…Long Live the Economy
Most troubles are unnecessary. We have Nature beaten; we can make her grow wheat; we can keep warm when she sends blizzards. So we raise the devil just for pleasure – wars, politics, race-hatreds, labor-disputes.
– Sinclair Lewis, Main Street (1920)
Here’s a proposition that can’t be repeated enough:
Ours is a tired, beaten-down economy.
We’re in the 110th month of the weakest “recovery” in modern history.
That’s another 10 years groaning under the weight of monetary central planning.
Federal Reserve policies – going back decades – have fostered destructive debt, speculation, and inflation of asset values.
They ought to be sweating bullets at both ends of the Acela Corridor.
What comes next is not the miraculous rejuvenation of an old-fart economy.
We’re too far gone.
This bubble – the biggest of all that came before in a long, dumb era – will implode.
Liquidations – of plant, of inventory, of labor – will follow.
Here’s a chart of “malinvestment” unwinding:
This kind of picture is really only worth the numbers detailed.
It doesn’t capture the misery on Main Street created by their changes over time. Some of them are sudden – catastrophic, even.
That’s not to say Wall Street and Imperial Washington are immune to tragic loss. Not at all.
The trouble is the major players inside the Acela Corridor understand “acceptable loss.”
And the other thing – really, the thing, in the big picture – is that they’ve perfected the art of privatizing their reward and socializing our risk. Read More