Nothing About This Economy Is Surprising

Nothing About this Economy Is Surprising“Insanity: doing the same thing over and over again and expecting different results.” 

— Albert Einstein

This Einstein platitude is so overused that I’m somewhat embarrassed to be planting it at the beginning of this article. But then I think about how utterly applicable it is to this piteous disaster we still call the global economy, and its presence becomes profoundly justifiable.

We have been told inflation doesn’t exist. We have been told interest rates can stay low forever. We have been told the stock market will continue to climb indefinitely. But these promises — and many others like them — have been made countless times before. The results are always the same.

We are living in fantasy, but the cracks are all around us: commodity prices continue to rise. Innumerable indicators suggest the stock market is almost certainly on the verge of collapse. Price discovery is a distorted illusion that offers very little in the way of meaningful valuation. Current debt-levels maintained by the world’s economic powers are unsustainable — especially in the U.S. and Japan. Yet, despite everything, nothing about this economy is surprising.

For two decades, I have been writing about how important free markets are to progress – to the growth of knowledge, as the philosopher Karl Popper called it. I am by no means alone; minds far more advanced than mine — along with groups like Cato and The Mises Institute, and Zero Hedge (to name a few) — have been defending market liberalism… many since long before I took my first breath. Yet for all the effort, the arguments have met with phenomenal resistance – often ferocious and virulent. Politicians and academics have been blaming markets for our collective problems for ages, and yet I fail to see their reasoning.

Wall Street, for instance, is the favorite whipping boy for the housing crisis that descended upon us like a poisonous fog. And yet it was created not by banks, but by government programs that all but demanded these banks loan money to anyone with a pulse. In this process, banks acted merely as facilitators to the transactions.

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