From Elastic Economics To Elastic Money: The True "Economic" Underpinnings Of The Status Quo

Tyler Durden's picture

Wonder why the premise of a Gross Domestic Product is bunk? Wonder why politicians care first, foremost and only about bailing out banks, with little thought put to actually saving that core driver which according to economic canon is responsible for 70% of GDP? Wonder why the status quo is more threatened by a gold, or any kind of standard, that limits the potential of infinite dilution of nominal concepts? The Privateer's Bill Buckler expains, in three short paragraphs, the great lies that are Elastic Economics and Elastic Money, and why everything else is noise.

From The Privateer

Elastic Economics?:

 

It is routinely stated in the US that the bulk of all economic activity is provided by what is called “consumption”. For at least two decades, the claim is made that consumption is the most important driver of economic “growth” and contributes anything between 65 and 75 percent of that “growth”. Nobody has ever bothered to explain how a nation which consumes more than it produces can be enjoying economic “growth”. There is, of course, a very good reason for that. It cannot be explained. As any individual knows, the road to the poorhouse is paved with consumption in excess of production. It cannot and never has been otherwise, no matter how “elastic” economic concepts have become.

 

There is only one essential sector left as far as those tasked with “running” the economy is concerned. This is the financial sector - specifically the banking sector and the financial assets markets. The rest of the economy, especially the dwindling part of it that actually produces goods, has been utterly sidelined.  When it comes to regulating production, anything goes. The elasticity shown here is all but infinite with no principles whatsoever involved in the avalanche of rules, regulations and restrictions routinely churned out by government to “protect” the consumer. But when it comes to the major facilitator of this government control, the financial sector, there is only one rule which has no “give” in it at all. That rule is that the financial sector will be propped up no matter how stretched out of shape the “real” economy becomes in the process. The reason is clear when we look at the ultimate in “elasticity”. 

 

Elastic Money!:

 

This is and always has been the object of the exercise. Every advance in “the art of the possible” in both politics and economics has been underpinned by it. According to the “theory”, money is the one economic good which CAN be created out of thin air. Indeed, the “money managers” go further than this. They claim that money MUST be created out of thin air if they are to go on “running” the economy. Here they are right. A market economy works by means of voluntary trade and for this, an unchanging medium of exchange is vital. A command economy is justified on the premise that those being commanded are getting something for nothing. That requires a money stretched to fit what they deem “possible”.