The horizon is not so far as we can see, but as far as we can imagine

Sneering that there is no runaway inflation misses the point

A lot of people though that unconventional monetary policy (aka. printing huge amounts of money) would lead to runaway inflation.

They were wrong, and the fact that they were wrong is a cudgel used to beat them.

But the reason they were wrong is important, as I noted last week: they thought that all that money would get to ordinary people rather than virtually all of it going to the rich and corporations.

In retrospect, and perhaps even at the time, naive.  But what the critics are castigating them for is believing in the good faith of policy makers: thinking that those policy makers actually wanted an economy that worked, if not for all people, then for more than the top one, five or ten percent.

They were wrong because they weren’t cynical enough or weren’t realistic enough to realize that developed world elites are so depraved that they are willing to print trillions of dollars to give almost exclusively to people who are already wealthy, in order to ensure they stay wealthy.

Monetary policy, at this point, has no other actual aim in most countries. It is meant to bail out indebted securities firms, to keep the rich rich, and to make them richer. If it happens to do anything else, that’s most likely an unfortunate side effect, since poor governments sell off crown assets cheap; and poor people work for almost nothing.

One can (and did) point out this a short-sighted policy likely to rebound on the rich, but they do not really believe it, nor do they really believe any one else deserves money.  They are the “value creators” and they are worth what they are given.  They, after all, bought up government fair and square.  Now they want a return on their investment.

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Revolution Revisited


  1. Dan Lynch

    QE has juiced financial markets, but the main point of monetary policy is not what it is, but what it is not. It is not fiscal policy. It is not spending on social programs. It is not infrastructure. It is not a public job creation program. It is not the New Deal.

    NeoLibs believe in small government (well, except for the military and the Stasi, for which money is no object). Neolibs worship “free enterprise,” even though that phrase is not in the constitution nor in the bible. So they’re all about trying to jumpstart free enterprise with private debt bubbles.

    The private debt bubbles, when successfully inflated, juice the economy for a while. But all private debt bubbles eventually pop, and then we’re in a recession again. Rinse and repeat.

  2. guest

    Amen, Dan Lynch.
    And then we get to hear from the ilks of David Stockman about how QE *is* basic keynesian stimulus, and thus proves Keynes was all wrong, as if the premiere and pioneering deficit scold of the modern era has any moral or intellectual authority to tell us anything.
    That’s what gets me about Krugman. Not that I disagree with his analysis, but he basically argues that Fed Policy is the only tool left to us and spends more time fretting over central bank policy, and almost none on what actually needs to be done (tax reform, corporate reform, re-regulation, raising the minimum wage, paying teachers and other public employees and retirees their due, infrastructure spending… and taxing the shit out of the billionaires if just one of them objects on the grounds of deficit spending)

  3. IAQ

    NeoLibs believe in small government (well, except for the military and the Stasi, for which money is no object).

    “When war is continuous there is no such thing as military necessity.Efficiency, even military efficiency, is no longer needed. Nothing is efficient in Oceania except the Thought Police.”

  4. Michael

    All the money pumped into the system has allowed the super rich to acquire huge chunks of the real assets and resources of the system. They own most of the means of production and have huge piles of funny money. they are positioned to take a crash in value of that cash and KEEP the real assets. They don’t fear the next crash they anticipate it, they will liquidate their losses with script while the common man will lose everything he has left.

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