Overstimulated And Undernourished

What do you get if you take a normal, healthy adult, deprive him of nourishment and try to make up for it by loading him up with stimulants?  Picture this.  No vegetables, no quality protein.  No sleep.  No exercise.  Nothing but a little junk food and repeated, escalating doses of methamphetamine.  

You get the 2020 US economy.  Our central planners in Congress and at the Fed have been trying the same thing for years with diminishing returns.  No surprise there.  Here in the Land of the Free, we’ve let nourishment slide and tried to make up for it with ever increasing doses of drugs.  Amid ever louder cries for “more stimulus”, no one in power seems to ever stop to think about why that should actually be helpful or why the average American is struggling to maintain even a stagnant standard of living after years and years of ever “more stimulus”.  The Fed has cut interest rates to the bone and conjured trillions of dollars from thin air in an attempt to stimulate, but the result has only been a zombie economy; staggering, glassy eyed, somnambulant; keeping up appearances of activity, but not seeming to get much of anything productive done.  Few are doing really, really, well, but most are working hard just to tread water.  

It’s because those really-well-doers just aren’t taxed enough, some say.  But if even if you confiscated half of everything the ultra-wealthy have, they’d still be far more wealthy than their counterparts of a generation or two ago.  And if you distributed this bounty among the rest they’d scarcely notice the difference.  Something much bigger than our tax system is at work.  

The main culprit is a wolf in sheep’s clothing.  A snake oil remedy marketed as something good for our economy, but which is really only good for the economy of the political and financial elite.  Central planner imposed, artificially low interest rates.  They inflate asset prices.  This transfers wealth to those who own the assets from those who do not.  It’s no accident that over forty years of falling interest rates, the wealth gap has exploded.  So we see that “stimulus” is really a sort of code word for stimulating the wealth of the already wealthy.  

But today, calls for ever “more stimulus” seem even more bizarre than usual.  All around America, government is slamming the brakes on economic activity.  With the other foot on the gas pedal.  This is just wasting a lot of gas and burning up the brakes.  There’s no coherent message in this, the net result being that people are being encouraged to consume more but produce less.  Never mind how the stuff that is to be consumed is going to be produced … not the sort of questions with which to bother our over-educated, under-commonsensed, economic elite.

Nutrition, exercise and proper rest are to a person’s health what sound money, the rule of law, and economic freedom are to an economy.  Trying to substitute them with ever increasing doses of stimulus is just as bad for an economy as it sounds like it is for a person.

3 thoughts on “Overstimulated And Undernourished

  1. Llanlad says:

    Finster, where do you stand on whether China has real or “fake” wealth at present and that the US has the cleanest shirt is a world of dirty laundry?
    My own opinion is that despite their government and economic system they are in the driving seat as they are actually manufacturing stuff more efficiently than most other places. If they weren’t then why would the public be buying it? Some commentators say they are over producing and don’t have a market for their goods which is deflationary.
    I just can’t see this argument- they are growing their own market enormously and there appears no end to potentially millions more consumers globally. Surely if you take primary products and create goods and then swap those goods for more primary products whilst making a surplus then you as a country are surely getting wealthier. What am I missing when some people claim China’s wealth is an illusion? If China suffered some crazy bust and was taken out of the equation wouldn’t inflation go off the scale the world over? Isn’t the inflation we’ve seen following the Coronavirus testimony to that?

  2. Bill Terrell says:

    Thanks for the question, Llanlad. I have to start by disclaiming any depth of expertise on China; I read a lot about it but haven’t yet really formed a clear picture. That said, it’s safe to say China is a complex economy; like most it has faults and merits. China is basically a central planned economy, yet has selectively embraced a free market model in some areas.

    Its wealth is not fake. As you correctly point out, it produces. This while the US and other western economies have not only been growing increasingly centrally planned, but with an emphasis on debt and consumption. So the trend has been that China has been ascendant while the US has not. I know of no mechanism by which an economy can borrow and consume its way to prosperity nor of any historical examples.

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