Today while perusing a post on the Seeking Alpha financial network I came across what appears to be a very sensible explanation of what we see in the world of finance and business today.
This no-nonsense analysis is occasionally echoed by other writers on the SA site, most notably Mr. David Stockman, former budget director for President Reagan.
He was a high-flyer back in the day, the pre-Greenspan days.
But here I make reference to a different contrarian analyst, Mark A. Grant, upon whose article I stumbled upon this morning.
https://seekingalpha.com/article/4140703-universe-edge-restaurant?sht=p3a1ld&shu=8wcf#comment-77507865
From a distance, I've been following the contrarian school of thought ever since the fall of '08. I say "from a distance" because I am neither an economist, nor a significant investor. I am a mere citizen who happens to be a consumer, an American, an author and a semi-retired person, age 66.
This contrarian school of alarmist financial analysis generally demonstrates a perpetual amazement; their astonishment revolves around the credit-mongering house-of-cards built by the central bankers of our preset world (the Fed, EuroCBank, Bank of Japan, People’s Bank of Japan, etc.). It’s not that the contrarians have much respect for of the central bankers’ delicate arrangement of interlocking currencies and trade incentives; rather, their astonishment arises from the mystery of why it has not yet fallen apart and produced a new crash.
You see, this new international construct is not founded upon traditional economics, but rather (as it appears to this layman) upon that (at the time) new-kid-on-the-block upstart school founded in the 1930’s by Mr. Keynes; it’s all about governments and banks perpetually tweaking national/international money spigots to produce certain desired effects.
Our current zombified house-of-cards scenario has been at work for a decade or so now, ever since the crash of ’08, with its aftermath of Great Recession or great whatever-it-is.
Getting back to the source of this present article: This morning I was reading Mr. Grant’s take on the present situation and comparing it for the umpteenth time to the contrarian undertow that continues to make perfect sense. This bearish complaint corner has been going on for so long I'm beginning to wonder if the fiat-wielding central bankers have actually managed to change, by their manipulations, the fundamental nature of money.
Maybe we actually are now in a brave new world where the old rules of debit/credit will never again apply.
With all these electrons flying around the planet--all these monetized digital representations of presumed wealth and bank-enabled assets--haven't we truly ditched the old gold-backed world of currencies-dollars, pounds, francs, marks, drachmas, denarii, Euros, rubles, shekels, yen, yuan, SDRs and zlotys?
Could Bitcoin and such be nothing more than a flash-in-pan death-throes sparkle signifying the end of our great age of post-BrettonWoods expansion?
Might this extended wave of central banks’ Quantitative Easing actually turn out to be the debt-driven tidal wave that propels us into a land that prime forgot, where all the rules and practices of days gone by are tossed aside forever in the liquidity flood and trash heap of history?
We're getting to a precarious place now where the only solution will be to tear up the score-cards, balance sheets, and start over. The central governments of the world are forever indebted to the central banks of the world. It certainly seems that way to this observer. I'll be surprised if we ever get back to what Mr. Smith called "the wealth of nations."
We ain't in Kansas any more, Toto. Exactly where we have landed is unclear. And it just might be that tapping our ruby-slippered heels of old-school analysis are gone with the wind.
When this whirlwind of fiat-instruments does wind down to a dull roar and all the chips fall where they may, who/what institutional entities will have wrangled control of the new asset-spewing beast? Whatever that entity turns out to be--it (they) will be in a position to dole out the newly-zombified assets to the world's surviving movers and shakers. I guess most of us out here in lala land will be quakin' in our boots.
As for us commoners, we may all of us have to settle for a mere meal-ticket while the big chips get re-assigned.
A meal-ticket on a card or a chip, of course.
What troubles me is: what new rules or allegiances will be demanded by the powers--that-be?
What will it cost us, John Doe/Jane Smith, to even get in the game?
King of Soul
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