Deflation

There are two ways to give people more economic power.

1- Increase the power of the money they already have. Contract the money supply, allow assets purchased with unserviceable debt to reprice- this deflation adds buying power to the money we already have in circulation. This rewards the people who saved and this punishes the people who chose to exist off credit, but only initially. Once you flush all the bad lending out of the system, the economic power added to the savers through deflation will cause a rebirth of a real supply and demand system, in place of the fantasy 'borrow today, pay in ten years system'.

This is the honest way of repairing an economy with prices distorted by a bloated money supply. It rewards those who lived within their means, and delivers a well deserved wake up call to those who treated cheap loans like cheap cocaine.

2- The dishonest way to repair an economy wrecked by a bloated money supply is to reward the government that borrowed too much and the individuals who borrowed too much, by shoving even more loans at them. This rewards all the bad habits that have brought us to this point.

This is the method favored by the banks. They will gladly let the government and the American people get overextended on credit again. When it crashes again, they will own even more of America as collateral and you will be even more frozen into life as a debt slave.