For about ten years now, the Fed and prominent economists have repeatedly — and arrogantly — asserted that Japan’s persistent deflation resulted from the central bank’s error in not lowering interest rates fast enough. All these bankers are wrong about the true error committed and the actual lesson to be learned. The significant monetary errors attending the Great Depression were not committed from 1929 to 1933. They were committed from 1914 to 1929. To admit the true error and lesson would be to condemn the very existence of fiat money and central banking. The initial error was committed by Congress in granting one bank a monopoly on the country’s money. That monopoly has allowed personal greed and political ambitions to foster seven decades of easy credit. Easy credit has in turn created an unsustainable debt load throughout the society. Nothing can relieve that load except what has always done so: a deflationary collapse. You cannot avoid the consequences of easy credit, just as you cannot avoid the consequences of taking amphetamines for months on end. The true lesson for society: don’t create monopoly mechanisms that foster easy credit.

- Excerpted from the January 16, 2003, Elliott Wave Theorist