Growth Is Sucking Wind

Happy Monday and welcome back to. The crisp morning air of a spring not quite ripe welcomed those of us in Michigan; our early treatment to hot weather broke abruptly on Friday night to yield cool weather over the weekend. That has held into the start of this week so far.

Growth reports have yielded steady disappointment. Each time we get hit with a lackluster outcome, since late last year, we shrug it off like high times are just on the horizon. What if they aren’t?

There is an old economic theory that maximum production is ultimately bounded above at any given point in time. A society overproducing for the benefit of one generation necessarily creates low demand for the next, ushering in economic hardships, under this treaty of thought. If we think of the 90’s and early 00’s as such a point in time of overproduction (<5% unemployment in the 90's?), then that could maybe explain the ever present weakness in the face of effervescent punditry which we have been subjected to.

This line of thought led to the infamous "smashing windows" comments that are so well known in Keynesianism. Maybe we just need to blow up some more Middle East pipelines…?

I cannot condone shorting assets though. It's just too stupid of a strategy. If this economic idea is behind our weakness, then it follows that the Central Banks are directly at fault (and also directly to be commended for preventing the collapse of civilization 5 years ago, all sort of murkily at the same time). But weak growth will also provide justification for more intervention on the part of the same, the gross irony there barely coming under scrutiny.

So yes the people who sort of set us up for this in the '90's and '00's will almost assuredly break things more, while blaring the catch phrase "WE'RE HELPING!". Which sort of sets us up for more QE and longer periods of lower interest rates and maybe other even more stupid policies we haven't even thought up yet.