Morons and the Economic Elite
Who’s the moron?
The month of August came and went. It was full of sound and fury — with big whipsaws in stocks — but what did it signify? Nothing?
Yesterday, nothing happened. Stocks were as flat and placid as a democrat’s brain scan.
But the activists aren’t dead. Fed governors. Newspapers. Economists. All are pushing for more intervention. It is just a matter of time; they’ll get it.
As Dear Readers know, The Financial Times is the voice of the economic elite. If the FT doesn’t tell you what they are thinking now, it tells you what they will be thinking, after they’ve had an opportunity to read the paper.
And right now, they’re thinking that they need to find a way to get back on top of things. They need to get in control of the situation.
In his latest remonstrance, Ben Bernanke practically recused himself. He said he wasn’t doing anything (he has members on his committee who are opposed to more Fed action). He passed the ball to the Obama Administration and Congress.
The Fed is out of the game. At least temporarily.
But here is The Financial Times:
Waiting for QE3…
Who’s waiting for QE3? The bankers. The economists. The speculators.
And now, here’s Clive Crook, in The Financial Times of course, telling the Bernanke Fed team what morons they are.
Revised figures show the sluggish US recovery has been even slower than previously believe, and this calls for fresh monetary stimulus.
Right. More stimulus! More QE! More money!
But the figures don’t show what Mr. Crook thinks. They don’t show a weak recovery. They show no recovery at all. This is not a recession from which an economy recovers. It’s a correction, which an economy suffers.
If it is allowed to.
Nor do the figures show that the feds haven’t intervened quite enough. They show that their trillion-dollar interventions have been worse than worthless.
The problem, as we keep saying, is debt. The private sector is getting rid of it. Households paid down $50 billion worth of debt in the last quarter. Not much, but at least, they’re doing what they ought to do. The feds, meanwhile, added about $500 billion worth of deficits.
What Mr. Crook, and most of the elite economics professoriat, asks for is government intervention to short-circuit the process of de-leveraging. Their view of an economy is as simpleminded as Thomas L. Friedman. (More below…) In their view, an economy is either growing at a healthy speed. Or it is not. If it is not, they have to do something.
But what can you do when an economy needs to unload debt? Well, you could help it out. You could raise interest rates and push all those millions of Humpty debtors off the wall. You could raise taxes; those suicidal householders…now standing on the ledge…could be encouraged to jump.
At least, those cures might help get de-leveraging over with faster.
Or, you could declare a Debt Jubilee, as they did in ancient history…cancelling all debts…and re-starting everything at zero. Or, how about this… You could print up trillions of dollars and drop them from helicopters all over the country. That is the cure Mr. Bernanke himself, perhaps jokingly, suggested. In a few hours, debts would be worthless.
Again, these ‘cures’ are focused on the real problem. Trouble is, they cause more problems than they solve.
Why not just let nature take care of it? Withdraw all federal intervention. The markets will sort it out quickly. And without causing further distortions and economic grotesqueries.
It’s not going to happen. Instead, after the economy and stock market sink…Bernanke and the feds will swing into action. The morons.
Since we’re discussing morons this morning, we will focus on one of our favorites: Thomas L. Friedman.
The common mistake made by all world-improving jackasses is to think that the world is so simple that they can make it better. In economics, it’s obvious to anyone who has ever thought about it that there are no knee-bones that aren’t connected to anklebones…and to foot-bones. You can move them around, but you’ll get kicked in the derriere.
“It’s either control…or money,” says our friend John Henry.
You can control an economy — to some extent — but it’s going to cost you. Every manipulation, every jury-rig, every fix…slows it down, imposing additional friction and costs.
But to Friedman life is a series of challenges, to which he must come up with a solution. Hardly a column with Friedman’s photo appears but that it does not include another gimcrack solution to one of the problems he imagines.
Poor Friedman now sees big problems. He has to put his thinking cap on. The world cracking apart — China, Europe, the Mideast…all are breaking up, he says. That’s why it’s vitally important, to paraphrase the sage himself, that we keep America strong! How do we do so?
“…the only way to dig out [of our deep hole] is with new, hybrid politics that mixes spending cuts, tax increases, tax reform and investments in infrastructure, education, research and production.”
Hey. That sounds pretty easy. Our representatives just have to get together on the right mix of ‘hybrid politics.’ A little education…a little infrastructure….a little this…a little that.
What does Friedman really want? Control, of course. He wants to hold onto the illusion that half-bright hustlers can actually control events…and that they can get the outcome that they want, rather than the outcome they deserve.