Dear Friends,
It seems to me, economists have been seeking the holy Grail of nonstop economic growth for as long as there have been economists… but as with all natural complex systems, the economy must expand, sleep then expand again. The expansion part of the cycle is where new ideas are implemented, and the recession part is where old inefficient ideas are destroyed, to free up the resources for the next wave of new ideas. Like an animal or plant, an economy grows rapidly for a while then sleeps. If someone were to force a plant or animal to stay awake forever, as speed addicts do, the animal or economy becomes sickly. Economists and politicians want the laws of economics to bend to their will but like all of God’s laws they do not lend themselves to bending.
A politician may want to be able to eat belladonna, but no matter how much they might want to, the moment they do, they die. Someone else might want to fly without wings but jump from a towering cliff and God’s law of gravity enforces itself. The point is, God’s laws are not flexible, breaking them always has consequences. No matter if someone poisons himself, jumps from a cliff or snorts crystal meth to stay awake, God’s laws do not broach noncompliance. Trying to force an economy to only grow is just such a violation of God’s law of economics.
Great depressions are caused when government backed by economists try to stop the boom bust cycle of economics. FDR turned Herbert Hoover’s recession into a great depression by trying to force economic growth by fiat. Following Keynesian economic theory, Roosevelt attempted to force economic growth by controlling how much and what a farmer could plant, determining the prices retailers could charge, employing people to do absurd things like count the tips on maple leaves and huge government paid for engineering projects. What he got was a depression that lasted for a decade, soup lines, mass unemployment and a dependency class.
Obama and his economic brain trust have attempted the same thing. He has had the good fortune of having a federal reserve that has kept interest rate at or near zero for the entirety of his term, he has run up a deficit greater than all the Presidents before, he has passed reams of new regulations and usurped a third of the national economy with the Affordable Care Act. Meanwhile, like FDR, he has had a fawning media cover for him at every turn. Today, the soup lines are hidden by food stamps which is at an all time high, the unemployment numbers are massaged by the BEA with terms like U6 unemployment, virtually all the jobs that have been created are low paid part time work and the stock market has expanded because of firms buying back their own shares, on margin, instead of organic growth by investors.
Now the latest gimmick the brainiacs are trying are, negative interest rates, helicopter money, bail ins, and banning cash. Negative interest rates are already being used in Europe and Japan to push demand. What they are, is exactly what it says, savers are charged interest to stash their money in a bank or by buying bonds! To keep people from pulling all their savings from the banks and setting on cash, which would drive the banks out of business, the masterminds want to ban cash. Helicopter money is where the Federal Reserve would print a few billion dollars, lowering the value of all the money now in circulation, and deposit it in people’s bank accounts. If all that fails to save the economy and threatens the banks, those of us who have saved money will have our money withdrawn from our bank accounts, and given to the banks.
Methedrine can make a tired person wakeful, the negative side effects will manifest themselves sooner or later. Keynesian economics, or demand side economics, is like using crystal meth to keep the economy awake even when it needs to sleep. There are two competing philosophies of economics that don’t seek permanent economic growth, the Austrian school which stresses the effect of savings on an economy, and Joseph Schumpeter’s boom bust theory. The Austrian school’s theories have only been used twice in the US, once during the 1920’s and then in the 1980s. The result was fast economic growth with short weak recessions. Meanwhile, every time Keynesian crystal meth has been tried, the long term effect has been depression and outright economic collapse. Gods laws cannot be compromised, no matter how smart a brainiac is, or how much she might want to. Isn’t it time for politicians and economists to grow up and follow the laws of economics? Just say no, to economic crystal meth.
Sincerely,
John Pepin
