Last year the Federal Reserve announced they were going to taper QE (reduce money printing). For those of you new to the party they are printing about 3 billion dollars a day (about $10 per day per person).
Most people interpreted this as good news that the economy was recovering and assumed the taper would happen as announced.
I said to myself, no chance. They can’t slow QE because the physics and mathematics of our predicament will not permit it.
Yesterday the new head of the Federal Reserve announced that their plans to taper are now flexible which is code speak for “we will not taper if doing so would cause GDP and/or asset prices to fall”.
In 2011 I wrote:
I wonder if intelligence requires denial to survive?
With intelligence we are capable of understanding:
- the universe will eventually go dark
- the sun will age and engulf the earth
- we will die
- there is no god
- the only purpose to life is for genes to reproduce
- political beliefs and leaders have no influence on anything important
- technology is just a flattering word for new ways to consume non-renewable resources
- climate change will ruin the lives of our grandchildren and it’s too late to do anything about it
- depletion of non-renewable energy will eliminate 9 out of 10 people within 50 years
- more than 50% of our paper wealth will vaporize in the coming global depression
I know that I would be more motivated if I was ignorant and optimistic.
In 2013 a new book titled Denial by Ajit Varki and Danny Brower was published in which they make the case that human intelligence does in fact require denial.
This book provides a plausible explanation for some of the most perplexing human mysteries.
The economy is a very popular topic. Everyone wants more money. Everyone has a strong opinion. Lots of intriguing and murky stuff goes on. Many bloggers make a living from analyzing, predicting, muckraking, and titillating.
Many different sites cater to different perspectives. Do you want to blame the fed, or the rich, or the slackers, or the foreigners, or the right-wing, or the left-wing? Take your pick, you can find a big community of like-minded people to froth with.
What’s really hard to find is a deep unbiased understanding of what’s actually going on.
It’s there if you dig, but it’s hard work.
There’s little I can say about the economy that’s not already been said. So I will be brief and stick to the important things to know, and things I do not often see elsewhere.
Had lunch today with a successful small-scale farmer specializing in producing healthy meat.
He seemed oblivious to problems we face. He said peak oil had been proven wrong and that the new fracking technologies were going to make the US an energy exporter. He seemed an intelligent person, yet believed strongly in something for which he had no supporting data and chose not to ask me any questions about why I held a different view.
Nate Hagens was right. The data have proven peak oil a reality yet the public still views peak oil with hostile distaste and willful ignorance. I think Varki’s theory explains the willful ignorance.
I would estimate the number of people who understand what is going on is less than 1 in 10,000. What will happen when the economy collapses? Almost everyone will be surprised and unprepared. The chorus will be “no one saw this coming”.