Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.
By Adrian Sobers
“I’m not saying it’s not bad. It’s bad. But it could be worse.” – (Saul Goodman, Breaking Bad)
Richard Duncan’s aptly titled Macro Watch Video from September 28, 2022, doubles as a forecast of our economic future, Watch Out: Something Is Going To Break!
“To bring inflation down,” he says, “the Fed[eral Reserve] must tighten Monetary Policy enough to destroy Demand.” He’s right. There is no other way in our fiat system that is monopolized by governments and broken beyond belief (daresay repair?). This is why decentralizing finance is key to emancipating more persons.
The two main levers of the fiat system are broken. The most recent example of this is the emergency bond purchases by the Bank of England. Oversimplifying here but either they stop buying bonds on Friday (October 14) as planned and leave the pension market in pain or continue to print and buy bonds, causing even more inflation.
If we paid as much attention to the legacy of socialism and statism as we do to the legacy of slavery we’d be much further along. We need to be working much further up the causal ladder. Looking back is all well and good but we need to look in the mirror more. Magatte Wade gets this more than most and her talk with Lex Fridman – Africa, Capitalism, Communism, and the Future of Humanity – is worth three and a half hours of your time.
Since the global economy is based on creditism (not capitalism), the one way to reduce inflation is politically untenable.
Duncan explains, “Until a large number of Americans lose their jobs, the Inflation Rate is likely to remain far above the Fed’s 2% Inflation Target.” Mind you, inflation targeting is a big part of our problem, but now is not the time for that. The main point here is that when monetary authorities get to the point where they talk about “fighting inflation”, that is code for job losses.
Mr. Duncan continues, “Our economic system, Creditism, requires Credit Growth to stay out of crisis; As interest rates rise, Credit becomes less affordable; If further interest rates hikes cause Credit contraction to accelerate, the economy could spiral into a Depression – not just a recession; Investors should be prepared for something to break.”
And yes, that’s Depression with a capital ‘D’. Double digit growth? B is also for behave do. And when Duncan says “be prepared for something to break”, he means break badly.
The Bs have the world in this predicament, you know them by name (and policy). Ben Bernanke winning a Nobel Prize in Economics for his research on the financial crisis he helped to create is just another day in the upside down multiverse of economic madness.
I refer interested readers to the section in Nassim Taleb’s The Black Swan – Anyone Can Become President – where he gives “a brief history of the “Nobel” Prize in economics.” The Wall Street Journal was cheeky about it, he won it: in theory. Funny, but nothing to laugh at.
The Federal Reserve held an emergency meeting early in October and I suspect that will be the first of many such meetings. Ever so often you see a story in the local and international press about government working with businesses or a particular sector to “fight” inflation/high prices. Plaster meet sore.
This is great photo-optics but a complete waste of time and another example of working too far down the causal ladder. Our political and monetary masters need to accept responsibility for the inflation only they can create.But that will never happen, which makes the work of people like Magatte Wade even more important.
Our monetary masters are out of levers to pull but God is never out out of love for His creation. B is also for a babe born in Bethlehem who, all grown up, reminded us: “I am with you always, to the end of the age” (Matthew 28:20). It is also for burdens that we are to bear for each other. As Paul wrote, “Bear one another’s burdens, and in this way you will fulfill the law of Christ” (Galatians 6:2).
C is for carry your, no silly, crosss and also for casting your cares (1 Peter 5:7). Why? Because He cares for you. Never lose sight of that in the midst of all this.
Adrian Sobers is a prolific letter writer and commentator on matters of national interest.
