A trend of fiscal and monetary centralization seems to be rebuffing capitalist ideals for an economic heel digging. As Western nations deleverage private assets, governments are doing the opposite by leveraging monetary and fiscal policies. Central bank bailouts, and easing of monetary policy have been in fashion across the world. A look at the balance sheets of central banks, and the global debt map published by the Economist should make this clear enough.
The expense of all this money bathing is credibility. How much money can governments print, and how many sovereign bonds can be restructured at the expense of private bondholders before businesses and investors doubt the effectiveness or benefits of such policy? The more money that flows, the higher the equities climb. Higher 401(k) balances are more appealing than lower inflation and systemic fiscal functionality, and placing Southern Europeans in financial rehabilitation will be good for Europe even if it comes at the expense of nationality.
The economic debate about such policies exists, but traditional mainstream economics is not the approach of choice per Dylan Matthews of the Washington Post. Moreover, according to Matthews a good number of influential economists either support aggressive fiscal or monetary policy or both. Anything can be rationalized with sound reasoning, that does not make it valid logic however. In the case of economic policy, all this spending could be an echo of Reaganomics where outspending competition leads to advantages. Problem is that is a tactic not a strategy.
• Reuters: Corporate earnings reports less than spectacular
• Bloomberg: Oil price rises as Iran cuts off exports to U.K, France
• WP: Government and employers penalize military reservists seeking work
• NCPPHE: American wealth to decline based on current education trends
• DOL: Advanced manufacturing growing, but labor is scarce per WP
• OECD: Q4, 2011 GDP in OECD Area declined .1%
• IBI: China seeks to boost lending by lowering bank reserves to 20.5%
• UK Guardian: Hundreds of thousands protest spending cuts in Spain
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