In response to an FT View on 17th April 2015, entitled 'The worst mistake is to ignore secular stagnation'
"The persistence of this phenomenon has been called “secular stagnation” by Lawrence Summers, a former US Treasury Secretary, using the term to describe “a chronic excess of savings over investment”
1. There is no excess of 'savings' over investment - there is an excess of currency units issued as debt, which bear no relationship to the means of production, productivity thereof, or any other entrepreneurial or wealth generating activities
2. Somewhere along the line these 'mighty brains', who create their own 'mighty PR' by marking each other's homework and awarding each other prizes, failed to notice that there are alternative ways of looking at the world other than though the models they learned in order to get brownie points from the previous generation of think alike academics
3. The world does not conform to Dynamic Stochastic Equilibrium Models or any other variety of flat earth map. Any theory of the economy that disregards the importance of money, debt and/or banking may be 'just peachy' when it comes to winning a Nobel Prize, but is utterly useless to anyone who wants to understand how markets work, how capital flows or how to work with natural cycles rather than abolish them
4. Terms like 'secular stagnation', 'savings glut' and 'chronic demand deficiency syndrome' all reflect the same mindset. It doesn't matter whether Larry Summers or Ben Bernanke is 'right' in terms of the economy they are discussing - the economy they are discussing does not exist in the real world
5. The policies these academics have been selling to the world for decades have also been used and perverted by politicians who desperately want them to be right, so they can take credit - so they proclaim to the world that they have abolished 'boom and bust', like our very own Gordon Brown did...a few years before he subsequently claimed to have 'saved the world' after the financial crisis hit
6. The policies created through the blend of academic hubris and political avarice have created the conditions that we currently face. In short, fiscal bribery and monetary madness - the policies we have been pursuing were designed to buy the electorate and print the wealth - it won't work now, and it never will
7. Eventually, the market forces that these people so clearly disregard and disrespect will re-emerge to flush the garbage that their policies have generated back down the drain where they belong. People like Professor Krugman will say 'we didn't do enough'. I think these guys have done far too much already
"When such mighty brains as Professors Bernanke and Summers cannot agree, a pragmatic response is called for"