Financial Meltdown – Crisis and Challenges

Abstract

This paper looks at the current financial crisis in the light of the preceding major bubbles in the United States. We observe that history of bubbles is history of asset bubbles with attendant easy money. We posit that solution to these bubble crashes do not have to lead to deflation or inflation. If we go back to the basic of credit creation through real savings, the solution will not likely to set the stage for another bubble. An example of back to basic credit creation is provided.