I just love it when Capitalists and their acolytes talk dirty. I respect them when they cut out all the bull about ” fairness ” and ” social justice ” and giving people a break or empowering some group or other ,or extending some kind of nebulous property owning democracy ,or helping start-up businesses, and giving a ” hand-up not a hand-out “…blaherty,blaherty,blah . For the Supreme Global Usurer-Capitalist Ruling Elites anything and everything that isn’t exclusively about MORE PROFITS for themselves alone and concomitantly MORE MISERY,SUBJUGATION and a lifetime of abject penury for the 99%,simply isn’t worth mentioning let alone thinking about.As far they and their system are concerned we can all go rot in hell and in fact they’ve prepared a hell for us in which can go and rot in at our earliest convenience. Ambrose Evans-Pritchard is a financial commentator non-pareil and his columns in the Daily we-do really hate poor people and their very existence Telegraph are a delight to read. His most recent missive speaks of ” Temples ” and “Secular ” and orthodoxy. The very essence at the heart of the Worship and Adoration of Mammon and all its Works.
The world’s monetary watchdog has thrown down the gauntlet. It has challenged the twin assumptions of secular stagnation and the global savings glut that have possessed – some would say corrupted – the Western economic elites.
It has implicity indicted the US Federal Reserve and fellow central banks for perverting the machinery of interest policy to conjure demand that may not, in fact, be needed, and ensnaring us in a self-perpetuating “debt-trap” with a diet of ever looser money.
The Bank for International Settlements (BIS) – the temple of monetary orthodoxy in Switzerland – has been waiting for this moment, combing through the archives of economic history to mount an unanswerable assault.
The BIS believes it has found the “smoking gun” in a study of recessions in 22 rich countries dating back to the late 1960s. The evidence suggests that the long malaise of the post-Lehman era – and the strange episode that preceded it – can be explained almost entirely by the destructive effects of boom and bust on productivity growth.
Credit bubbles are corrosive. They gobble up resources on the upswing, diverting workers into low-productivity sectors and building booms. In Spain the construction share of GDP reached 16pc at the height of the “burbuja” in 2007, when teenagers abandoned school en masse to earn instant money erecting ghost towns.
Parasitical wastage creeps in. “Financial institutions’ high demand for skilled labour may crowd out more productive sectors,” said the paper, acidly.
The bubbles leave a long toxic legacy after the bust hits. This takes eight years or so to clear. “The occurrence of a crisis greatly amplifies the impact of previous misallocations,” said the paper, racily titled “Labour reallocation and productivity dynamics: financial causes, real consequences”.
Crippled economies have to make the switch back to healthier sectors against the headwinds of a credit crunch and a broken financial system, and typically amid austerity cuts in public investment.
The BIS has long argued that a key reason why the US recovered more quickly than others is because it tackled the bad debts of the banking system early, forcing lenders to raise capital. This averted a long credit squeeze. It cleared the way for Schumpeterian creative destruction.
The Europeans dallied, prisoners of their bank lobbies. They let lenders meet tougher rules by slashing credit rather than raising capital. Europe’s unemployed have paid a high price for this policy failure.
Claudio Borio, the paper’s lead author and the BIS’s chief economist, said the “hysteresis” effect of lost productivity is 0.7pc of GDP each year. The cumulative damage from the boom-bust saga over the past decade is 6pc.
This more or less accounts for the phenomenon of “secular stagnation”, the term invented by Alvin Hansen in 1938 and revived by former US Treasury Secretary Larry Summers. Loosely, it describes an inter-war Keynesian world of deficient investment and demand.
The theory of the global savings glut propagated by former Fed chief Ben Bernanke falls away, and so does the Fed’s central alibi. It can longer be cited as the canonical justification for negative real rates. The alleged surfeit of capital in the world proves a mirage. So does the output gap.
If the BIS hypothesis is correct, there is no lack of global demand. The world faces a supply-side problem, impervious to monetary stimulus. The entire strategy of global central banks is based on a false premise.
and that is how come the capitalist economic system and its Ruling Elites,adherents,activists,supporters,acolytes and servile intelligentsia and all their infrastructure must be eviscerated,without compunction nor any show of individual mercy,from the face of our World. It’s us,the 99% of human society or them,the 1%. We get to choose.