The US is in the Same Position as Japan Was

First of all I’d say it started in 2007. 2008 was the panic and it was an emergency liquidity response to that, but the roots of this really go back to 2007. That’s when the sub-prime crisis erupted, that’s when the Bear Stearns hedge funds melted down. That’s when the Fed first started in to cut the discount rate and respond a little bit, even though they were way behind the curve and didn’t see it coming.

So the depression started in 2007. It could be over tomorrow if we had the right policies, but we don’t have the right policies. It will continue indefinitely.

We look like Japan. Japan has said, people talk about the lost decade, we’re in the third lost decade; it’s been over 20 years of depression, depressionary symptoms or depressionary economy in Japan.

The U.S. is now in the same mode, it’s kind of ironic because for decades Bernanke and other scholars criticized the Japanese, saying, “What’s the matter with you guys, don’t you know how to run monetary policy, don’t you know how to get out of a depression?” Then they said, you know, in 2007, “We are going to avoid the mistakes of Japan.” But we’ve made every single mistake that Japan made.

We should have shut down banks in 2008. We didn’t. We propped them up instead of shutting them down, which is exactly what the Japanese did. They locked the problems into place and financed them instead of writing them off, shutting them down, putting backers in jail, closing the banks, breaking the mob, stripping out the bad assets, putting them under a rock in trust for the American people, sell them over 20 years or however long it takes. Then re-IPO the clean banks.

- Jim Rickards via Future Money Trends:

http://futuremoneytrends.com/blog/?p=10062