Every generation has its fads and follies…which it takes for Eternal Truth.
Diversity…climate change…and a 2% inflation target top today’s list.
Early adopters believe they are ‘progressive.’ They pick up the buzzwords in college — intersectionality, carbon neutral, dynamic stochastic — and throw them around like small change. They think of themselves as the cutting-edge, liberal-minded innovators that move society forward.
And then the next generation laughs at them.
Hidden truths
TIME magazine has just named Greta Thunberg its Person of the Year. Ms. Thunberg thinks she knows what temperature the Earth should be. No kidding. She thinks it’s too hot. She proposes that we spend trillions to keep it from getting hotter.
Like Joan of Arc, perhaps the Archangel Michael speaks to her…Maybe she knows some truth thus far hidden from other mortals. And her crusade is big; she’s not just rescuing Orléans from the English, but saving the planet.
When we were young, we could ice-skate on the West River…on the west side of the Chesapeake. Now, it is very rare that the river freezes. But is that a bad thing? Now we use less fuel keeping warm.
Besides, it’s a bad-climate wind that blows no one good. While Floridians, barely above sea level, already sweat heavily in the summertime…out on the high plains of the Dakotas, mightn’t they appreciate a few more days added to their growing season?
As to what the Earth’s climate should be, we have no opinion…Let others, who think they know, get their photos on the cover of TIME.
More diversity!
Likewise, at a recent board meeting of a nonprofit institution in Baltimore, a crowd of adults were lectured on the need for ‘diversity.’ Leaning heavily on the ‘intersectionality’ of discrimination, the staff — all female — proposed to increase diversity by…hiring more women!
The Baltimore Museum of Art, meanwhile, says next year it will not buy works of art done by men; it is making amends for the male dominance of the art world since the time of Eve.
And if an old, now unbuyable, painting by Botticelli or Manet seems to show women in a decorative role, the museum feels it necessary to warn viewers that the ‘patriarchal structure’ of society at the time forced women into subservient and submissive roles. It doesn’t want anybody to come to his own conclusion!
But is patriarchy a bad thing? It’s not a knowable thing. Is ‘diversity’ good? Again, who knows? Does the gender of the artist make any damned difference? Ehh?
Economic marvel of interest rates
Those questions are best not asked — not if you want a job in academia or the art world. They are almost verboten. But so is any discussion of opposing points of view. A professor in Nebraska even got whacked by a ‘bias response team’ for putting a Trump sticker in his office window.
The financial world, too, has its own claptrap. Central bankers and economists think they know what the consumer price inflation rate should be: 2%. Why 2%? There’s no evidence that 2% is better than 3% or that 3% is worse than zero.
They think they know what interest rates should be, too. How do they know these things? No point in asking. The answers are mumbo-jumbo.
But let us move along and pause to gawk at another marvel: negative rates. In this Brave New World, many economists think they not only ‘make sense,’ but that the situation requires them.
When savers have to pay for the privilege, they reason, they’ll stop hoarding money and begin spending it. Then, the economy will grow faster, people will have jobs, incomes will rise, profits will go up…and we’ll all be richer.
Our jaw drops open…our breathing stops. Imagine all those generations of idiots that went before us…all of them diligently saving their pennies, pfennigs, and sous.
If they had only known. We shudder to think how much richer they could have been if they had spent all their money rather than saved it.
And here’s another big plus for negative interest rates: They turn debt into an asset. Because the carrying cost turns into a stream of income!
One-upping Jesus in interest rates
Yes, Jesus may have turned water into wine…but central banks have now one-upped him. They turn a negative into a positive…an expense item into revenue…a bad thing into a good one. It’s almost, well, incredible.
‘The borrower is servant to the lender,’ it says in the Bible. But now, with these new miracles of modern finance, it’s the lender who must brew the debtor’s tea and empty his chamber pot.
Negative interest rates? Bring ’em on! Soaring debt? No problem! A debt crisis? Forgetaboutit.
When future generations look for something to laugh at, we doubt they will have to look much further.
We’ll explain why tomorrow…
Regards,
Bill Bonner