There are voices that there are already too much debt in the world (government, personal, government debt) and that can be the cause of the crisis. From the other hand the the only solution offered by the governments and the central banks to the possible (forthcoming or not) crisis is to create more debt. So - if consumers take loans and spend them, then manufacturers can produce and the GDP grows. But if consumers are prudent and save money, then manufacturers can not sell produce and can not continue operations, GDP falls and recession emerges.
If this vignette is true, then how sustainable growth can happen? Or is this vignette the example that there always should be boom/bust cycles? Or does my vignette contain some paradox, some oversimplification, some mistake? My question is - is my vignette correct or does it contain mistakes and what are those mistakes?
One can try to solve the paradox in vignette by saying that consumers create value as well (labor) and that they can spend the money earned with their labor without taking loans and so the sustainable GDP can exist. If that is so, then why governments or other entities are trying to boost credit instead of boosting labor? Some can say that "boosting" labor can be quite cruel - e.g. the governments can put into force laws that pressure citizens to accept any work however bad paid it is (i.e. if there are no betters jobs available in the economy). But from the other side one can argue that government can increase the skill level, the creativity level, the entrepreneurial spirit of the citizens and so they can create new businesses, new ideas, be worthy employees for businesses that pay high wages. So - such boosting of labor can be beneficial for the all (citizens, businesses, budgets; such boosting does not require increase of the debt level). Why such beneficial boosting is not happening? Why central banks does not suggest such boosting and why everything is talking about increase quantitative easing and debts?