1/ Repeal the Fed’s mandate for full employment. The Fed should simply be focused on maintaining sound money. (Full employment is a chimera anyway, full production should be the goal.) Let’s look at why Fed is “machine code” of civilization...
2/ Deep structure of money: it is stored human energy. It’s the social contract we make as a species that gives us a way to save, store and enumerate our energy. Energy that is precious, scarce and temporally finite.
3/ Thus, when we distort money, we literally warp the human lifeworld. We deprive our social being of stability & the dignity of our time, effort & foregone consumption. Sound money is not best understood as an economic principle, but as an ontic precondition of social life.
4/ Inflation, of course, is a choice—both intentional & inadvertent—to degrade money over time. There may be good reasons to match monetary base to underlying realities (population growth, productivity growth etc), but not usually how it’s couched. Instead, an arbitrary “target”.
5/ Interest rates, which Fed purports to “set”, are also not best understood as economic affair. Instead, psychological: human time preference—of consuming my stored energy now, vs deferring & consuming later (classic Bohm-Bawerk).
6/ Interest rates, as “price” of money, are simply your willingness to pay me to not use my stored energy today, and instead let you use it today, in return for me using more of your stored energy in the future.
7/ To degree we have powerful systemic forces—like Fed & banking structure—using policy to “set” interest rates, to inflate our money, etc., we have to see them as serious interventions they are: they literally distort inner workings of the global, collective human energy system.
8/ Bitcoin, gold, currency flows etc. all are reactions to this manipulation: alternative stores & strategies of ”wealth,” all in an attempt to find some terra firma for simply preserving prior human energy for oneself w/o an overpowering force like the Fed to take it from you.
9/ Bc, make no mistake, that’s what’s happening: the Fed is responsible for populism, the wealth gap, and our society-wide polarization. Largest transfer of wealth bw middle class & rich in history occurred due to financial liberalization of past 5 decades.
10/ Nixon Shock of ‘71 removed the rate limiter on USD, allowing for dual mandate of ‘77 & neoliberal party from ‘80 onwards. Declining real rates since ‘80 has created most of wealth since then, but most accrued to 10% capital holders while 95% of pop. got cheap WalMart goods.
11/ Throw in Glass-Steagall repeal in ‘99, fall of USSR in ‘89, & rise of conservative media, & perfect storm to sell middle class on idea of American exceptionalism while degrading our monetary base in name of economic “growth.” This was in fact a strategy for capital to grow.
12/ Hence, since ‘00, we end up with $4 of borrowing for every $1 of growth, a nation in debt, a currency that’s propped up by our navy & threat of sanctions, and a bankrupt & stagnant lower and middle class. And a massively wealthy 1%, and basically satisfied 10%.
13/ And as I & others have said, ever-building, ever-popping, ever-graduating bubbles: tech (‘01) becomes housing (‘07) becomes sovereign debt (‘19). No place left to go: we’re now in a 40 year Everything Bubble that can only be refinanced by wiping out USD
14/ How? Exactly what we’re seeing: degrade the value of all of our stored energy by continuing to lower interest rates to keep the party going, even in the face of unprecedented highs in stock market, bonds, real estate, private equity...
15/ Punchline is this: EVERYONE should be absolutely furious that our lifeworld, energy system, & society has been so badly warped by those who‘ve used our money system to transfer wealth from those who don’t understand the system to those few who do.
And they keep doing it.
And they keep doing it.
16/ As I wrote in TGR, this won’t stop until system contradictions become so big, so painful, that it breaks. This has to occur at nexus of political power (in DC), bond market (w USD) and American voter (as taxpayer, consumer, borrower, creditor).
17/ So when we see post-‘08 populism around Western Hemisphere, see it fundamentally as an outrage to failed monetary philosophy. As in, literally, stop transferring energy from 90% to 1%. It’s been 4 decades, and it has to stop. It will stop, & only Q is how messy will it be.
18/ Will it be like 1890-1915, or 1929-1945? (Or something new?)
So yeah, I‘m irritated as the Fed lowers rates again. Not only is it an irrealist denial of biz cycles, it’s telling us all that our futures—the value of today’s energy tomorrow—are basically worthless.
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So yeah, I‘m irritated as the Fed lowers rates again. Not only is it an irrealist denial of biz cycles, it’s telling us all that our futures—the value of today’s energy tomorrow—are basically worthless.
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