They Still Don’t Get It……

You may have read reports of trillions of dollars stashed in offshore accounts  denying governments billions in tax revenue.

You may  be aware that corporations are  carrying trillions in cash surpluses  lying unused in accounts for lack of profitable investment opportunities.

You may also be aware of increasing media pressure to lower central bank lending rates, despite that fact that most simple cash deposit accounts are paying negative interest to banking customers.

In the last few economies that are still seen as viable, Government bonds are paying the lowest return they have in decades, in many cases a negative rate meaning that you have to pay the Government to store your money!

But what does it all mean?

Surely the massive surpluses corporations hold are an indication of returning profitability and an imminent return to profitable investment.

Surely the low rate of return on Government bonds means   long term interest rates can be kept down, smoothing out the housing market and providing credit for companies and individuals.

Are these good signs?

If so, why all the talk of credit downgrades, contraction and deepening depression across the globe?

Bog Standard (BS), economists of every hue try to explain ongoing economic developments in terms of nations or regions relatively going up or down, in terms of inflation or deflation or sustained (if anaemic) recovery or further downturn.

None of this can adequately explain confusing and apparently contradictory indicators in the global economy. Every time BS economists hazard even tentative predictions as to future events they are shown to have no idea what is coming next. The only thing that is absolutely sure in an increasingly unstable economic environment theBS explanation will continue to offer no insight at all.

This is because without fail,  all BS narratives miss the explanation that can tie all the observed monetary phenomena together- the degradation and collapse of state issued currency.

The degradation of state issued currency is part product of deliberate political policy and part inevitable result of the development of capitalism.

It will result in the DEMOCRATISATION OF MONEY.

The degradation of state money means that Government money pays no interest, no matter where or when it is invested.

No interest destroys the inflation feedback loop which means that the system is increasingly blinded as to the amount and velocity of currency in circulation.

The flight of currency from collapsing state bonds to marginally more secure ones does not mean that some nations are faring better than others, it is just a spasmodic reflex:  state currency circling the drain; a tsunami sloshing around the international bond market after the underground collapse of the system.

While some Keynesians advocate reintroducing  930,s style centralised system to mitigate the effects of the Democratisation of Money, they do not understand the underlying process, much less its potential implications.

Therefore their recommendations will fail to receive any real consideration.