Murphy's Financial LawThe United States’ finance policy is following in Greece’s footsteps.
Napoleon Linarthatos
May 1, 2023
In Greece, gloomy predictions are a hard sell. The Greek sun, the summery climate, and the deep blue sea make such theorizing seem panicky, melodramatic, and otherworldly. That strangeness is not just felt by the hearer of such prognoses; the sayer himself feels conflicted and wavering, a God-forsaken foreigner in his own land.
This vast natural conspiracy was augmented back in 2005. On top of everything else, Greece had hosted the 2004 Olympic Games and won the 2004 Euro soccer championship. The economy was humming along. Brand new shopping malls, bridges, tunnels, and motorways were the physical testaments of an age of prosperity.
Even if I had translated, printed and distributed my gloomy 2005 “Letter from Greece” article to all Greeks, I wouldn’t have made a dent in the national mood of prosperity and progress. Only five years later, nothing anyone could say or write would reverse the nation’s feelings of despair and anger. Greece’s economy in 2010 was in a de facto state of bankruptcy. The massive social and institutional decadence described in the “Letter from Greece” had manifested in a rather spectacular way. The speed and ferocity of the collapse made Hemingway’s path to bankruptcy, “gradually and then suddenly,” seem a rather apt description of what had occurred.
Consider an important difference between America and Greece. For some time now, the average American has been aware that things have gone wrong. This is not just a reflection on the present administration, but a deeply felt and long-standing judgment on the state of the country. But here is an important similarity: Both countries’ ruling classes are equally juvenile, self-centered, and disconnected from the consequences of their beliefs and actions.
It would be hard to design a policy as catastrophic and self-serving as the easy-money policies of the last three decades. What was initially termed as the “Greenspan put,” the bailing out of investors by liquidity injections from the Fed, eventually morphed into perennially and artificially low interest rates with quantitative easing. Easy money, in various forms, became the fentanyl of our ruling class.
Since 2001, the U.S. national debt has more than doubled in proportion to the economy. Since 2007, and for the 15 years that followed, the growth in the balance sheet of the Fed nearly equaled the growth of the whole economy. In a 2010 op-ed in the Washington Post, the then-chairman of the Fed, Ben Bernanke, asserted that his easy money policies would “promote economic growth.” “Lower mortgage rates,” he predicted,
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None of the suppositions of the Bernanke op-ed came to be true. None of these suppositions should have been considered true at the time that they were made either. Why did America need its central bank to stimulate growth? Why did the Fed lower rates for corporate bonds or mortgages? Why did the Fed repeatedly have to prop up the stock market? You know things have gone wrong when few, if any, are asking the most obvious questions.
In that September 2012 meeting, Fisher said, “using monetary policy to overcome bad fiscal and regulatory policy is, to my mind, not only faulty but a pyrrhic strategy.” Monetary policy was a cover-up for the American economy’s stagnation. It was a way for our ruling class to hide the complete failure of its progressive economic agenda.
That this cover-up also masked a tremendous transfer of wealth that the ruling class granted to itself was an extra benefit. The primary beneficiaries of those $5.3 trillion in share buy-backs were those on top, since, according to CNBC, those on the “top 10% of households by net worth control 87.2% of equities” in the U.S.
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Source:
https://www.theamericanconservative.com/murphys-financial-law/
