Thursday, October 27, 2016

William Hague on 'quantitative easing'

  1. Savers find it impossible to earn a worthwhile return, which drives them into riskier assets, thus causing the price of houses and shares to be inflated ever higher.
  2. Higher asset prices make people who own them much richer while leaving out many others, seriously exacerbating social and political divides and fueling the anger behind “populist” campaigns.
  3. Pension funds have poor returns and therefore suffer huge deficits, causing businesses to have to put more money into them rather than use it for expansion.
  4. Banks find it harder to run a viable business, contributing to the banking crisis now visibly widespread in Italy and Germany, in particular.
  5. Those people who are able to save more do so because they need a bigger pot of savings to get an equivalent return, so low interest rates cause those people to spend less, not more.
  6. Companies have an incentive to use borrowed money to buy back shares – which they are doing on a big scale – rather than spend the money on new and productive investments.
  7. Central banks are starting to buy up corporate bonds, not just government bonds, to keep the system inflated – so they are acquiring risky assets themselves and giving preference to some companies over others.
  8. “Zombie companies,” which can only stay in business because they can borrow so cheaply, are kept going even though they would not normally be successful – dragging down long-term productivity.
  9. Pumping up the prices of stock markets and houses without an underlying improvement in economic performance becomes ever more difficult to unwind and ultimately threatens an almighty crash whenever it does come to an end – wiping out business and home buyers who got used to ultra-low rates for too long.
  10. People are not stupid; when they see emergency measures going on for nearly a decade, it undermines their confidence in authorities who they think have lost the plot.

From the delightful pen of Bill Bonner

Thursday, October 13, 2016

Review: The Myth of Democracy

The Myth of Democracy The Myth of Democracy by Tage Lindbom
My rating: 4 of 5 stars

I am reviewing on the title essay alone here. This is a richly fascinating philosophical essay that examines, as so many do not, democracy as idea, as foundation for a moral order to society, and finds it wanting. To wit, this excellent passage:

"Society is a living organism and properly should be the carrier of a
hierarchy of values, of unshakable spiritual and moral norms; society
is of the qualitative order. But this commonwealth is now threatened
with replacement by a centralized world of bureaucracy whose aim is to
dominate the vacuum that a withering civilization is leaving behind.
The modern industrial and social state is quantitative in nature and,
as centralized bureaucracy, it has no moral norms. The aim of the
modern state is to intervene continuously and to regulate the secular
order wherein sensate interests are increasingly dominant. Once upon
a time, in traditional societies, laws were complements and
confirmations of an order of things that had its profoundest roots in
the spiritual realm and in a social morality deriving from that realm.
Now we see the opposite. A feverish, administering, regulating,
legislating activity becomes unavoidable, and the power of the state
necessarily grows apace. Economic and productive life also calls forth
administrative and bureaucratic pyramids. The scope for responsible
citizenship is steadily eroded; man will become more and more a
subject."

Not only this, reader, but more gems await, including facets of Rousseau I have not
seen discussed, the two archetypes of liberty and equality, and so on. While at times a bit too general -- examples are sparse -- and 'assumptive' that a God exists and anchors the moral order (in my view, God does not except as an idea, an ultimate abstraction), it is nevertheless absorbing and thought-provoking. Yes, atheists can profit from reading theistic tracts.

The last two essays, The Idea of Socialism, and Lucifer (I'm thinking of Milton now), await.

View all my reviews