The damage is already baked in the cake. Two (or arguably even three) decades of artificially low interest rates have produced unsustainable levels of debt throughout the economy (both in the public and private sectors) and have enabled the FedGov to spend far beyond its means. The politicians in both parties will not stop deficit spending until the bond market forces them to with much higher rates. But if/when that happens, it will create a lot of damage too.
Andrew Mellon knew the only real cure for this stuff a century ago:
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. Enterprising people will pick up the wrecks from less competent people."
Of course he missed: "Liquidate the banks", but given his familial background, that's not terribly surprising.
Teddy Roosevelt made one of the biggest mistakes in US history by taking the "gild" out of the Gilded Age. Teddy rode the usual horse in doing it: Class envy.
"Trusts" did not need to be "busted." We need "trusts" now more than ever.
The damage is already baked in the cake. Two (or arguably even three) decades of artificially low interest rates have produced unsustainable levels of debt throughout the economy (both in the public and private sectors) and have enabled the FedGov to spend far beyond its means. The politicians in both parties will not stop deficit spending until the bond market forces them to with much higher rates. But if/when that happens, it will create a lot of damage too.
A lot of damage is already baked in.
The Fed's fundamental economic illiteracy is layering more damage on top of that.
And, no, the politicians won't stop deficit spending until compelled to.
Andrew Mellon knew the only real cure for this stuff a century ago:
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. Enterprising people will pick up the wrecks from less competent people."
Of course he missed: "Liquidate the banks", but given his familial background, that's not terribly surprising.
Teddy Roosevelt made one of the biggest mistakes in US history by taking the "gild" out of the Gilded Age. Teddy rode the usual horse in doing it: Class envy.
"Trusts" did not need to be "busted." We need "trusts" now more than ever.
Liquidating society would indeed cure inflation, but I suspect few of us would recognize the "entrepreneurial" society that would emerge.
And even fewer would know how to prosper.
There's a similarity between "defund the police" and markets.
If the police are defunded, it would correspond to a rise in vigilantism.
Markets already have vigilantes. Fortunately they do only monetary damage.
The problem in both cases is that society should make up its mind: Police or vigilantes?
The Fed or "bond vigilantes?
Life would be smoother for all of us if we could only decide. And stick with it.
I'm not sure I agree with the vigilante analogy.
"Bond vigilantes" are free market participants. They are who really should be setting interest rates, not a central bank.
Maybe we don't disagree. I'm in favor of abolishing the Fed as well as the police. Vigilantes "all the way down." chuckle.
Do vigilantes make mistakes; even life or death mistakes? Sure. But, if we are willing to admit it, government makes bigger mistakes and more often.
So is it another case of the "evil of two lessers," as is true of our two Presidential candidate choices?