Have we, as a global society, gone way past the point of no return? Reading my last post again, just after the Paris counterattack by ISIS, it struck me that maybe I shouldn’t be constantly denigrating the wolves shepherding the human herd. After all, sporadic social upheavals and terrorism, can -and will- get worse. Much worse. Confronted with ISIS, or Nicolas Maduro, I’d rather have Mario Dragui and friends running the show. Recently drone defunct ISIS “John” and co, or any other radical group, might be the herd-backed alternative. Our choices are increasingly limited to picking the lesser evil. Maybe I should back them Goldmanites after all -at least they do not know how to handle a Kalashnikov.
We dissidents might be entering a time where Austrian based economic surgery is no longer an availble option. We tried hard to prevent public, government, and CB endorsing of the actual state of affairs, but nobody really listened. Let me tell you it felt lonely in the Austrian club -for endless years. But resentment is not a constructive emotion, however unfair and shortsighted Goldmanites and affiliates may have been.
That doesn’t mean I have changed my mind regarding global macroeconomic policy, though. I have no doubts that Bernanke, Krugman, Summers et al should be put to jail for their grave neglect, or at least condemned to economic ignominy. The piles of debt and layers of inequality accumulated are daunting. But, no matter how thoughtless and stupid economic policy may have been, the harm is done -and is likely beyond peaceful & orderly repair. As Ghandi used to say, an eye for an eye and we all end up blind (sorry I can’t side with the Jews, or Hollande bombing, on this). With WW III already well started, we have to remain focused on some crucial and urgent achievements.
- An economic landing as soft as possible, after the long overdue, debt write-downs.
- An economic system with a strong supply side in order to improve employment, wealth distribution, and mental health of the unemployed and underemployed.
- An efficient, and fair, distribution of generated wealth.
That’s a hell of a job, in a very short time -in the meantime let’s forget the responsibilities accrued to those implementing the economic policies that took us here in the first place.
I increasingly doubt the patient (our social tissue), would survive surgery if we cease money printing, bring about some modest interest rates, downsize public expenditure, and compel people to read and work. Without reading and working, exponentially growing parts of our population are in for morbid mental obesity (if they are not there already). Economic surgery implies short term pain, for a long term gain -and a payback to our children. These are concepts unlikely to be understood by the mob. So maybe it’s best to just keep printing money, and “nirping” away our savings, for as long as it goes.
For sure all those surgical changes, that imply giving JMK a decent but irreversible funeral (and nothing less than a total cremation will do), cannot be implemented simultaneously. No question we need some time lags, and adequate phasing of the appropriate policy. But even playing our cards deftly, over a couple of years, I doubt we can survive the ensuing social turmoil. We have stretched unfairness and inequality well past the limits. And corruption is now, for all intents and purposes, obvious to everybody.
What finally makes economic surgery an unlikely success, is the fact the world population is more and more a mob of brainless short-sighted residual leftovers from the Homo sapiens species. They would not understand that we need surgery, if we are to clean up the mess, and set up an economic infrastructure that can grow moderate and sustainably -while preventing and uprooting the constant generation of outrageous inequality. Lastly, let’s not forget, if democracy continues to play, they control the votes.
Redistributing wealth will not do the job -as a stable fix. It is not about entitlements or redistribution of incomes. It is about distributing properly from scratch. Redistribution comes at a heavy cost, because it impairs entrepreneurship and personal effort. It will take time for society to understand this. Increased taxation is not the way to go. We have to route value fairly, as it is generated, to the right economic agent. And unfortunately for anybody holding equity, the consequences of doing so, will be severe for after tax free cash flow (explanation below).
The main generators of atrocious inequality are,
- large, corrupt and inefficient governments -with their elites,
- large ultra-efficient, but ruthless large caps and multinationals and their boards of directors,
- Goldmanite politburo controlled CB’s and all those near them that profit from the Cantillon effect.
They are responsible for most of the inequalities that have surged over the last two decades. Definitely, lots of bad news in the pipeline for those groups. Continue reading