Is this a true statement today?:
"Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.
Actually it is not true.
Workers are included in owners of capital. Their savings are loanable funds that, when loaned, provide capital for industry. Consumers normally consume and save. It was the Federal Reserve that lowered interest rates in 93-94 that re-inflated the bubble. Their creating of money "out of thin air" led to inflation as it always does. Consumer savings are thwarted by artificially low interest rates by the Fed and persistent and purposeful inflation. Why save when you can't gain much from a CD and why postpone purchases when the goods will cost more later. Actions of congress (Fannie Mae and Freddie Mac) and "the affordable housing policiy" caused loans to be made that otherwise would not have occurred. CDO's were a result of this policy. Had there not been an artificially induced boom, this would not have happened. All booms are caused by the Federal Reserve stimulating and when they raise interest rates to curb the inflation they caused, it results in a bust as unsustainable malinvestment is exposed. In a normal economy without government medaling and monetary expansion, businesses would fail at random times rather than many at once, resulting in a level and prosperous economy.
Marx had zero economic intelligence! so too with John Maynard Keynes! so too with Obaminable, Geitner, and Bernanke! As Keynes has been proven wrong before, this one will finally nail the lid on his coffin.
The 1837 crash was deeper than this one (of course we are not at the bottom yet) and as deep as the Great Depression. However, it was over quickly. Van Buren, when asked what he was going to do about it, quoted Jefferson. "The best government is government which governs least".
