Boiling the Economy

As sluggish as the economy has been, it’s tempting as Jellen suggest to “overheat” the economy before cooling it. Such a tactic risks killing the patient to get rid of a cold.

Who would benefit and who would be hurt? For sure Wall Street will benefit. For reasons I can’t fathom, this administration has bent over backward to feed the bankers and speculators. Even more amazing, no one has called them on it.

What happens on Main Street? America hasn’t experienced really high inflation since the late 70s. When prices grow more the ten percent a year, investments grow but savings are wiped out. Some values jump; others stagnate.

We’re not half as smart as we think we are. We’re trying to fine tune something akin to a force of nature. As we can, fertilize, dam, seed, and what not. But a lot of what makes an economy work is the perceptions of people. Lots of people. And we really don’t understand what motivates and dissuades people individually or collectively. The more we think we do, the greater we’re tempted to do something really stupid.

In the late 40s and again in the late 70s money, and everything valued in fixed dollars, lost half its value in a few years. The thirty years has been a good run.

Why do we contemplate playing Russian roulette with the nation’s economy?

Advertisements