In God we trust?

A Central Bank task is to guard the stability of the financial system. A stable financial system is based on three pillars: stable prices, sound financial institutions and efficient payment systems. Since 2008 there is a threat that the financial system will implode. An imploding financial system will create a depression in the real economy where goods & services are produced.

In contrast to the 1930-ies, Central Banks and Governments have prevented an imploding financial system. Central Banks have acted as lender of last resorts and Governments have prevented defaults of banks. But there are complaints: the economy is not growing. This is not surprising because the economic growth before the crisis was build on credit.

Growth will be possible after substantial repayments of credit. Do we have to trust in God? No, we have to trust our central bankers and politicians that they do it right this time to prevent a financial meltdown and economic depression.