Monday, 6 April 2020

"Stimulus" from the Santa Claus state will fail us as badly as their phony boom


The world was already awash in debt, borrowed into thin air by the banking system. The cracks had already begin to open up. In setting interest rates to such historically-low levels the financial engineers had already red-lined everything, grievously discouraging savings, grossly inflating every single asset price beyond anything approaching reason, and grotesquely distorting a structure of production already bruised from the disaster of 2008 from which it had never been allowed to repair itself.

But now these bastards have an alibi for the collapse they'd set in motion. This phoney-baloney bubble was already bursting, spectacularly, just as this pandemic hit the globe. It's killing people. But it's rescued the creators of financial apocalypse because everyone's to focused on coronavirus to see their fingerprints for what they are. And everyone can continue to ignore the reality that should be staring them in the face: that we have been consuming the seed corn for decades, and we are just beginning to face the consequences; that for decades now we have over-invested in speculative bubbles, under-invested in productivity-increasing assets, and squandered borrowed money on consumption; that rather than boost productivity, we have lowered productivity via mal-investment, propped up unproductive sectors with immense sums of borrowed money, and finessed the figures to make things look like we were moving forwards.

'Cos the harsh reality is that we weren't moving forwards at all. And it wasn't the pandemic that exposed the lie. It's this pandemic that's allowing the liars to escape responsibility for the destruction that their policies of lose lending and fiscal stimulus unleashed.

And now -- as we're all locked up under home arrest, with nobody allowed to go out and make stuff -- with governments worldwide sending people cheques to keep buying the dwindling amount of stuff that is being made -- mainstream economists everywhere are still scratching their chins on new "fixes," as if "stimulus" from the Santa Claus state will save us instead of sink us all.

For years they've ignored the coming consequences of their economic programme -- which is based on nothing more than promoting the bizarre idea that economic prosperity means living on debt forever. They watched, these central bank planners and mainstream economic engineers, as interest rates had to go ever lower to get the tiniest amount of effect, and as the marginal productivity of every dollar of new debt sunk ever lower. They talked smack about "rock-star economies" and "tech-led booms" while refusing to see the reality in front of them, or to ask themselves the slightest question about their methods.

And now that the consequences are upon us all, they're arguing about a "v-shaped recovery" or a "u-shaped recovery" as if that isn't just fantasy land. And instead of being exposed as the charlatans that they are, instead they're hiding behind the "exogenous shock" of the pandemic as if their gross irresponsibility wasn't responsible for leaving us so unable to cope.

And on panels and advisory committees everywhere, the very people who are responsible for the global economic meltdown their own advice set in motion are now being called on to deliver advice on what to do next.

It's like asking an arsonist how to rebuild after the fire he himself set.

It's grotesque.

LISTEN: And how little intelligent commentary is there at the moment analysing the twin problems of the bursting bubble coupled with the pandemic -- and the irresponsible government and central bank responses. Here's one of the few that I've found: Professors Joseph Salerno and Peter Klein join Tom Woods "to discuss the economics of the extraordinary episode we are currently living through, as well as the likely consequences of how the U.S. federal government and the Federal Reserve Bank are responding."





2 comments:

  1. Ridiculously low interest rates.
    Massive debt.
    Quantitative easing.
    Oppressive taxation.
    Stifling regulations.

    Did they miss anything?

    ReplyDelete
  2. One thing that is particularly galling is that the fantasy that lack of "demand" is biggest problem isn't exposed by anyone, even though it's as clear as the nose on your face that the appalling lack of *supply* is the problem here.

    ReplyDelete

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