What is happening to the markets

The post below is not easy reading. But it captures what has really happened to our economy, without a lot of numbers.

Fisher's Debt-Deflation Theory

Essentially, for too many individuals and society as a whole, "capital has been betrayed into unproductive works."

"Had Fisher observed the Greenspan/Bernanke Fed in action, he might have updated his theory with a revision. At some point, capital betrayed into unproductive works has to either be repaid or written off. If either is inhibited by reflation or regulatory forbearance, then a cost is imposed on productive works, whether through inflation, higher interest, diversion of consumption, or taxation to socialise losses. Over time that cost ultimately hollows out the real productive economy leaving only bubble assets standing. Without a productive foundation, as reflation and forbearance reach their limits, those bubble assets must deflate." -- London Banker

We threw too much of our wealth away on things we didn't need. We borrowed to buy things we couldn't afford. When it came time to pay the bills, there wasn't any money.