Richard Duncan is an interesting fellow. His eyesight seems 20/20 when it comes to analyzing how we got where we are today. Yet his solution is unthinkable to me.
If you are curious, please listen to this hour-long interview. It will get you thinking and you will learn a lot about many aspects of today's economic conundrum. However, in my opinion, Mr. Duncan errs in believing that it is possible to stave off catastrophe.
Here is the interview:
Richard Duncan interview
He is basically recommending that the developed world throw gasoline on the fire of fiat money creation. He says we must maintain the current level of world GDP through enormous debt creation (i.e. more QEs) and through government investment in infrastructure and technological projects. By doing this he hopes that the resulting advances will somehow allow us to avoid a worldwide crisis that would take the form of either a world war or a global depression like none we have ever seen.
His solution completely flies against all of my own economic theories–indeed against common sense itself. He sounds to me like Louis XV with his "après moi le déluge" (after me the deluge).
|[Thanks to Wikipedia]|
Surely, these credit/debt bubbles must burst. I believe that the longer we put it off, the worse it will be, and that we've already gotten to the stage where the war or depression or both are inevitable.
Yet he seems to think catastrophe can be staved off, and that the politicians will try this because they have no other choice. About that he is surely right, but is he right that the times have changed and we must modify our thinking? Or is this just putting off judgment day?
Please let me have your thoughts.
|Thanks to halloween-masks.com|
No one can deny that current markets are scary, so I have opined in an article at Seeking Alpha.
We all share the malaise as this unfolds in front of our eyes.
In last weekend's Wall Street Journal I read yet another ridiculous statement
by a member of that elite group called Central Bankers. They make me chuckle every time they open their mouth.
How many times do we have to hear that Madame Yellen or Monsieur Draghi has everything under complete control? Take this for example from the latter:
"There is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would."
Right. All Europe's economy needs is a little tweak here and a little monetary push there. Especially after Japan and the U.S. have done this so "successfully"–which, by the way, was after completely missing the Great Recession even when it was staring them in the face.
In fact the U.S. has been so "successful" that now they can't figure out when and how to turn it off.
I can't help but wonder about the ending of this charade. So I allowed my imagination to wander. Here's the result. (Click on the image for a larger version.)
My previous post
mentions tea leaves as a way for the Fed to determine policy. I bet you thought I was kidding. Well, watch this video
to see what Fed-watchers are watching. And just in case you're wondering, it's not a comedy sketch.
|[Screen capture from Bloomberg]|
[Thanks to J.B. for the neat alternate headline.]
I looked at the first page
of the Wall Street Journal today, there to find an article about our favorite gurus, the Federal Reserve Board. Most market players are predicting that the Federal Reserve Board will do nothing this year about interest rates.
The article contains a really fascinating exchange between William Dudley, president of the New York Fed bank, and John Taylor, an economist of extraordinary common sense, judging from the exchange:
Dudley: "I don't really understand what is unclear right now."
Taylor: "Are you kidding? No one know what you are doing."
In fact, I would conjecture that the Board itself does not know what it is doing.
Therefore, I suggest that Ms. Yellen and her co-gurus take counsel from the following page:
Surely reading tea leaves will be more accurate than relying on the pseudoscience of econometrics.
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