Tuesday, February 18, 2014

Collapse-O-Nomics: Commonsense is Extinct

No Reasonable Idea Will Go unClusterfucked by the Idiocracy
The Lost Boys continue to decry today's "Keynesian" policy failures - this obviously ludicrous idea of borrowing the economy out of debt. However, when I took (Macro) Econ 101 way back in 1987, the Professor at the time - an ardent Keynesian - taught us that correct application of fiscal stimulus is to run deficits during recessions and surpluses during expansion. Therefore, in the context of a typical five year business cycle, that would lead to one year of deficit followed by four years of surplus and hence a balanced budget (if not net surplus). However, today's Keynesian bashers don't know any of that, because they never took Econ 101 nor even Commonsense 101. These Keynesian bashers are as deluded as the Krugmanites who think they too know anything about appropriate use of fiscal policy. No sane doctor would prescribe using antibiotics for 30 years straight and then declare like a dumbfuck at the end of it all that antibiotics don't work. This is all just a game by and for morons of which there is no shortage on all sides of this equation.

Keynes Didn't Envision Reagan, Bush or Faux News
Unfortunately, Keynes never envisioned the Idiocracy, nor how bastardized his policies would become over the course of time, when placed in the hands of hill billies and B Actors looking for a retirement gig. Fiscal policy was never intended to sponsor tax cuts for the ultra-wealthy, military blunders, nor military build-ups. Nor did he envision this concept endorsed by Krugmanites of bailing out a 30 year leveraged consumption binge and multi-year housing boom via the application of totally unlimited government borrowing. And needless to say, he never envisioned monetization of debt solely to prop up the stock market while the real economy was outsourced in the background. All of this chicanery is the result of what happens when Frat Boys go to college to socialize rather than to get a real education. They become very good at pretending to know things, while having absolutely zero judgement as to how these policies need to be applied in order to be effective. In other words, a little bit of knowledge is an extremely dangerous thing. 

Extreme Deflation Doesn't Mean Cheaper Computers at Best Buy
Keynes himself was an extremely intelligent man - whose ideas were far beyond the grasp of today's policy-making game show hosts. Anyone who has ever read "The General Theory of Employment, Interest and Money" is standing on the shoulders of an intellectual giant, if they understand what he is saying, at all. Moreover, the problem he was trying to solve was how to mitigate the devastating human impacts resulting from The Great Depression. He was addressing a real depression, not a three month hiatus from shopping binges and expensive dinners, which is what the Idiocracy deems to be this recent "great recession".  

Worse yet, the Lost Boys seem to believe that deflation means lower prices at Best Buy. Unfortunately in a real depression, deflation means a total collapse in demand leading to a collapse in prices. In a fixed cost-based world wherein all corporate entities have taken full advantage of 0% interest rates to maximize financial leverage - then deflation means bankruptcy. In other words, every possible mistake that could be made leading up to this lethal juncture, has been made, specifically around subsidizing cheap debt. In a fixed cost world, deflation means mass unemployment and accompanying turmoil. Which gets us to the next point.

The Polling Booth (and/or Molotov Cocktail) is the Final Arbiter of all Economic Theories
The rule of one vote per woman or man can work eventually. In the interim, however, it may not work well, if at all. The subversion of democracy via mass brainwashing aka. Faux News in addition to the dumbing down of a population via junk food and junk culture, is a lethal combination. In the interim, democracy can lead to any ludicrous outcome including the mass accumulation of wealth in the hands of an ever-dwindling minority.

Ultimately, however, there is only so much pain the masses can take and then they revolt. At that point, political democracy becomes economic democracy. No one can predict what new bastardized economic model will result from this ensuing pandemonium, however, rest assured it will look nothing like the current one. 

In other words, in the fullness of time, economics and politics are one and the same. No economic model regardless of how textbook "efficient" it is deemed to be, can indefinitely withstand the polling booth. That's just one more lesson that today's frat boys and billionaires are going to find out the hard way. The future will not be about what a handful of entitled people want for themselves, with zero concern for their fellow man. That childish fantasy will be flushed down the toilet of history, where it belongs.

The Pendulum Swings
At this late juncture, the political pendulum is still hard to the right on economic policy, not withstanding the feel good election of Obama to Bush's third and fourth terms. The political economy is the furthest to the right it has been since the early 1900s just prior to the Great Depression, during the heyday of the "robber barons". Today's power elite have pushed their luck to the absolute limit and then a lot further. What they don't realize is that momentum has halted and the pendulum is getting set to swing back in the other direction. The Idiocracy has been conned into voting against their own economic interest for thirty fucking years straight. It's an unprecedented run in modern history. When the political pendulum begins to swing the other way, the status quo political ideologies will be obliterated in lockstep with the status quo pseudo-economy. The recalibration will be instantaneous and the elite's grasp on power will be challenged, violently.

Commonsense Doesn't Sell Text Books
Lastly, this omnipresent buffoonish devotion to economic ideology - Keynesianism, Monetarism, Austrianism, Communism, Socialism, Capitalism etc. has meant that commonsense has been thrown out the window. Commonsense of course being the only moderating control rod in all of these economic "systems". However, to be a commonsense-based centrist is to be seen as being weak and lacking confidence. Clearly, the "best ideas" deserve slavish unquestioning devotion. Unfortunately, in the real world, all of these theories - which is what they are - have massive flaws so wide you can drive a truck through them, therefore it's only a matter of time before their brainwashed proponents take the application of theory to the ludicrous extreme, at which point these "systems" all collapse in their own uniquely spectacular fashion.

Voila.