Your K Is Little More Than The Identifying Details Of This 2nd L

The OECD’s Chief Economist wasn’t writing about specifically this ADP data, but he might as well have been (see below).

But what actually produces these “L’s?” That’s the fifty trillion-dollar question. As Henry George finally pieced together in 1879, depressions like this are provoked by an “impediment in the machinery of exchange.” A recession, on the other hand, practically any old shock can do that.

What could be so destructive that it could actually alter and detour the longer run economic course and do so across the entire face of Planet Earth; so thoroughly and repeatedly thwart what even the most astute of Economists (there are some, a few) had come to believe was a new paradigm of only ever mild business cycling?

Economists, obviously, this time are already blaming COVID as that impediment, but it’s no different than saying subprime mortgages were the inhibition responsible for the last one. To the point: it’s becoming indisputable that there have been two.

In both cases, as in all those prior depressions, the answer is in one sense much easier (because it’s always the same thing, as John Maynard Keynes observed) to identify. Wrecking the labor market, the Pièce De Résistance of any “L”, is the specialty impediment of the monetary system.

This explains both Jay Powell’s flood myth as well as why it was a myth and the consequences from it being no more relatable than a boring, badly-spun fairy tale. Not COVID, the slowdown, as we’re still documenting here, it hit over the summer.

We’re again violating the “prohibition” on unit roots, introducing serious and long-running impediments in the machinery of exchange, and have therefore been set once again on a course way, way short of recovery. Call it a “K” if you must, just don’t you dare call it hope (yes, that OECD cover above really made me mad; as it should make you furious, too).

Real hope, not the bland sloganeering we’ve been normalized to, the same which has rewritten the word recovery into something it so is not, true hope lies in recognizing these things all for what they are, the only thing they could ever be or have been. Some real science and evidence, for once, would be a great place to start.

A permanent shock really narrows the suspects down. A second permanent shock would, in an honest world, leave no doubt. Especially when just this thing was predicted years ago. We don’t live in an honest world; we’re told we live in an Economist’s world when in truth we inhabit the eurodollar’s increasingly restricted space.

But inflation…

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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