“…the harsh reality is that no president has much control over the economy.”
—Joe Nocera, Business Columnist, NY Times
It’ll be over soon–the candidates’ braying about job creation. Tiresome lies. Anyone who has a favorite in this horse’s ass race better hope his horse places or shows. If he wins, he will preside over the playout of a collapse made inevitable by a global economic overreach funded with shaky loans. He won’t make it to the end of his term before being hounded from office.
These two guys aren’t stupid. Delusional, maybe. More likely, cynically pandering to the desperate hopes of a citizenry that knows nothing good is coming. Mankind is grasping at any thread of hope before social mood turns down in earnest. Next comes “screw it, we’re not gonna pay.” Greece just did that. Europe will follow within the decade. In this country, the next wave of defaults will be cities and states. Municipal bonds will be worthless. China is already experiencing riots. There will be no place to hide.
Inflationistas insist that the central banks of the world are printing the monetary system into hyperinflation. Nope. It is not possible for central banks to buy anywhere near the volume of bonds and loans that will go bust. The ensuing deflation will be one for the history books. The U. S. did not exist when the last deflation of this degree of severity occurred.
Innovation, which bent the growth curve upward for a hundred years, is temporarily crushing employment. Already replacing millions of physical jobs with machines, it is rapidly replacing mental work with digital brains. Scroll down to my previous post and click on the link to Andrew McAfee’s TED talk, if you haven’t already done so.
The upside in all of this is that, when we welch on the debt (no other choice), we get to start all over, like we did after the thirties. And, as McAfee points out, innovation will generate the next wave of sustainable job growth in a world in which debt service does not dominate everyday life.
To survive, we have to accept reality, work together, and gut it out. A better world is coming. I hope to be around for it.