So, what is to be done? Rather than focusing on lowering already epically low rates, governments that enjoy such low borrowing costs can improve their creditworthiness by borrowing more not less.And then when Doug Kass @RM.com piled onto the same Summers article, my 'Full Retard' alarm went into red alert. Any time you have Dumb and Dumber clamoring for the same horrifyingly moronic policy then you know it's just a matter of time before it gets implemented.
Monday, June 4, 2012
When ZeroHedge first brought up this recent Larry Summers article in the Financial Times, I was flabbergasted but I certainly can't say surprised. After all, no sooner had I written my recent diatribe about Harvard, than the dean himself comes out and says literally the dumbest thing I have ever heard anyone say, who was supposedly deemed mentally competent:
So, to paraphrase the article, the way out of a debt crisis is to borrow MORE not LESS. You see, we have been doing it all wrong up to now - we've been borrowing too little. What we need are more bridges to nowhere, more military equipment piled up or better yet blown up - and other trinkets that add no value to the economy. In other words, we are just not good borrowers and dammit we need to improve !
Then he adds in some economic babble about 'carry forward' of leases and he quotes another Harvard stooge just for good measure. But, he makes sure never to question the value of these various acquisitions in the first place. After all, it's a foregone conclusion that everything the government buys is a good use of money, will provide a positive future rate of return and won't burden our children and grandchildren...Except of course it's all academic nonsense. Instead of comparing the ACTUAL expected rate of return from these pointless expenditures, his basic point is that given that we are going to pay for all of this junk anyway, we may as well finance at it at low interest rates. AND, most importantly, by doing so we can take advantage of cheap financing to borrow EVEN MORE money to buy even more pointless government crap - 'Act now and you will get 6 Ginsu Knives, absolutely Free'. He does make mention near the end about an expected ROI from these 'investments that would offset the expenditure (aka. the Keynesian delusion); but of course he conveniently ignores the fact that there has been negative ROI on the past 229 years of government borrowing, as evidenced by the massive accumulation of debt. But, that's obviously because we were not borrowing enough. In order to pay off your debts via borrowing, Harvard Economic theory postulates that you need to borrow the MAXIMUM amount possible. And of course, he never questions the fact that these 'low interest' rates are provided by the Federal Reserve monetizing government debt by printing new money which is an invisible tax on all of us. The next time we go to the grocery store or gas station we get to pay that tax in the form of higher prices.
Wow! Even I am speechless for once, and my end-of-world paranoia is at full tilt when I realize these are the types of people 'leading' us at this juncture. No doubt Pres. Obama has already assimilated the piece and is nodding his head approvingly:
And of course the real issue isn't Larry Summers and a few stooges who subscribe to his point of view - after all, every Village has its Idiot. The real issue, as I wrote in my Harvard piece, is the amount of ongoing 'mind share' these thought dealers are accorded by the Lamestream Media.
What the hell are our Children and Grandchildren going to think about us?