Monetary Policy Has Failed – Here’s the New Hustle
We were shocked to see in the Financial Times – yes, the “pink paper,” no less! – a sensible article on current central bank policies. Our heart raced. Our pulse sped up. A light sweat gathered on our forehead. What is going on? we wondered.
International Deep State mouthpiece Financial Times. When you tire of its statist exhortations you can always switch to reading Financial Slimes.
The Financial Times is the mouthpiece of the international Deep State. It is solidly behind Hillary… NATO… the EU… QE… ZIRP… NIRP… the phony credit dollar… and just about every other cockamamie perversion of civilized life.
And yet, there it was… in Monday’s edition. William White, head of the OECD’s economic development review committee:
“The monetary stimulus provided repeatedly over the past eight years has failed […] Debt levels have risen […] Consumers have had to save more, not less, to ensure adequate income in retirement.
At the same time, easy money threatens two sets of undesirable side effects. First, current policies foster financial instability… and many asset prices bid up to dangerously high levels. Second, current policies threaten future growth. Resources misallocated before the crisis have been locked in through zombie banks supporting zombie companies.
On the demand side, accumulating debt creates headwinds, leading to more monetary expansion and more debt […] On the supply side, misallocations slow growth, which again leads to monetary easing, more misallocation and still less growth.”
Somehow, William White has managed to land another job at a globalist institution after leaving the BIS. This is slightly astonishing, given his well-known critical views regarding central bank policies. He even gets to write FT editorials and is interviewed by Bloomberg! Maybe we have fallen through a wormhole into a parallel universe.
Screenshot via Bloomberg
Regular Diary readers will recognize this analysis. It is more or less what we have been discussing in these pages for the last eight years (minus our pointing the finger of blame at the post-1971 dollar).
That this critique has moved from the back alleys of the Diary to the main street of the Financial Times is an important sign. It is a sign of desperation. The Establishment is in need of a new program. New magic. New hocus pocus that will keep this swindle working.
Not that the Establishment is ready to abandon its activist meddling or give up its racket. It depends on the system now in place to move trillions of dollars of other people’s money in its direction.
But monetary policy is clearly not doing the trick. And the insiders are now coming to terms with it. They need a new hustle. What? Fiscal stimulus!
They want the government to spend more money. Where will it get more money?
It will borrow it, of course.
Clearly, there’s not enough debt yet. Somebody’s got to do something about that!
This is what Larry Summers has been calling for. It is what Paul Krugman wants. Our friend Richard Duncan at Macro Watch believes it is essential to avoid depression.
The Financial Times has been in favor of bigger government deficits (aka “fiscal stimulus”) since the crisis began.
But never before in the mainstream media have we seen it backed by a realistic understanding of how the Fed’s policies have failed.
Chart by: Bonner&Partners
Chart and image captions by PT