- Growth at all cost…
- Why another 2008-like bailout might not be possible…
- Washington has written a tax bill that opens the door for regular Americans to use the same legal tax loopholes the elites have used for decades. Why should elites get all the breaks?
Dear Reader,
Mr. Powell held rates steady yesterday.
Out of rational calculation, or to dig a defiant thumb in the president’s eye… I do not know.
He babbled his customary mummeries. Yet I paid them no mind whatsoever.
Nor am I concerned with the routine doings of the Federal Reserve. I simply do not believe they are as momentous as many do believe.
Yet very few — on either side of the political divide — question the Federal Reserve’s assigned custodianship of the United States economy.
Many are hot to “reform” the Federal Reserve this way or that way. Yet they do not question its centrality.
Thus the Federal Reserve’s preeminence is as elemental as gravity… the ebbing and flowing of the tides… or the profusion of rocks within a congressman’s skull.
Perpetual economic growth is its directive.
Growth at All Cost, Regardless of Cost
Economics commentator Charles Hugh Smith:
- Boiled down, the dominant narrative holds that the Federal Reserve (central banking) and the central government have the tools to quickly reverse any dip in GDP, a.k.a. recession, and return the economy to expansion.
- The unstated foundation of this narrative is that recessions are bad, as only permanent expansion is good.
It is true. The institutions cited — the central bank and central government — consider recession a sort of moral failure.
Recession indicts them on charges of professional incompetence… as an airplane crash may indict an aircrew’s incompetent airmanship… or a building collapse may indict an architect’s incompetent architecturing.
You Really Think It’s Free Market Capitalism?
Are recessions inevitable outcomes of natural economic cycles?
Recessions are inevitable outcomes of natural economic cycles, yes. Yet it makes no nevermind to the central planner.
He is out to avoid recession as the devil avoids holy water:
- That this isn’t “free market capitalism” doesn’t bother anyone, because the whole point of central banking and government is to eliminate the rough edges of “free market capitalism” with the sandpaper of “state capitalism,” which creates or borrows as much money as needed to smooth over any spots of bother, a.k.a. Recessions.
- That recessions are essential market dynamics is not part of the narrative, which is conveniently binary: recessions bad, expansion good.
Once again, Mr. Smith strikes bullseye.
Growth, Growth, Growth!
“Growth, growth, growth!” is their eternal mandate of the central planner.
Thus the economic apparatus must hum perpetually at a very high whir.
If it slackens, if it sheds steam, if it wobbles, the central planners leap immediately to action.
They will not permit the thing to go along on its own.
They burst with prescriptions to elevate the economic level, to elevate consumption — always to elevate consumption — or to elevate investment.
To this end they suppress interest rates. They fabricate oceans of credit — that is, oceans of debt — from the great abysm of nothingness.
They seek to bend economic law to their defiant and hubristic will.
Economics then becomes an instrument of politics — and the perpetual cry for growth.
Yet must an economy be slave to growth?
An Economy Requires Rest
Nature runs to cycles. The tides wax and wane, animals hibernate in winter, the seasons roll one into another.
Left undisturbed, an economy likewise runs to the cyclical orientation.
Why not permit it its natural fluctuations?
If an economy is weary, let it loaf for a spell. Let it take its rest and recuperation.
And if it wants to enter hibernation, permit it to enter hibernation.
It will emerge with energetic vigor when the time is proper. It will be keen to get going.
Meantime, the economy under habitual intervention is forever denied the rest and recuperation it requires.
It is perpetually shoved along. And so it can merely gutter along under chronic fatigue.
The Debt-Based System Can’t Rest
Alas, our debt-based economic order cannot grant hibernation.
That is because it requires perpetual expansion in order to service the perpetual accumulation of debt that system spawns.
Absent credit expansion — that is, absent debt expansion — the economy cannot expand.
That is precisely why this preposterous system requires “growth, growth, growth.”
And so we are set eternally upon the hamster wheel.
Intervention is the perpetual answer.
And so intervention succeeds intervention… each one larger than the previous.
Thus the greater the magnitude of the following crisis… which requires greater intervention yet.
With high irony: ‘Growth at all cost’ deforms into ‘no growth at any cost.’
Out of Tricks
Yet is massive intervention still possible? Mr. Smith:
- As for bailing the system out as in 2008, that is no longer possible… The system was “saved” by recapitalizing the financial sector — the source of new debt and speculation. But this time around, the economy is saturated with debt, income has stagnated and cannot support more borrowing, and the credit-asset bubbles in housing and financial assets have reached unprecedented heights of risk, i.e. fragility.
And so in our quest to evade short-term economic discomfort… we have likely guaranteed long-term economic malady.
Pay me now or pay me later, as the phrase runs. We have chosen to pay later.
And pay we will, I hazard, soon or late.
Alas, we will likely pay steeply.
Brian Maher
for Freedom Financial News
