Global Banks Send Warning as Keynesian ‘Event Horizon’ Approaches: World “Elite” Running Out of Other People’s Money

the world has now entered into what could only be characterized as an “Event Horizon” —>

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Based on prevailing Keynesian economic attitudes across the planet, the world has now entered into what could only be characterized as an “Event Horizon” which speaks to that final point in both space and time where no other option exists before being inexorably caught up and crushed in the powerful gravity waves of the economic beast that the world has created….

CRN Politics

By Barry Secrest

Since our mind-numbingly eventful journey into “The Transformation of America” began, which is nothing if not a scouting trip into the existential boundaries of Fascist-Totalitarianism, America has only limped along, economically, with anemic growth and steadily eroding economic numbers.

Only the stock market, as piloted by  a gaggle of crony capitalists, has seen periods of liquidity growth, and that too will most likely, if not ultimately, prove to be a bubble.

Instead of America leading the world in a free market, pro-capitalist, agenda of growth  to create wealth and expand technologies, the planet, as led by an elite group of banking-bean counters and government bureaucrats, has effectively run the world economy aground on the shoals of Keynesian theory and over-regulation, and Obama appears to be leading the fray, from behind.

Keynesian economics, by definition, refers to the theory that, at best, an economy can be controlled largely by government intervention essentially eliminating the various cycles of slumps and growth by “influencing aggregate demand through activist stabilization.”

In essence, moving the economy away from a private command and control response and into the realm of a government command bureaucracy, which, in its very essence, suggests quasi-government ownership of the economy and, therefore, an economic construct encompassing a different form of mixed-market socialism.

Keynesian economics, moreover, only focuses on the short run, which might more easily explain Obama’s total lack of concern or even interest in the massive $ 19 trillion dollar debt, that America has amassed by virtue of Obama’s quantitative easing and wasteful stimulus.

But it’s not just America,under Obama, rather, it’s the world that has embraced Keynesian theory which, by literal default, has placed the world in debt, to both itself and to the wizards behind the curtain, who have bankrolled the massive debt.

The world’s economies  are even now operating on a mountain of paper debt, held by the elite, that is essentially worthless beyond the heat that might be utilized if the paper mountain were burned, which is, about, the only useful purpose it might serve.

With all of that said, time appears to be running out even as the planet seems to be approaching what could only be defined as an “Event Horizon.”

The central bankers, according to Reuters, have all but run out of both original answers and theoretical exercises and appear to be moving away from whatever vestiges of capitalism that had been holding things together and towards a complete uniform collapse.

In effect, the term “Event Horizon” can be described as a point which equates to a final juncture in both time and position, where the world either commits to the present ill-suited course and hope for the best, or reverse all engines and try heroically to escape from the powerful  waves of what is quickly turning into a full-blown world-engulfing Cloward-Piven collapse.

Related: 

The Beast Stirs: As Global Economic Unrest Persists Elites Begin Pushing “Cashless Society”

 

Indeed, America, under Obama, has been following the precepts of the Keynesian Euro-Socialists, where mixed-market collectivism has prevailed for a generation. However, finally, with America under nearly a decade of a redistributionist Obama administration, the world has in effect run out of other people’s money.

Now, the central bankers know that their decades-long foray into deeper and deeper forms of Keynesian theory has failed miserably, but, their answer to these failing policies?

A heaping dose of even more of it.

According to the late Conservative economist Milton Friedman,  the flaw behind Keynesian economics in part, is the idea that “putting intellectuals,” or the world’s elite, as they call themselves, in charge of “turning the dials & pulling the levers of power is wholly bad.” 

In this story from Reuters By Howard Schneider, we can painfully see that the world’s global elite, or “intellectuals” as Friedman called them, have run out of conventional answers and are now delving into the unconventional.

“JACKSON HOLE, Wyo. (Reuters) – Central bankers in charge of the vast bulk of the world’s economy delved deep into the weeds of money markets and interest rates over a three-day conference here, and emerged with a common plea to their colleagues in the rest of government: please help.

Mired in a world of low growth, low inflation and low interest rates, officials from the Federal Reserve, Bank of Japan and the European Central Bank said their efforts to bolster the economy through monetary policy may falter unless elected leaders stepped forward with bold measures.

These would range from immigration reform in Japan to structural changes to boost productivity and growth in the U.S. and Europe.

Without that, they said, it would be hard to convince markets and households that things will get better, and encourage the shift in mood many economists feel are needed to improve economic performance worldwide.

During a Saturday session at the symposium, such a slump in expectations about inflation and about other aspects of the economy was cited as a central problem complicating central banks’ efforts to reach inflation targets and dimming prospects in Japan and Europe.

ECB executive board member Benoit Coeure said the bank was working hard to prevent public expectations about inflation from becoming entrenched “on either side” – neither too high nor too low. But the slow pace of economic reform among European governments, he said, was damaging the effort.

“What we have seen since 2007 is half-baked and half-hearted structural reforms. That does not help supporting inflation expectations. That has helped entertain disinflationary expectations,” Coeure said.

Bank of Japan governor Haruhiko Kuroda said he is in regular talks with Japanese Prime Minister Shinzo Abe about opening Japan to more immigration and other politically sensitive changes needed to improve potential growth, currently estimated at only around one percent annually.

Fed Chair Janet Yellen devoted the final page of her keynote talk on possible monetary policy reforms to a list of fiscal and structural policies she feels would help the economy.

Fiscal policy was not on the formal agenda for the conference, but it was a steady part of the dialogue as policymakers thought through policies for a post-crisis world. One of the central worries is that households and businesses have become so cautious and set in their outlooks – expecting little growth and little inflation – that they do not respond in expected ways to the efforts central banks have made.

That has included flooding the financial system with cash, and voicing a steady commitment to their inflation targets in an effort to make people believe they will be met.

Kuroda acknowledged that household expectations have not moved, and said the BOJ was prepared to continue its battle to figure out how to shift them. In modern monetary theory, households and business expectations are felt to play a defining role in spending and investment decisions, and thus in shaping inflation and growth.

“Japanese inflation dynamics remain vulnerable,” Kuroda said. “It could be that long-term inflation expectations are yet to be anchored in Japan” at the bank’s 2 percent target.

The concern about expectations is a paradox. The Fed, for example, fought a difficult battle with inflation in the 1970s, hiking interest rates to recession-provoking levels and eventually winning a war of credibility over its ability to rein in price increases.

Some central bankers remain fearful of clipping that cord.

But they also are hunting for ways to jolt the economy out of its doldrums, and a fiscal push is a possible tool.

In a lunch address by Princeton University economist Christopher Sims, policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future.

“Fiscal expansion can replace ineffective monetary policy at the zero lower bound,” Sims said. “It requires deficits aimed at, and conditioned on, generating inflation. The deficits must be seen as financed by future inflation, not future taxes or spending cuts.”

It was not clear whether such ideas will catch on. But there was a broad sense here that the other side of government may need to up its game.”

About the Author

Barry Secrest
A native of the Charlotte area, Barry Secrest is the owner of two successful ventures, one in business and the other in media: Carolina Industrial Agency and Conservative Refocus. He has more than 25 years of experience in the insurance industry. Barry is also the author of the book "A Perfect Liberal Storm" which was released in late July of 2010.