Ain’t we got fun?
Ev'ry morning, ev'ry evening
Ain't we got fun?
Not much money, Oh, but honey
Ain't we got fun?
The rent's unpaid dear
We haven't a bus
But smiles were made dear
For people like us
In the winter in the Summer
Don't we have fun
Times are bum and getting bummer
Still we have fun
There's nothing surer
The rich get rich and the poor get children
In the meantime, in between time
Ain't we got fun?
Whiting, Kahn, Egan... 1921
The Dow up 58 yesterday. Nothing important there.
Gold up $31. Hmmm... what does the gold market see? More QE?
Last week, it was the IMF. It urged the Europeans to increase their money-printing efforts to avoid deflation. This week, the Financial Times tells Ben Bernanke to get off his cushy derrière and take bold, decisive action in the fight against the Great Correction.
Sebastian Mallaby, writing in the FT, says Bernanke is acting like a wimp. He needs to come up with some new weapons, new strategies, and new tactics. C’mon Ben, “show some real audacity”.
Ben Bernanke, hero of ’08, will not want to see himself stripped of his medals. He will not sit on his hands and watch as the US follows Japan down that long, lonely road towards stagnation. He will not want his resume blemished by a splotch of failure just when he faced his greatest challenge.
No, dear reader, he will ‘do something!’ – no matter how dimwitted it may be.
And here’s a BBC sage reminding Ben Bernanke what the greatest economist of the 20th century would have done. “What would Keynes do?” he asks.
Of course, the answer is obvious to anyone who ever thought much about Keynesian economics. Keynes would have done just the wrong thing!
But that’s not the way John Gray sees it:
... The influential Cambridge economist has figured prominently in the anxious debates that have gone on since the crash of 2007-2008. For most of those invoking his name, he was a kind of social engineer, who urged using the power of government to lift the economy out of the devastating depression of the 30s. That is how Keynes's disciples view him today. The fashionable cult of austerity, they warn, has forgotten Keynes's most important insight – slashing government spending when credit is scarce only plunges the economy into deeper recession.
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Even Richard Duncan urges the Fed to action. Duncan is unusual, though. He sees the problem clearly... which is to say, he sees it like we do. Here, CNBC reports on an interview:
“When we broke the link between money and gold, this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that we will collapse into a new Great Depression,” he [Duncan] argued.
“If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it.”
Duncan argues that governments in the developed world should borrow “massive” amounts of money at the current low interest rates to invest in new technologies like renewable energy and genetic engineering.
What could he be thinking? Of course the money would be wasted. That’s what government does. It borrows money from people who have proven they know how to make money and gives it to people who have proven only that they know how to take it.
One will offer to build a bridge to nowhere. Another will propose to assassinate a foreigner. Millions will put out their hands for retirement/health/unemployment and other forms of assistance.
And what will happen to the money? It will be gone with only more debt like “dead soldiers” left on the table after a party to show for it.
Still, Duncan thinks that even if the money goes down a rat hole, it still might make sense: "Even if this is wasted, at least we could enjoy this civilization for another ten years before it collapses,” he said.
That’s what separates a real pessimist from us optimists. It would be nice to see what Mr Market would do. Left to do his work, he’d surely separate many of the rich from their money, he’d blow the doors off the banks and flatten hundreds of corporations. He’d put a swift end to this Great Correction and then we could get back to work.
But he wouldn’t wipe out our whole civilisation! You have to be a genuine pessimist to believe the correction will be fatal to our civilisation.
Who knows? Maybe Richard Duncan is right. We’re all going to die anyway. In the meantime, and in between time, ain’t we got fun!
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