Doing so, they illustrate an important aspect of debt deflation: just as governments and central banks artificially inflated the bubble on the way up, they are going to make the bust far more prolonged and painful on the way down. In the US, frackers have run into low oil prices and the limits of low-cost money and have responded accordingly. They are keeping their most efficient rigs running, idling the rest, and reducing production and expenses. Debt has been restructured and companies have gone bankrupt. Prices of oil production assets have dropped to what, a year ago, would have been regarded as fire sale levels. This is how capitalism cleans up its errors. Governments make bad situations worse.

This is an excerpt. For the full article, please click the link above.