A few words on the mistakes inherent in #centralbanks' blind fixation on engineering =CPI increases of the order of 2%
1/x
1/x
If technological advance, entrepreneurial innovation, beneficent network effects from widening circles of trade are producing more 'utility' at lower cost, prices should be allowed to FALL accordingly to reflect that greater plenty. 2/x
To decry such a phenomenon as 'deflation' is arrant nonsense: to try to prop these prices up out of monetary necromancy is to inject excess money/credit when that medium is already acquiring an extra capacity to conduct exchange. 3/x
Not only do prices tend to RISE for all other goods & services, those not so blessed by progress -even though they are not actually more scarce- but also fictitious levels of profit are generated in those areas newly in abundance. 4/x
Predictably, too much emulation occurs, floating yet another Tech bubble; breeding a new herd of Unicorns. Real wages are suppressed, lowering productivity, encouraging consumptive borrowing, penalising thrift & poisoning social discourse. 5/x
At firms, we see debt further eroding balance sheets, increasing individual fragility and scrambling the broader relation between the price of financial capital and the quantities of real capital which it can acquire. 6/x
This latter dysfunction adds dislocations to intertemporal trade to those already being introduced systematically into contemporary/simultaneous exchanges. Wealth drains between the cracked facade of sham prosperity. 7/x
A fractured Commonwealth - as well as an entirely avoidable Boom-Bust cycle - is the result though, sadly, the ensuing crisis merely feeds the Leviathan which brought it about, rather than starving the Beast as a penalty for its sins. 8/x
The monster arrogates even more powers to itself. Cronyism grows. Zombies are nurtured. Deadwood remains uncleared. As they say in China: “The Private Sector retreats: the State advances.” Macro morbidity is the ‘New Normal’ 9/x
@threadreaderapp unroll
Before you know it, the Technocrats are talking of ‘secular stagnation’, fretting they have expended all their ‘ammunition’. More profligacy is officially urged and tired, old ‘New’ Deals proposed. The tender bloom of Liberty shrivels. 10/x
