Crash and burn!

fed_reserve_rate_hike_ben_garrison

Ha. Ha. Ha. Yet another imbecilic and infantile “plan” devised by our holy central planners tears itself a new one; yet another failed synthetic product of a bygone era; an era that never needed said garbage in the first place. Price controls always fail. I speak of our present and absurd monetary central planning: the only driver of growth, other than technological advances and meager sustainable capital construction, since the last collapse. Read some of my other articles. I am here to tell you that we are not only engulfed in the most overbuilt economy ever known, but also the most indebted and the most malinvested. Said structure will bite shit, because both sanity and practical mathematics dictate as such.

The yield curve is merely a supply/demand curve; it just so happens that an oversupply in money*time hides its own disastrous effects better to the untrained eye. A shortage of credit inevitably occurs because bubbles always pop; be they by Fed “policy error” or random other events (such as collapsing oil prices in a heavily overinvested sector). Combine this with the fact that the government cannot mathematically handle more than a percentage point or two more of interest on the FFR; else they face inability to pay their debt. So what happens? Some (non-Austrian amateurs in free market economics) might argue that the “Wicksellian” rate has been pushed lower by the Fed and its policies. How so? How could a market oversaturated with high prices, overconsumption and overinvestment possibly be naturally at rock-bottom interest rates? LOOK: the reason the Fed can’t raise rates much at all is that they face a systemic collapse, for two reasons. One lies in the private sector, which is chock-full of malinvestment from nearly 8 years of ZIRP, and has a bloated financial sector that is now plainly begging for NIRP; else, the debt-enslaved sector collapses. The other issue is this state itself’s debt, which cannot be serviced with interest rates much higher than a single percent. What is 1% of 20 trillion? 200 billion a year to pay interest on paper bullshit. Have fun, statists. People that think the Wicksellian rate is near zero are kidding themselves; the only reason these rates are so low is because the Fed has introduced the artificial credit to sustain such rates. No shit, folks. I need not continue further on this point. I only meant to vent, so have a good weekend.

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