In response to an FT article by Martin Wolf on 4th February 2016, entitled 'Why it would be wise to prepare for the next recession'
http://www.ft.com/cms/s/0/11f38928-ca6f-11e5-be0b-b7ece4e953a0.html#ixzz3zDp5lcZX
Firstly, the possibility of a recession before 2025 isn't very high, it's a no-brainer. We are in a global slowdown that has been obvious for at least three months to people who look at leading indicators, if of course their job doesn't require them to be in denial. Admittedly that disqualifies 90% of economists, 95% of financial journalists and 100% of central bankers.
Secondly, there is another option than the ones you list and it does not fall into the black or white 'act' or 'do nothing' categories that you suggest.
"Many would call for the cleansing depression they believe the world needs. Personally, I find this idea crazy, given the damage it would do to the social fabric."
This has been used as the justification for Ponzi monetary policy for the past twenty years. The last time a central banker met a slowdown with anything other than panic and easy money was the beginning of the nineties. Those who remember it will also recall that George H. W. Bush subsequently blamed Alan Greenspan's 'lack of action' for his defeat in the 1992 election. Since that time every slowdown, every crisis has been met with cheap money, and latterly, the open spigot. Each time it has been done it has solved nothing fundamental. What is has done is to paper over the cracks, build up an even greater mountain of debt and postpone the inevitable collapse for another day, another year, and most important of all - for another politician's watch.
Here we are again, and here you are again Mr. Wolf. Black and white - do nothing or create a load more debt that no-one has any intention of ever paying back...but never address the underlying problem - the monetary and banking system.
They will try all the 'solutions' you've listed. They will justify them with spurious justifications like they did with QE - 'trickle down' and 'the wealth effect'. The spurious justifications will not be enough with the abolition of cash, so they will resort to outright lies and the demonisation of people wishing to resist any further capitulation to state control of the economy.
None of them will work because they do not address the fundamental problem. They are as intellectually bankrupt as the balance sheets of the Central Bankers who will be promoting them.
Eventually there will have to be global reset of the monetary system. That is inevitable. What is not inevitable, although it is just as crucial, is this: there should be a reset of the banking system, the system of primary dealers, and the whole way that governments raise money through the bond markets. This system allows governments to 'fund' wars their populations wouldn't pay taxes for and entitlement programs they have absolutely no intention of ever honouring. This system is rotten to the core. It supports crony capitalism/socialism for the rich and it is a blight on the face of western economies. It is also a kick in the face for anyone who thinks democracy should be a bit more than a complete sham.
There will be a new playing field, a new Bretton Woods if you will. This will probably be overseen by the IMF, who will be the only governmental institution with a balance sheet that doesn't look like the world's worst hedge fund. There will be debt forgiveness. The dollar will not be the global reserve currency any longer; neither will the Yuan or any other national currency. I have no doubt that the IMF is already sitting on plans to re-capitalize the world with the SDR. That will need to be watched very carefully - they are barely any less clueless than the Fed.
Finally, and going back to your quote:
"Many would call for the cleansing depression they believe the world needs. Personally, I find this idea crazy, given the damage it would do to the social fabric."
Every time we deny the fundamental nature of our problems, we make the eventual damage to the social fabric worse. The solutions you suggest will delay the inevitable...maybe. Personally I think it's time we faced up to this before it sweeps everything away in an avalanche of defaults and social breakdown.