Dear Editor,
We had the 2008 financial crisis called “the Great Recession.” It was mainly caused by people not being able to pay their mortgage (home debt). Low interest rates were offered to people who would not normally qualify (subprime borrowers).
The low interest increased and people could not meet their mortgages. Home prices fell. The entire US financial system went into recession, and the rest of the world followed suit.
Today, the US consumer and most of the world are drowning in debt. Low interest rates of the world’s central banks and quantitative easing (by other names) are keeping the global financial system afloat. There is a 60% chance of a recession starting in the United States by the end of 2020, according to a National Association for Business Economics Survey.
About every 10 years a global recession has occurred, but the central banks of the world have extended the time by low interest rates and by creating liquidity. It will be difficult to deal with the coming recession because interest rates are already low, and most countries are heavily indebted.
I believe both capitalism and communism are obsolete. Communism was fatally injured in 1991 when the Soviet Union collapsed. Capitalism will be fatally injured by the end of 2021 or the next global recession.
The fourth industrial revolution requires a modern economic system. The current system is built for the first industrial revolution, not the fourth, which will change the world by using artificial intelligence and advanced biotechnology.
The only constant is change. What the capitalists and communists (or socialists) don’t realize is that labour and capital are interdependent: one cannot exist without the other. Artificial intelligence, which is replacing workers, doesn’t value money or human life.
Yours truly,
Brian E Plummer