Early last November, Financial Times published an article entitled “The Bank of Japan Considers More Easing”. That “Easing” was more Quantitative Easing (QE)—the printing and then injection of more, unearned fiat yen into the Japanese economy.
The object of QE is to create sufficient inflation to “stimulate” a slow, stagnant, recessed, or depressed economy back to economic vigor, productivity and prosperity.
According to that article,
“Last Friday the Bank of Japan [BoJ] decided to leave monetary policy unchanged. But it also revised down its inflation and growth forecasts, and pushed back its expectation of hitting the 2 per cent inflation target to the end of next year. . . . Disappointing outcomes do not mean that the BoJ’s combination of an inflation target and using QE has failed, but that it needs to be more enthusiastically pursued.
“The BoJ can and should contemplate going further.”
In other worlds, even though a Japanese version of QE (Quantitative Easing) has failed to stimulate the Japanese economy for most of 20 years . . . even though QE has failed to stimulate the US economy for the past seven years and, currently, seems to be failing to stimulate the EU and Chinese economies . . . Japan has nevertheless concluded that there’s no reason to think that QE just doesn’t work.
After all, it’s conventional wisdom that “If at first you don’t succeed, try, try again.”
It’s also conventional wisdom to say, “Doing the same thing over and over and hoping to get a different result is the definition of insanity.”
So, dear reader, which of these “conventional wisdoms” is most applicable to Japan’s current situation: “try, try again”—or the “definition of insanity”?
Is Japan admirably persistent or inexplicably insane?
“For one, the practice of extending target dates for hitting the goal of 2 per cent inflation does not reassure investors, households and companies that the bank is doing whatever it takes.”
Repeatedly “extending target dates” doesn’t merely diminish public confidence in believing that the bank is “doing whatever it takes”.
Instead, by repeatedly extending its target dates further into the future, Japan has not only diminished confidence that QE even works, but has also diminished confidence that the Bank of Japan has any tools that even could work to repair the economy. Repeatedly “extending target dates” (much like the Federal Reserve repeatedly extended the target date for raising interest rates by 0.25% for nearly seven years) isn’t simply an admission that the central bank hasn’t done enough—it’s an admission that the central bank is helpless to do more to solve the problem and is therefore not in control of the economy. The overt inability to control diminishes the public confidence on which this system is based.
• In the end, most people don’t understand economics but they do understand—and have confidence in—power. People don’t mind that they’re personally ignorant about economics (or anything else) so long as they can see that some politician (who presumably does understand) in a position of power who is able to control or fix things.
From the voters’ perspective, all they want to see in public office is a man who can “get ‘er done!”. They don’t care if their leader is the Messiah, the Mahdi, some mulatto from Kenya, Al Capone or Larry the Cable Guy. All they care about is whether their leader can at least appear to “get ‘er done” and, by that appearance, inspire public confidence that somebody’s in control who’s looking out for the voters.
We haven’t had one President since Nixon took us off the gold standard who could truly “get ‘er done”. As evidence look at how the national debt (which will eventually collapse or even destroy this nation) has persistently grown over the past 44 years.
• We have had presidents who at least appeared to “get ‘er done”. That appearance, however false and fraudulent, was good enough to inspire the American voters’ confidence in their leaders and their currency.
But today, after 44 years of appearing to “get ‘er done” (but actually failing to do so) the national debt has increased to the point where it’s no longer possible for anyone to even appear to “get ‘er done”. The debt problem is too big. The voters are starting to understand that nobody can “get ‘er done” and, in that knowledge, they’re losing confidence in the system/racket/con-game that we call “government,” “banking” and “dollars”.
How do the voters know “it can’t be done”?
They know because they’ve watched Zero Interest Rate Policy (ZIRP) persist for seven years. They may not understand ZIRP; they may not even understand what “ZIRP” means. But they dimly know “ZIRP” hasn’t caused a significant improvement in the economy in past seven years and is unlikely to do so in the next seven.
Likewise, voters have watched Quantitative Easing (QE), “too big to fail” banks, too big to jail corporate executives and politicians who will look you in the eye and lie, lie, lie. Most voters don’t object to any of that idiocy, immorality or criminality so long as our leaders can appear to “get ‘er done”. But they can see from the persistent, repeated and long-term failures of QE, ZIRP, Wall Street and Washington DC, that their leaders have not only failed to “get ‘er done,” but are probably now incapable of ever “getting ‘er done”.
Insofar as the gov-co can’t ever “get ‘er done,” we don’t talk about it much, but we all sense that that must mean the “end” is approaching and may even be near.
