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MarkGB 

"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

The economy is an ecosystem not a zoo

In response to an FT article by Adam Posen on 19th August 2014, entitled 'Keep rates low until the hidden jobless return to work'

http://www.ft.com/cms/s/0/12ae0580-26d0-11e4-bc19-00144feabdc0.html#ixzz46NbJ39oD

The economy is an an ecosystem, not a zoo! And Central Bankers are not naturalists - they've never lived in a forest or even camped out for a couple of nights. They are glorified zoo-keepers, and they seem to think that if they can get the enclosure just right, the animals will behave just like they're supposed to.

Guess what? Most of us wild things don't want to be in a zoo. Speaking personally, I would prefer the keepers to just just sod off, go back to their spreadsheets, and maybe amuse themselves by designing an ideal world for a new play-station game. I'm sure that the electrical impulses would conform to expectations and not spoil anyone's fun or academic credentials with unforeseen consequences. 

But most of all, please stop pretending that any of you have got the foggiest idea of what you're doing. You bailed out your pals, you've made the rich richer, the poor poorer, you've monetized government debt, which will never be paid back, and you haven't got a clue what to do about it. Your inflation statistics describe the benign world for people who buy iPads, but underplay the effects of inflation on people who spend a high proportion of their income on food, energy and what used to be known as the cost of living. Your GDP figures are bunk, and you know as well as I do that the wealth effect hasn't worked.

Jobs are created by businesses. Businesses thrive in an environment where prices give clear signals of supply and demand, where it makes more sense to invest in capital rather than borrow money at ZIRP in order to buy back shares, inflate EPS, and boost executive bonuses - leaving the next CEO to fix the balance sheet when the effect of the monetary heroin wears off. I have never heard Janet Yellen or any of them acknowledge any of this. Until this environment changes, you can forget about creating employment.

Please try to show some respect for the environment when it next rejects your attempts to keep it under control. More of the same will not pacify the markets after the next crash. When it does, do the decent thing, put your Keynesian fantasy novels into the bin, dust off Adam Smith and then move on to something by Ludvig Von Mises. It will describe perfectly what just happened.

Secular stagnation? Raise inflation targets to 4% says Tim Harford

You cannot print your way to health or wealth