Every now and again, it’s good to take stock of the Great Global Reflation that has been marching higher (with a few stumbles and scares) since early 2009, over eight years ago.
Is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?
Keynesianism Vs The Real World Let’s start by reviewing the systemic contexts of the economy.
This Great Reflation is embedded in two basic contexts:
The dominant socio-economic structures since around 1500 AD are profit-maximizing capital (‘the market’) and nation-states (‘the government’). The dominant economic theory for the past 80 years is Keynesianism, i.e. the notion that the state and central bank must aggressively manage private-sector consumption (demand) and lending via centrally planned and funded fiscal and monetary stimulus during downturns (recessions/depressions). Simply put, the conventional view holds that there are two (and only two) solutions for whatever ails the economy: the market (profit-maximizing capital) or the government (nation-states and their central banks). Proponents of each blame all economic and social ills on the other one.
This post was published at PeakProsperity on Friday, May 19, 2017.
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