The system, the nation, runs on and stays cohesive based on public confidence. But, insofar as the people sense that nobody can “get ‘er done” and the “end” is therefore “near,” the people are losing confidence in their leaders and institutions.
• Declining confidence is true in the US and also true in Japan:
“Setting a target date [in Japan] and missing it is bad for credibility [confidence], but so is endlessly deferring the goal into the future.
“Haruhiko Kuroda, the BoJ’s governor, observes that inflation rates have been pushed down by lower oil prices. But the weakness of real consumption, which fell 0.4 per cent in September on a year earlier, suggests there remain serious problems [in] generating domestically-driven demand and inflation.
By “serious problems [in] generating domestically-driven demand and inflation,” they mean the Japanese people aren’t borrowing enough currency to purchase more products, increase demand, cause inflation and thereby stimulate their economy. The people aren’t borrowing enough to achieve that objective.
In a debt-based economy, that’s a “serious problem,” alright.
Something has happened.
The Japanese people aren’t responding to economic stimulus as expected. Neither are the American people.
The people’s conditioning has failed (they won’t borrow even when currency is plentiful and interest rates are near zero) and/or their confidence in their leaders has been lost.
“By continuing its QE programme, the BoJ has done a fair amount of what it can. It should continue to explore the possibilities for doing more. But it cannot just be up to Mr Kuroda [Governor of the BoJ] and his colleagues to get Japan’s sputtering economy up to cruising speed.”
Insofar as the BoJ has done “what it can” without getting the Japanese economy “up to speed,” that’s evidence that there’s not much more that Japan’s central bank can do. They’re out of arrows, out of spears, out of corncobs and out of bullets. These outages do not inspire public confidence.
The Financial Times article has implicitly admitted the obvious: the central bank of Japan and its QE programs have been proven to be incapable or reviving Japan’s stagnant economy.
If QE won’t work . . . if QE can’t work . . . what will?
• Both Japan and the US are facing possible economic depressions. The world is facing a global economic depression. Virtually everyone is concerned by those possibilities.
But, must economic depressions be viewed as something intrinsically terrible—like cancer? Or should depressions be viewed as something painful but necessary and even beneficial much like a hangover that removes toxins from our systems and perhaps even teaches us a valuable lesson about avoiding alcohol?
Getting drunk feels good. Having a hangover feels bad. But, what’s the terrible thing? Having a hangover? Or, getting drunk in the first place? Is the hangover simply the result of the terrible thing (getting drunk)? Could it be that the hangover is part of the cleansing, remedy and cure for the terrible thing (getting drunk)?
Similarly, should an economic depression be viewed as the “terrible,” stand-alone event that “just happens” without cause?
Or could the depression be viewed as not only as a painful consequence caused by economic imbalances, but even as a beneficial remedy for the “terrible” thing (economic imbalances)?
If so, what are “economic imbalances” and why might they be viewed as “terrible”? Are these “imbalances” terrible in the sense that mathematical errors are simply unintended mistakes? Or could it be that persistent economic “imbalances” are “terrible” in the moral sense of being evidence of persistent governmental policy and intentional injustice?
• What “injustice” might be found in economic “imbalances”?
Bernie Sanders claims the richest 0.1% of Americans own as much wealth as the bottom 90%. That income inequality is not the simple result of hard work. To significant degree, it’s the result of the super-rich bribing politicians and officials to violate their oaths of office to serve the general welfare of all the people and instead serve the special interests of the super-rich. That injustice is achieved in part by means of institutionalized economic imbalances.
Gerald Celente has claimed that 85 of the richest people in this world have more wealth than the bottom 3.5 billion. Those 85 super-rich aren’t only Americans. They can be found in a host of nations. But their multi-national distribution is evidence that official policies of institutionalized economic imbalances favoring the rich exist on a global basis. Those imbalances are largely unjust.
Not all economic imbalances are evidence of injustice. Some imbalances are anomalies that happen without intent, last briefly and are soon corrected. A fundamental idea behind a free (unmanipulated) market is that, given the opportunity, people will sense and correct the economic imbalances of prices that are too high or too low.
However, a persistent “economic imbalance” isn’t evidence of a mathematical anomaly. It’s evidence of an established policy implemented for the unwarranted benefit of whoever prospers from that imbalance. A persistent economic imbalance is evidence of significant social injustice.
• Could it be that one reason the Japanese people won’t respond as expected to the BoJ’s stimulus is that, unlike their leaders, the Japanese people want to be moral? Are they sick of economic injustice? Could it be that a majority of Japanese sense that QE (printing fictional currency and then giving it to people who didn’t earn it) is inherently unjust? We all want more currency, but how many of us really want currency that’s been stolen?
