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Tag Archives: Economics

Six Years On

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“The ideas of economists, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”
– John Maynard Keynes

Six years ago on Wednesday this humble blog was started.  It’s been here MWF ever since, without a single break.  Typically, the anniversary post is a chance to talk about where Barataria has been over the past so many years and brag up the stats a bit.  But that’s not all that important.  What is important is that this blog has covered a momentous time in the economy and life and general with a singular perspective – there are some really wild things going on that I don’t understand, but we can talk about them and maybe work out something together.  It turns out that this perspective is far closer to what the “experts” have experienced than we thought.  And it’s been one Hell of a ride to hang onto.

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The Managed Depression – Update

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I recently wrote this piece for submission to a mainstream media outlet, but it was rejected.  I’d like to present it here.

Economic health, like personal health, starts with honesty.  When something is wrong a good diagnosis is the first step towards the proper cure and a strong recovery.  Our economy is been deep in what is commonly called a “Great Recession”. That strange term is a substitute for the dreaded word that most of us know is the true condition – a depression.

That “D-word” may be feared, but it should not be.  It simply points to different and more unusual treatment than we are used to.  History will eventually come to know our present economy as what I call a “Managed Depression” – unusual among similar stages in the business cycle in that this one has been carefully managed.

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Jubilee – Cancel Debt!

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There has been a lot of good economic news lately, at least compared to the very bad news of a few years ago.  But that doesn’t mean that there aren’t bad things worth keeping a close eye on – especially those that predict future action by the Federal Reserve.

The velocity of the US Dollar – the number of times per year that money turns over through the economy – continues to drop without an end in sight.  This is a worrying sign because it suggests that most of the economic growth we are seeing comes from money that is being more or less printed by the Fed.  It also suggests that there will be another round of quantitative easing, or even more money printed.  There has to be a better way – and this wouldn’t be Barataria if we didn’t take a stab at how.

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Low Growth, the New Normal

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What does a future of low economic growth look like?  The Congressional Budget Office (CBO) economic forecast estimates a real growth (adjusted for inflation) of less than 2% for the foreseeable future.  We have discussed before how this pattern is likely to hold through the next generation and around the world as population growth slows and new opportunities will come only through technology improvements.

The implications are vast, if for no other reason than investing and saving for retirement are going to be very different concepts than we have come to expect.  Everything changes – and a few things may even change for the better.  It’s worth thinking through, and carefully.

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Money is a Tool

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What is money?  Your answer may depend a lot on how much of it you have.  Ultimately, the main purpose of money is convenience.  A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs.  But if you can also exchange those eggs for money you can save it up to buy something different or bigger.

As we’ve concluded before, Adam Smith was right – money is a matter of belief.  Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth.  Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.

But money is more than convenience and faith – it’s what it takes to make things happen.  And that’s worth thinking about some more.

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