Opinion: How this debt-addicted world could go the way of the Mayans
http://www.marketwatch.com/story/how-this-debt-addicted-world-could-go-the-way-of-the-mayans-2015-04-27
Published: Apr 27, 2015 5:01 a.m. ET
http://www.911forum.org.uk/board/viewtopic.php?p=169894#169894
Paying a high price for too many elites and their ‘frivolous cravings’
By
SATYAJIT DAS
Nowadays many countries’ social and political
structure relies on debt-driven consumption and
increasing levels of entitlements.
Blame the policy makers. To drive economic
growth, boost living standards, and manage
growing inequality, policy makers have used debt
and monetary tools to create economic activity.
This has resulted in excessive borrowing and
imbalances in global trade and capital.
Governments played a part, too, allowing the
buildup of social entitlements to win or maintain
office. Private companies also encouraged the
growth of employee benefits to avoid immediate
pressure on wages as well as boost current earnings and share prices.
But such expensive commitments were rarely fully funded.
Rather than deal with the fundamental issues,
policy makers substituted public spending,
financed by government debt or central banks, to
boost demand. Strong growth and higher inflation,
they hoped or believed, would correct the problems.
The current state of affairs echoes Archaeologist
Arthur Demarest’s observation about the Mayan
civilization: “Society had evolved too many
elites, all demanding exotic baubles…all needed
quetzal feathers, jade, obsidian, fine chert, and
animal furs. Nobility is expensive,
non-productive and parasitic, siphoning away too
much of society’s energy to satisfy its frivolous cravings.”
Seven years into this crisis, the level of debt
in major economies has increased. Global
imbalances have decreased, but primarily as a
result of slower economic growth. Countries such
as China and Germany are reluctant to inflate
their domestic economies, moving away from their
export-driven model. Major borrowers, such as the
U.S., refuse to reduce spending and bring their
public finances into order. Enthusiasm for
fundamental financial reform has dissipated,
driven by concern that lower credit growth will decrease economic growth.
<http://www.marketwatch.com/story/http://www.marketwatch.com/story/world-economies-walk-a-thin-financial-tightrope-2015-04-20>Policy
makers refused to acknowledge that available
fiscal and monetary policy tools cannot address
the underlying problems. They repeatedly use
complex jargon, obscure mathematics and tired
ideologies to disguise their failures and
limitations. Perhaps, as the writer G. K.
Chesterton suggested: “It isn’t that they can’t
see the solution. It is that they can’t see the problem.”
The policies, now centered around debt
monetization entailing zero interest-rates and
quantitative easing (QE), have potentially
destructive side effects. Punishing frugality and
thrift, and rewarding borrowing, profligacy, excess, and waste.
The resultant loss of purchasing power
effectively represents a tax on holders of money
and sovereign debt. It redistributes real
resources from savers to borrowers and the issuer
of the currency, resulting in diminution of wealth over time.
Debt monetization also creates moral hazards. Low
rates and easy availability of credit reduces
market discipline. Borrowers face less pressure
to cut back on their debts. Low borrowing costs
allow unproductive investment to be maintained.
It reduces incentives for governments to bring public finances under control.
Ultimately, the policies being used to manage the
debt crisis punish frugality and thrift, and
reward borrowing, profligacy, excess, and waste.
The policies might have been defensible if
successful. But evidence to date suggests that
policy makers are unlikely to succeed. The Bank
for International Settlements and other central
bankers now stress the limits to monetary policy
in boosting economic growth without addressing the underlying issues.
Ordinary people fear the consequences on their
lives from the Great Unraveling. The political
and social response is likely to be volatile. It
was the fear and disaffection of middle-class
citizens who had lost their savings in the Great
Depression that gave rise to fascism.
Governments have shown little willingness to
inform the electorate about the magnitude of the
economic problems, the lack of solutions, and
cost of possible corrective actions. Politicians
have taken regard of historian Simon Schama’s
comment that no one ever won an election by
telling voters it had come to the end of its
“providential allotment of inexhaustible plenty.”
In a moment of unusual candor, Prime Minister of
Luxembourg and Head of the Euro-Group Jean-Claude
Junker stated: “We all know what to do, we just
don’t know how to get re-elected after we have done it.”
Precious political and economic capital has been
wasted with inadequate policies that have side
effects and decrease chances of a recovery. For
policy makers everywhere, to paraphrase Alexander
Solzhenitsyn, the “permanent lie [has become] the only safe form of existence.”
Satyajit Das is a former banker and author of
“Extreme Money” and “Traders, Guns & Money.”
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Please consider seriously the reason why these elite institutions are not discussed in the mainstream press despite the immense financial and political power they wield?
There are sick and evil occultists running the Western World. They are power mad lunatics like something from a kids cartoon with their fingers on the nuclear button! Armageddon is closer than you thought. Only God can save our souls from their clutches, at least that's my considered opinion - Tony
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