Ever since Richard Nixon officially severed the strings between currency and the relatively scarce mineral, gold, there has been an effort to achieve scarcity by an alternate route. Why? Because, if it ain’t scarce, nobody’s going to borrow and lend it.
Obviously, if something can be “created” by sending out electronic bits, as the U.S. Treasury recently did when it distributed three trillion certified IOUs to banks, businesses, and individual households, it ain’t rare.
So, this Bloomberg article is just giving context to the obvious.
A rare regime-change in economic policy is under way that’s edging central bankers out of the pivotal role they have played for decades.
Fiscal policy, which fell out of fashion as an engine of economic growth during the inflationary 1970s, has been front-and-center in the fight against Covid-19. Governments have subsidized wages, mailed checks to households and guaranteed loans for business. They’ve run up record budget deficits on the way — an approach that economists have gradually come to support, ever since the last big crash in 2008 ushered in a decade of tepid growth.
And the public spending that put a floor under the pandemic slump is increasingly seen as vital for a sustained recovery too. When it looks like drying up, as it did in the U.S. last week, investors start to worry.
The only thing I would quibble with is the false attribution of agency, a common journalistic flaw, which assigns action to inanimate objects. Fiscal concerns about who’s got enough money and who’s got none did not “fall” out of favor. They were shoved off stage by the money changers.
After Richard Nixon severed the ties to gold, he did suggest each household should have a guaranteed annual income (as each Social Security recipient household does now). Wall Street disagreed. So, he tried price controls and then he resigned and the deprivation of ordinary Americans continued apace. Now everybody’s poorer than they were in 1960, except for the 1% drowning in the millions of IOUs and swimming pools.
Why are people putting chlorinated pools next to the ocean? ‘Cause the ocean’s too dirty to swim in.
We might ask how come Michael Bloomberg isn’t pouring all his billions into buying Florida? The answer most likely is that it takes TIME to spend money and every man’s time is a quantity that is definitely fixed.
Accumulation is easy; sometimes automatic. Spending wisely is hard.
A fool and his money are soon parted.
“They’ve run up record budget deficits on the way — an approach that economists have gradually come to support, ever since the last big crash in 2008 ushered in a decade of tepid growth.”
And who’s responsible for that “tepid growth”?
Mitch McConnell and his Republican cohorts who put the screws to the economy so Barack Obama would lose. See, that is what happens when you put personality before policy and the lust for power over all.