Sunday, July 10, 2011
Apocalypse for you, joy for me
Ever since the Goldman Coup of 2008, Polistra has been pointing out that the supposedly 'apocalyptic' or 'unthinkable' consequences of refusing to submit to the thieves are actually GOOD things for ordinary people.
The consequences are only destructive for people who richly deserve to be destroyed.
Now they're doing it again with the 'apocalyptic' consequences of a US default. But when you pin down the experts, they say that the 'unthinkable and unimaginable apocalypse' consists of higher interest rates and lower stock prices.
Both of those are WONDERFUL consequences. Unlike the experts, I can imagine and think about both, and both make me deliriously happy.
For the last 5 years we've been operating in strict defiance of the oldest law of economics, pretending that we can hold the price of borrowing at zero (for some people!) without creating problems. Real economists have known since 300 AD that price control always creates shortages, hoarding and black markets. And predictably, we have shortages, hoarding and black markets in capital. These bad things bring great profit to a few evil people, and those evil people pay all the 'economists' to be goddamn liars. If interest rates can rise to meet genuine risk, the whole banking system will return to a true free-market setup. When governments realize they have to pay actual interest on their bonds, they will be much slower to borrow. (I suppose Capo Bugsy Bernanke will invent some new criminal trick to get around it, but China's own economy is slowing down now, so they can't be the same kind of sugar daddy from now on.)
Same with stock prices. This is a longer-lasting problem, running back to 1980 or so. Companies that use profit as their pivot point are motivated to satisfy their customers and their employees. Companies that use share price as their goal don't care about quality of product or service; share price can be manipulated easily by insider tricks without any actual product or service at all.
Clearly the 2008 crash wasn't enough. Suckers are still going into the market, giving the evil players lots of material to play with. A great big resounding crash will drive the suckers out once and for all, and the share-dependent companies and traders will be unable to function. Only 'privately held' companies that operate without trading, and some steady dividend-payers, will survive. Profit will dominate again.
LOW INTEREST AND HIGH STOCKS ARE THE PROBLEM.
HIGH INTEREST AND LOW STOCKS ARE THE SOLUTION.
The consequences are only destructive for people who richly deserve to be destroyed.
Now they're doing it again with the 'apocalyptic' consequences of a US default. But when you pin down the experts, they say that the 'unthinkable and unimaginable apocalypse' consists of higher interest rates and lower stock prices.
Both of those are WONDERFUL consequences. Unlike the experts, I can imagine and think about both, and both make me deliriously happy.
For the last 5 years we've been operating in strict defiance of the oldest law of economics, pretending that we can hold the price of borrowing at zero (for some people!) without creating problems. Real economists have known since 300 AD that price control always creates shortages, hoarding and black markets. And predictably, we have shortages, hoarding and black markets in capital. These bad things bring great profit to a few evil people, and those evil people pay all the 'economists' to be goddamn liars. If interest rates can rise to meet genuine risk, the whole banking system will return to a true free-market setup. When governments realize they have to pay actual interest on their bonds, they will be much slower to borrow. (I suppose Capo Bugsy Bernanke will invent some new criminal trick to get around it, but China's own economy is slowing down now, so they can't be the same kind of sugar daddy from now on.)
Same with stock prices. This is a longer-lasting problem, running back to 1980 or so. Companies that use profit as their pivot point are motivated to satisfy their customers and their employees. Companies that use share price as their goal don't care about quality of product or service; share price can be manipulated easily by insider tricks without any actual product or service at all.
Clearly the 2008 crash wasn't enough. Suckers are still going into the market, giving the evil players lots of material to play with. A great big resounding crash will drive the suckers out once and for all, and the share-dependent companies and traders will be unable to function. Only 'privately held' companies that operate without trading, and some steady dividend-payers, will survive. Profit will dominate again.
LOW INTEREST AND HIGH STOCKS ARE THE PROBLEM.
HIGH INTEREST AND LOW STOCKS ARE THE SOLUTION.
Labels: the broken circle
¶ 12:41 PM
