Sometimes purported cures don’t cure anything, they just mask the patient’s deterioration. Such has been the case with the economic cures for the last financial crisis peddled by policymakers. From Charles Hugh Smith at oftwominds.com:
All the “fixes” have fatally weakened the real economy, and created a dangerous illusion of “wealth,” “growth” and solvency.
The “fix” of the last eight years worked, right? This was the status quo’s “fix”:
1. Massive expansion of debt: sovereign, household and corporate, all in service of a) bringing consumer demand forward b) fiscal stimulus funded by debt c) corporate stock buybacks to boost stock valuations d) asset bubbles in real estate, bonds, stocks, bat guano futures, etc.
2. Monetary stimulus, i.e. creating and distributing money at the top of the wealth/power pyramid so corporations and the super-wealthy could buy more assets with free money for financiers issued by central banks.
3. Gaming statistics such as unemployment and metrics such as stock indices to generate the illusion of “growth,” “stability” and “wealth.”
4. Saying all the right things: the “recovery” is creating millions of jobs, inflation is low, virtue-signaling is more important than actual increases in inflation-adjusted wages, etc.
What is fragility? Fragility is the result of an erosion of resilience, redundancy, adaptability, accountability, honesty, feedback and willingness to sacrifice today’s consumption for tomorrow’s productivity and systemic stability.
The status quo “fix” has gutted resilience, redundancy, adaptability, accountability, honesty, feedback and willingness to sacrifice today’s consumption for tomorrow’s productivity. Can anyone who isn’t a lackey on the payroll of the Powers That Be provide any credible evidence that the U.S. economy is more resilient after eight years of debt-dependent “recovery”?