This is an opinion editorial by Max Borders, a well-published author and a contributor for Bitcoin Magazine.
Well into the Great Recession, arch-Keynesian Paul Krugman wrote that what drew him to economics was, “The beauty of pushing a button to solve problems.”
Yet economies don’t have buttons.
Similarly, imagine someone who claimed they could build, fix or run the Great Barrier Reef. You’d be justifiably skeptical. The Great Barrier Reef is one of the most splendid ecosystems on the planet. Its beauty is matched only by its complexity. No one on earth could design, much less control, the array of biological processes that allow the reef’s fractal order to emerge.
Nearly everywhere, policymakers and central bankers manipulate our economies as if they were sitting at mission control. They fancy that if they can turn this dial or that rheostat, they’ll be able to “prime the pump” or whatever inapt metaphor guides such hubris. Sadly, the only way technocrats have been able to take us to the moon is atop a financial bubble.
exorbitant privilege. The inflation is not “transitory” as the authorities predicted. Our shared experience is an ongoing global phenomenon that will compound our troubles quarter after quarter. Paradoxically, as the world plunges into recession, the dollar could get stronger for a time, but it will be a wrecking ball as weaker, more indebted nations compete for dollars to service their debts, as was prescribed long ago at Bretton Woods. Now there is simply too much leverage in the global system.
Macroeconomic wizards, as well as the politicians into whose ears they whisper, have never faced the fact that economies are not like machines at all. Yet these economists’ prestige, positions, and livelihoods depend on scientism. It’s no wonder then, that these same experts fail time after time to make basic predictions with any accuracy. Worse, they labor under the notion that, given enough power and largesse, they can play God by pushing buttons, bailing out banks, firing up the printing press or setting a different interest rate.
The tab always comes due — and eventually, it will be handed to you, the taxpayer.
Modern Monetary Theorists (MMTs), have been whispering falsehoods into the ears of power. Tell the political class exactly what it wants to hear, and you might end up a presidential appointee.
guns and butter” that funded the welfare/warfare state. Today is only different by degree. Today, politicians are fond of characterizing everything they do as an “investment,” even though real investors have to feel the sting of losses. Politicians and their consiglieres feel no sting and sign no IOUs. Indeed, most of these mandarins have little skin in the game.
Interest groups and constituents line up at the public trough. Dispensing corporate welfare and helicopter money becomes their raison d’etre. Intervention is a necessary evil for the common good, they’ll say, brandishing their laurels from Harvard or the London School of Economics. Only they, “The Order of Macroeconomists,” can rescue the economy from crisis to crisis — or so the story goes.
Cantillon effect, which benefits the wealthiest and leaves the poor to buy less things with more money. In response, populists yowl and the people demand more goodies, but there is no more blood left in the turnip.
Canada’s or Scotland’s eras of free banking.
“The Fed’s full history (1914 to present) has been characterized by more rather than fewer symptoms of monetary and macroeconomic instability than the decades leading to the Fed’s establishment.”
Selgin and White are rare because they deviate from the mission control approach and suggest decentralized competition among currency issuers. They understand that better ways must be discovered, not compelled, in a Darwinian dance.
My version of that dance looks something like this:
decentralism. Sadly, we’ll have to wait till the house of cards falls to get it.
This is a guest post by Max Borders. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.