Could it be that most Japanese understand that Zero Interest Rate Policy robs creditors by paying them only a fraction of a percent interest on the wealth they’ve diligently earned and saved for lending? Are the Japanese refusing to respond to ZIRP because they’ve hit a gag reflex and no longer wish to be accomplices to the theft that’s inherent in ZIRP?
Does the central bank’s economic “stimulus” programs only work on immoral people? After all, the fundamental idea behind all economic “stimulus” is giving currency to people who haven’t earned it in order to seduce them into spending that currency and thereby stimulating the economy. Economic control is finally the science of the “free lunch”. The Federal Reserve and/or government will give you something for nothing if you will obediently respond to their desires.
• It is implicitly argued that giving currency to people who haven’t earned it (be they welfare recipients or Wall Street bankers) is OK because the “end” (economic stimulus) justifies the means (the immoral giving of currency to special interest that haven’t earned that currency).
But can the “end” really “justify the means”?
Ohh, it might work for a while and in rare instances.
However, can a seemingly desirable “end” (economic prosperity) really provide long-term justification for an immoral means such as spinning currency out of nothing; taking currency from those who’ve earned and saved it and giving that currency to people who haven’t earned it?
After all, if the end justifies the means (giving unearned billions to institutions that are “too big to fail”), then isn’t bank robbery also justified? If I’m arrested for bank robbery, will the judge declare me Not Guilty if I claim I stole currency from the bank to feed my family? If I shoot some guy so I can steal his credit cards, can that means be justified by my need to get some drugs or feed the kids?
Of course not.
Then how can some semblance of increased economic activity be deemed to justify leaving an unpayable debt to our children and grandchildren?
In the end, the whole idea of economic control is immoral because it almost always requires that wealth be taken from those who’ve earned it and given to special interests who have not. Economic control is the science of massive, institutionalized, organized “income redistribution” (a/k/a “theft”).
But, do you really want to live as a thief? Yes, this organized theft may get you a bigger house and a newer car and you may appear to be prosperous. But in your heart, you’ll know you’re only a thief and a crook and your apparent prosperity and character are lies since you didn’t really earn the house or car.
I know that some people don’t care how they got the big house or the fast car so long as they’ve got it. I also know that some people, and more than a tiny minority, actually want to earn their house and car—not just steal them. Some of us are moral people who would rather earn than simply have. I strongly suspect that those moral people are revolted by the prospect of participating in the organized theft we call economic control.
Even Mafia thugs who’ve made it big want to give up organized crime and become “legitimate businessmen”.
There is something in most of us that wants and even needs the dignity and self-esteem of earning our own way. That dignity and self-esteem are destroyed by government handouts, subsidies and even high, unjust taxes. It’s hard to take pride in being an accomplice to theft.
• I can’t argue that morality is rising in this world. But, could it be that, in the sense we once had the “silent majority,” some of the world’s people are becoming “silently moral”? They’re not openly complaining, but they don’t want to participate in a rigged economy and so they’re opting out and intentionally resisting the bait of ZIRP, QE and the “free lunch”?
What about the American people? Is their failure to adequately respond to the economic stimulus of ZIRP and QE the result of some mathematical error in an economics formula or a sudden, inexplicable disinterest in the promise of more free lunches?
Or, could it be that some Americans have also hit a gag limit to the immorality of rigged markets, paying creditors near-zero interest rates and awarding trillions of QE dollars to bankers who didn’t earn those dollars and are little more than gangsters? Have some of us grown so disgusted with the corrupt enterprises that we call government, Federal Reserve, economic control and manipulated markets, that we’re simply refusing to participate in those enterprises—even when we could achieve a personal benefit by doing so?
It might not be a majority of Americans who’ve hit the moral gag reflex. It might not even be a large number. But how many moral people does it take to provide enough “sand in the gears” to slow or stop an economic machine that’s fundamentally immoral and unjust?
• If the previous conjecture is roughly correct, should an economic depression be viewed as a terrible catastrophe or as a beneficial cure for economic imbalances (injustice)?
Is an economic depression a “time out” during which a nation (or a world) slowly regains some sense of morality, dignity and self-esteem?
Could it be that an economic depression is the only viable cure for the economic imbalances (social and economic injustice) created by our government, the monetary system and the oligarchy?
Will our national and global economies continue to stagnate or even decline until we “take our medicine”?
Can we escape the current economic malaise without first going through an economic depression?
I don’t think so.