The US Debt Driven Economy is like the Poorly Parented
child who begins to show severe delinqency when they reach the teenage years. If tough love is the medicine, then the humane way to administer it is not in large doses, but small. The FED hiking hard here would be like sending the kid to military school. That's just more "making the son pay for the sins of the father" stuff, if you asked me.
The FED needs to reign this in for sure. They've been working on it for 2 years, and now 3 other central banks are on the case as well.
Alot of this is cultural too. I remain worried that policy makers, and Bernanke in particular, are hyper-rational robots who forget that Economics is a social science. It's not all about money supply, and interest rates. Economics is about human behavior. I continue to suspect Bernanke is convinced of the invicibility of his econometric models. Trading is an art. Central Banking should be an art as well. I don't see Bernanke as an artist. I worry these guys never read Freud, Jung, novels by James, and Dickens.
More broadly, we've entered that ironic place that free-market economies tend to enter, where the people increasingly vote for leaders and policies that offer them the best illusion.
As Yeats said "In dreams begin responsibility." But you see, freedom presents too much responsibility for people. So, that's why Eric Fromme wrote the book "Escape from Freedom."
The USA began under the Yeatsian theme. We've entered the Fromme theme now.
Even Alan Greenspan is not responsible for that.
Best,
LP |
