Dear Friends,
It seems to me, when someone is coming down with an illness, initially the signs are slight and not too bad, later when the symptoms become worse they can be alleviated by aspirin and other medications, the worse the symptoms the stronger the medications needed to mitigate them, but when the illness hits with full force it can no longer be mitigated by medication and the body dies. Today the world economy is sick, the initial signs were ignored, so it has got to the point the strongest medication available is being used. Up to now, the symptoms have been mitigated by Keynesian principles, stupendous amounts of money printing, government debt spending, monetizing government debt, negative interest rates and central banks are even buying corporate bonds and stocks! From our own experience we can tell how bad a disease is, by the drugs used to treat it and when the morphine drip of monetizing the debt is used, pretty much all hope is lost. The chemotherapy of QE, Twist, negative interest rates etc… have lost their effectiveness and the illness has spread.
Using the right drugs to treat any disease is critical. Penicillin is wholly ineffective against malaria and quinine has no effect on strep throat. The Keynesian prescription is always spending, add to that the monetarist prescription of money printing, and you have the “universal” cure for every economic ailment. Of course not all ailments are the same. Just as strep throat is different than malaria the reasons economies falter are different. Moreover, if a single drug is used too much it looses it’s effectiveness and becomes inert, like the Keynesian prescription. Keynesian economics is the fall back position of every government since John Maynard Keynes described it. Like penicillin however, it has been used too much and for illnesses that it is unfit to cure, and so the overuse of Keynesian economics deficit spending has made our economies immune to the effects.
Some drugs only mask the symptoms of disease. Pain killers are an example of this type of drug. They mask the pain but have no effect on what is causing it. In fact, new studies have come out that show opiates actually enhance a person’s feeling of pain, if they are used too much. Monetary stimulus is this type of medication for an economy. It masks the underlying problems. Money printing makes the stock market and bond market appear to sail. That rise in stock valuation however only hides the problems. People understand the disconnect, like when an injured person looks down at his broken arm, but feels no pain because he has been given morphine. He sees the arm is broken, he knows it should hurt but the lack of pain confuses him. If another person isn’t there to render first aid, the victim will likely damage himself far more, from using it due to his lack of pain. Masking a problem only makes it worse especially if what caused the problem in the first place is not addressed.
To argue someone is doing well, even as they are on Keynesian life support and the morphine drip of money printing is being used, is to argue up is down. The media that calls itself unbiased knows if the true state of our economy were widely known, the faction they prefer would loose in a landslide, since they cannot allow that, they are pulling out all the stops to argue up is down. The media cherry pick data, and polish it before they deliver it to us, protecting their favored faction. The more they get caught manipulating data the more they do it. Like a witch doctor, his dancing and waiving a chicken leg over someone with cancer might be entertaining and have a placebo effect, in the end it will have no effect on the outcome, only possibly the duration.
Regulation is like poison, in small enough amounts it has no great harm and can even be beneficial in some cases, too much and it becomes toxic and perhaps even deadly. Our governments have been introducing regulatory poison into our economy since time immemorial. Since the effect of poison is to create illness where there otherwise would be none, the elite need to mask the symptoms of the illness they have created by regulation, crony capitalism, and corruption, even as they inject ever larger doses and more deadly poisons into our economy. The way to save a person who has been poisoned is first to stop poisoning her and then get the poison out her system, by chelation or by introducing an antivenin.
What we have is a sick economy… it has been sick for many decades and the illness has been metastasized by Obama’s policies. We have witch doctors, the media that calls itself unbiased dancing and waiving a dismembered chicken leg giving false hope, there are “doctors” who have only read one book and their only tool is a butter knife, performing open heart surgery, as we are being plied with heroine to mitigate the pain, and the patient dies a slow and lingering death. Our economy has been poisoned by government actions and so cannot recover until the right medications are used in the right amounts. Just as heroine will not heal a broken leg and can lead to the worsening of it by continuing to use it, masking our economic problems with money printing only makes them worse, because there is no incentive to stop poisoning our economy. We have progressed beyond the initial stages where lethargy, slight pain and muscle aches… through the open sores, crushing pain and high fever to being hospitalized in intensive care. Isn’t it time to stop poisoning our economy and use different medications?
Sincerely,
John Pepin
