Lately, everyone is adding their two cents on how to help the economy. Central to the ails of our economy and the EU is deflation. To us here at Evolution, this is only partly true. When every aspect in legislation, when every employer and every economic thinker centers their resolutions toward the wealthy and offer nothing for the laborer, you will get stagnation. The only aspect that has helped to keep the economy rolling is the aspect that the consumer does not utilize deflation more with its purchases. If the consumer waited for lower prices, then economies will have the worst economic outlook: stagflation - it could be on the horizon, especially if oil prices spike.
Fortunately, the consumer only utilizes the power of deflation with Christmas shopping. Nevertheless, we have global summits of G-7s, G-8s and G-20s. We have a World Bank along with the IMF. These are the same idiots whose programs got us to this point. We have destroyed currencies by seeking manipulating advantages and over-spending to the point where money loses value everyday with negative bonds. We hear the constant message that central banks have the answers in their tool box. If that is so, how come our nation has over $20T in debt and the world has over $130T? How come the Fed places a 2% inflation rate and never reaches that goal? I'll tell you why: they don't count, food, energy and shelter. They talk in riddles how a computer is cheaper today because it offers more for the price than previously on the market. They rarely challenge government spending to push for a balanced budget.
Independent Fed = BS!
They never admit that they are wrong! The Fed declares that it is independent, but the position is appointed. The government makes known its borrowing needs before the Fed policy meeting. Then, the Fed lowers rates to make the debt borrowing less costly. The stock market and the bond market also communicate with the Fed through the media and its price action. If a policy is ill received by the market, it tanks until the policy is changed to the thinking of both the stock market and bond market. This is indirect pressure and now, we have a president who regularly uses the media to excerpt even more pressure. Independence? BS!
Central Problem
They believe that they can engineer an economy. Engineers build bridges not economies. When central banks try something new like Keynesian economics after WWII, and they have some success, they take bows. However, when the added government debt becomes a factor, they try fiscal policy. They try rate policy. Now, they are advocating Modern Monetary Theory. They never consider the poor citizen and how their policies effect the everyday life.
If you take a quick historical view, society progressed when craftsmen took power from the nobility. When America gave the world, "All men are created equal." When unions were finally accepted, the quality of life exploded. But, the butt people can buy votes. They countered unions with Taft-Hartley. They got legislation to outsource labor and factories and yet, they were not taxed as a foreign concern. This is the heart of the problem. Dear Reader, the outlook is dismal.
Central Banks Work With Government
This the current meme floating around the world. The so-called independence of a central bank is being blurred so the central bank can work with governmental policies to aid the economy. This is the old Russian Five Year Plan or the present programs of the Communist Party in China. It also appears within the work of BOJ (Bank of Japan), the US, Fed and the EU, ECB. So much for the independence of the Fed, but here at Evolution, we never viewed the Fed as a separate entity (see above). Nothing spells kill the American dream, the positive aspects of capitalism and social mobility like a planned economy. The problem began when we allowed the creation of the Fed and their motive to replace gold backed economy with a fiat trust economy. This is why I say, End the Fed!
Politicians soon correlated debt with winning an election. Don't get me wrong, new ideas sometimes cost the investment of debt, but the projection is the problem. We are seeing it today with the democratic debates. Every candidate has an idea and the only thing that they have in common is debt.
Free tuition! What good is a college degree if it is watered down like a high school diploma? There has to be a job at the end of schooling. Obamacare? I'm against it. If there is free medical plan for all and a way to pay for it, I'm all in. The key to any debt investment is the detail in how to pay for it. The Keynesians never understand that important aspect. I could rant on-and-on, but I think that you get the point.
Fiscal - Monetary
cooperation only adds to debt. The projection of fiat interest rates to negative only proves that it is a failure and weakens government to make good decisions. If government or a politician offered a real solution, it would appear unpopular and easily attacked by the media or an opponent. This is why the outlook is bleak. Great ideas will be wisps into the air as people look up for "helicopter money." It is so much easier to sit on the couch, turn on the TV than to go into the garage and try to make something that will give meaning to your life. (Ask not what your country can do for you, but what you can do for your country.)
I see the rich staying rich and the poor growing in numbers. We are already experiencing a decay in morals and it will only get worse. This is not a Brave New World, but a loss of individualism. This leads to the loss of creativity and the loss of will power. Give some credit to the Viet Cong for surviving in tunnels as an example of will power. The only fear that they had was our "Tunnel Rats." God bless those brave souls. Anyway, we are becoming lazy and obese. If this continues, we will be slaughtered like a pig.
