It’s been a while since I last wrote for my blog. I haven’t run out of ideas. But, after weeks of reading all day long, I think I am short of brand new ones. Reading others reminds you to remain humble, because ynever
All of a sudden it does look like the scenario has changed. By now, most economists with a decent professional level are admitting to the fact that easy money is toxic, and cannot solve it all. Keynesians and neo-classics are allowing for defeat in private. The keynesian sect is already “out” in upper circles. Word will get to financial advisors and the masses before long. Pondering “ad nauseam” the economic atrocities being perpetrated daily by our central bank -and keynesian acolytes- does not generate any incremental added value. And, honest to God, I do not experience any pleasure kicking Keynesians hard, especially when they are in a weak position (about time!).
Finally, some “uncommon sense” is creeping in. Stanley Fisher is talking about market stability as a policy target time and again. Even “the maestro” openly allows for the fact that the Fed is painted into an increasingly narrow corner. Kuroda is, as I write this, very outspoken about the “enough is enough” paradigm when evaluating the exchange rate for the Yen. They are, naturally, allowing for defeat half-heartedly, and with the usual caveats, when not outright excuses. “We had to do it”, “we gained some extra time”, and other similar cover ups. Dudley or Williams are cautiously following the same track.
Bernanke and Krugman are, as was to be expected, the living exception. They will “die-hard”. And astonishingly enough Dragui has also become a “QE-aholic”. Stating the obvious: he surely thinks a lot of himself. And he is not even argentinian (argentino)! You know the adage: if you buy them at fair value and sell them for what they think of themselves, it’s the trade of a lifetime. My wife says converts are the worst. Dragui was late to QE-nomics, and now …
Focusing on the big picture, I think it is hopeless to brood the huge and long reaching consequences of our economic mistakes of the last two decades (with a Grammy in store for “Bernanke-Krugman” duo performance over the last five). That is how history has always been written, and will be written over and over again. We all pay for the mistakes of others. New mistakes will be made, and we shall have to cope with the after-effects. Nothing new under the sun (idiocy has not affected sunlight up to now). Continue reading