There is a fallacy that government spending, on infrastructure or anything else, creates jobs or economic growth in the aggregate. Murray Rothbard addressed the issue in great detail in his article “The Fallacy of the ‘Public Sector.” In summary, there is no such thing as the Infrastructure Fairy that takes government spending and magically turns it into economic growth.[1]
A witty and accurate observation. Belief in Tinkerbell definitely underlies the “strategy” of all our clever, refined, educated “experts.” As is evident from another quote from Mr. Roberts’s entertaining and wistful piece:
Thus, one way or another, and just as is the case with our financially burdened Ivy League MFAs, the entire country has borrowed what amounts to several years of its revenue producing capacity — some of which, presumably, must also be allotted to our care, shelter and feeding.
What could possibly go wrong?
Well, we’ll try waving that wand like Chauncey hit the buttons on his television remote in “Being There.” Some more QE will probably be in order. Like that.
We’re long overdue for an epiphany on matters such as our repulsive federal government; our cowardly, usurpatious Supreme Court; the transformation of the Constitution into sort of a guideline (hat tip Bill Murray); reckless foreign military adventures; welfare state madness; universal franchise madness; tech giant proxies for violations of the First Amendment; monopoly control of the economy; the political domination of the media, billionaires, banks, and foundations; and our sick adulation of and groveling before minorities, foreigners, Muslims, deviants, the mentally disturbed, and revolutionaries.
But . . . for now, I’ll settle for a good old economic meat grinder of a collapse to get people back on the same sheet of music. A back to basics exercise thing. And that sheet of music sure as hell won’t be have a Chinese version, a Spanish version, or a Hmong version. Ok, maybe a Tagalog version. Filipinos are just great people.
Notes
[1] “Infrastructure Spending Could Be Good… But It Won’t Be.” By Lance Roberts, ZeroHedge, 7/12/21 (emphasis removed).
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I appreciate these links to Zero Hedge. He can be a bit of a Chicken Little at times, but he is raising questions that politician SHOULD be interested in – but are not.
I’ve been talking over future trends with my son lately – like us, he currently owns a house that has appreciated in ‘value’ in this overheated market. He is looking at selling soon, then renting for 6 months to a year or so, then buying again, once the market drops a bit.
As long as he diversifies the money while he waits, it should work out.
We’re buying in a somewhat underpriced market, but a good neighborhood, one that will likely hold most of its value. Unlike some of the ‘hot’ neighborhoods, it’s stable, and unlikely to be hit by massive defaults on mortgages. We’ll probably be selling our current home in the spring.
Worst case scenario, we could keep paying for both, while waiting for the market to rebound (we are locked into a low rate, and have beaucoup equity). We’ve long believed in NOT buying at the limits of our financial capability, and are generally in the homes that those who are downsizing are looking for. Kind of a 2nd-tier market.
I’m betting that the market won’t crash before then. It takes time for the banks and other major investors to get THEIR money out of the market (see the wonderful film, The Big Short). Again, I’m taking a chance, but not a wild one.
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I thoroughly enjoy ZeroHedge. I struggle to get a feel for stocks and bonds, inflation, QE, GDP, spending, central banking, and money, among other things. Not least because I think this is all the Achilles heel of our rulers. The political and cultural Frankenstein is probably unassailable unless our rapidly diminishing personal options and independence radicalize the middle and working classes. That’s something that advances by inches as I have despaired for the last two decades over whites’ failure to wake up to the deliberate attack on our history, culture, and nation. Probably a punishing financial collapse awaits in the immediate future as the things I mentioned in my second sentence amount to a toxic combo of the first order. We can’t vote our way out of it and we can’t spend our way out of it and at some point the iron laws of arithmetic will have their say and recharging EBT cards and deposing “dictators” around the world will come to be seen as positive luxuries.
It’s all part of feeling as much of the elephant as you can and trying to make sense out of it. I have a house that I rent out that has an inflated market value now. I should probably sell it though I find the prospect of doing that daunting as I’m far away from it and have other things I’d rather do now. The house is in the Washington area which seems always to be awash with federal money. Not a pretty thing, I admit, but it’s a feature of the area and I’m hoping values will hold better than elsewhere.
I do love those property taxes though, no lie. Moreover, I wonder what would happen to the money I make from selling the house. How quickly will the value of that bundle erode due to inflation?
“The Big Short” was indeed a terrific movie. Hat’s off to the people who could make a fascinating movie out of the dry-as-dust details of high finance.
Even before I read a comment by Anne Barnhardt to the effect that you really only owned what you can defend, or carry (HT to Robert Heinlein too), I understood that so much of what’s “owned” is really vapor based purely on what other people would be willing to pay.
Consider Bitcoin. On a greed level, I wish I’d had bought at $1 or so. I’d probably have sold some at $100 – then some at $500 – and probably the rest at $1000. Now, what’s it worth? Insane. For something that is not physical but that has value only because there’s a clamor for it. (Now do I see the value in my late parents having forced me to not do the Manhattan Project as my American History high school project, but instead I chose the stock market crash of 1929… it brought to mind, very early in life, the idea that there are few things with intrinsic value but rather are valued only because someone else wants them. Aside: I have seen ads for sites that claim to tell you the “true value” of your home. No. The value of my home is the family, the security, and – market-wise – what someone else would be willing to pay.)
Never mind the take-off of Arthur C. Clarke: “Even the most advanced technology is indistinguishable from a brick when there’s no power”.
There IS a reckoning coming. My fear is that one triggers more. A financial collapse could trigger civil war spots… America dissolving into chaos would certainly give free reign to actors around the world to act according to their local grudges. Literal fallout from that could have decades-long effects.
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I couldn’t understand Bitcoin so steered clear of it. I still don’t understand “mining.” I suppose I don’t have to understand oncology to make money off of investing in drug companies, there’s that. As one focusing merely on crowd psychology I mean.
I love Clarke’s witticism. The expectation that tomorrow will be like today enables our killer complacency. Don’t ask me what drives our obsession with straightening other people out. We’re the global Karen on that. And, yes, there is a reckoning coming. Start with the fact that the Fed can’t fight inflation by tightening as that makes debt service impossibly burdensome. Thus, inflation. Congress, having no clue about capitalism or malinvestment, will not stop its lunatic spending. More debt to finance it. More inflation. More Fed paralysis. Ordinary people are already on the edge of disaster and young people are in a brutal prison of high debt, useless degrees, and an economy controlled by morons or the worst kind of off-shoring swine and monopolists and it’s adios to any kind of normality.