At the moment we stand on a the verge of a potential economic collapse, and the powers that be are working to either turn it around or bring it on. (Depending on which side of the opinion fence you sit on).
In short the idea of the economy is solid while it is primarily based on productivity.
the problem came from credit, while credit for business to grow is a good thing, credit for personal use with no productivity impact is not.
We are currently living in a consumerist society where we are encouraged to have what we want NOW, and sort out the details later.
This is just one of the causes of Recession and Depression, While this is a massive simplification of the economy, if credit for personal needs did not exists the economic curves would not exist to the levels that they currently do.
Think of it this way, if you borrow money for a car or furniture etc, then the impact of this is not more productivity, it is simply personal convenience, where as credit for business use will more likely cause higher productivity and hence impact the economy.
The Current state of things:
So what does this mean?
Either we will fix it or we will not, (going to require a pretty big rabbit to be pulled out of the hat) this is the economy on a massive scale that we cannot impact personally, but our habits and consumerism has brought us to where we stand today.
its not just consumers of course, there is a massive array of problems that have come from corporations, Government, banks and trading.
Derivatives also play a major part in what will potentially happen.
Regardless of the cause, is an economic collapse such a bad thing?
Our initial gut reaction would be "YES!", but wait a minute, is it?
Does our current economic model work? In short No, its a time bomb that has to come to an end. While the curve shows overall steady growth (economic life cycle), what it does not cater for is the consistent growth of Debt.
Would not a better model be built that caters for steady growth without debt excess, consistent Productivity growth and currency that is more that just paper or digits.
If you consider times past, the barter system was based on this and it worked, sure there where issues, but nothing that could not be resolved. This model was not based on credit, it was based on an exchange of goods or services for goods or services to the same value. Simple.
If the Global Economy crashes, regardless of the short term effects, it will give us a real chance to create something that is better, stable and fair. But the in-between period will not be nice.
Keep an eye out on what is happening globally, do you really expect the world leaders and government to let us know what is happening? Seriously? Have you noticed how people handle problems? Panic, rage, extremism etc. Why would they tell us bad news, better to handle the issue after the event, rather than dealing with the issue and the public outburst as well.
What is next?
Who knows, but it cannot continue without something happening one way or the other, if the global players prop up the Economy to last a bit longer then it will be just a band-aid until something happens that can stop the curve response, (everything that goes up must come down).
References:How The Economic Machine Works - While a simplification, this is a great video on how the Economy works.