“Valuations Will Fall Back”: Bank of England Gov. Carney Pooh-Poohs NIRP Miracle

“Derail an expansion and deepen a subsequent recession.”

When the yield of 10-year Japanese government bonds fell below zero, it marked a new milestone in the negative yield absurdity: it pushed the amount of global government debt sporting a negative return for investors to over $7 trillion.

Which means investors buying this government debt are willing to pay the government for the privilege even if that government is fiscally in worse shape than Greece! But “investors” is a funny word these days of central-bank craziness: the entity that buys every Japanese government bond that isn’t nailed down is the Bank of Japan.

The ECB too is still gobbling up government debt, as Bank of England Governor Mark Carney noted dryly in his speech on Friday at the G20 conference in Shanghai:

The largest four central banks bought assets worth $1.2 trillion in 2015, similar to the amounts purchased post-Lehman and during the 2013 euro-area crisis. Adjusting for lower government debt issuance, that leaves an unprecedented flow of net QE, with only $400 billion of additional government debt sold to the private sector, compared to $3 trillion in 2010.

And these QE-crazed central banks buy most of it negative yields.

Carney – who has never been shy about inflicting “unconventional monetary policies” on the economy and its denizens – went on to slam negative interest rates just when the chief negative-interest-rate perpetrators, let’s call them NIRPs, were hoping for a little love and solidarity.

He warned that the global economy, despite or because of years of QE, ZIRP, and NIRP, is dogged by a “weak global outlook” and “sluggishness of global demand”:

The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium. For the past seven years, growth has serially disappointed – sometimes spectacularly, as in the depths of the global financial and euro crises; more often than not grindingly as past debts weigh on activity

It is a reminder that demand stimulus on its own can do little to counteract longer-term forces of demographic change and productivity growth.

Then he defended “monetary stimulus” and the great things it has accomplished since the Financial Crisis. So the economic results are crummy. But hey, it’s the governments’ fault, he said: “Global growth has disappointed because the innovation and ambition of global monetary policy has not been matched by structural measures.”

He has a theory about why the markets swooned: “Necessary changes in the stance of monetary policy removed the complacent assumption that “all bad news is good news” (because it brought renewed stimulus) that many felt underpinned markets.”

But these low interest rates have a cost: they’re “bringing forward demand to today from tomorrow.” And “having brought forward demand for years, tomorrow is now yesterday.”

So they front-loaded consumption and a jump in asset prices – the “wealth effect.” What’s left behind is a pile of debt.

However, the effect of QE on the wealth channel cannot last forever. Monetary neutrality means real asset prices are not boosted indefinitely by such policies; their economic effects must ultimately unwind.

Said differently, unless an improvement in fundamentals boosts the underlying cash flows of these assets, real valuations will fall back.

But NIRP can’t solve the problem. Already, in countries that together produce about a quarter of global output, “policy rates are literally through the floor.” And yet, financial markets have plunged, and banks are in trouble.

However, it is critical that stimulus measures are structured to boost domestic demand, particularly from sectors of the economy with healthy balance sheets. There are limits to the extent to which negative rates can achieve this.

For example, banks might not pass negative policy rates fully through to their retail customers, shutting off the cash flow and credit channels and thereby limiting the boost to domestic demand. That is associated with a commonly expressed concern that negative rates reduce banks’ profitability.

So negative interest rates are effective in only one way: via the exchange rate – or as he says, “via beggar-thy-neighbor” – which might be “an attractive route to boost activity” for an individual country. “But for the world as a whole,” this “transfer of demand weakness elsewhere is ultimately a zero sum game.

Even that might not work anymore as the yen has jumped since the BOJ introduced negative deposit rates!

As this zero-sum-game pushes savings into the global markets, global equilibrium rates decline even more, “pulling the global economy closer to a liquidity trap.” Because…

At the global zero bound, there is no free lunch.

For monetary easing to work at a global level it cannot rely on simply moving scarce demand from one country to another.

And it doesn’t take a genius to recognize that a prolonged period of low interest rates can lead to a build-up of vulnerabilities which could derail an expansion and deepen a subsequent recession.

The NIRP absurdity is jackhammering into the foundation of the global economy that has already been damaged by the distortions caused by years of QE and zero-interest-rate policies. Even among central banks enamored with “unconventional monetary policies,” NIRP is starting to raise some ugly questions that seem to reduce their appetite for it.

The fact that megabanks, the very entities central banks coddle and protect at all costs, are wheezing and begging for mercy is likely giving central bankers the willies. Even at the Fed, where NIRP keeps popping up, the discussion is marked by a definite lack of enthusiasm for what might turn out to be one of the most toxic policies ever – not just for savers, bondholders, and stockholders, or the entire economy, but for banks!

“Distress” in bonds is spiraling into Financial Crisis conditions. Read…  Now It’s Even Worse Than it Was When Lehman Collapsed, But It’s “Contained”

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  39 comments for ““Valuations Will Fall Back”: Bank of England Gov. Carney Pooh-Poohs NIRP Miracle

  1. Vespa P200E says:

    Glad to see at that there is at least 1 CB from BoE dare to utter the truths and question the Keynesian wetdreams with statement that “QE, ZIRP, and NIRP, is dogged by a “weak global outlook” and “sluggishness of global demand”.

    At least we know where the NIRP will lead the world into seeing the real time drama unfold in Japan with unintended consequences. But I fear that the only new ammo the CB cabals have under their pocket are NIRP and next up is the elimination of cash. Brave new world we live in…

    • Jim says:

      Why do you keep referring to this as Keynesian? Wouldn’t Keynes have advocated fiscal measures – government spending on real projects, putting real people to work making and building real things – rather than monetary manipulations shoveling money into the hands of the banksters, doing nothing but inflating asset bubbles?

      • Cameron says:

        You are absolutely right Jim.

        There is a lot of utter bull dust spoken that is attributed to keynesian theory by totally ignorant commentators who I wonder ever studied any of Keynes their entire life. According to them massive money printing on a scale never before seen, the purchase by central banks of 100s of billions of bad bank assets, including risky government bonds, zero or near zero interest rates and now negative rates, the creation of grossly excessive Government debt that is so large it could never be paid back, massively expensive and now usually un-affordable welfare State payments of all kinds that are funded in part by government borrowings (see Europe especially) , capital market distortion etc etc. was, in their tiny minds, Keynesian theory.

        Nothing could be further from the truth of course. I studied JM Keynes and he never advocated any of those excessive and ridiculous economic measures and policies yet commentators continue to use his name in vain as if he did.

        He did advocate an increase in Government spending (including sensible debt based funding when needed) to offset recessionary periods when some economic stimulus was needed to replace that which was not being injected into the economy by private sector investment. The type of spending he advocated was productive investment as you say, involving needed public works and infrastructure improvement that would generate truly productive employment, the creation of needed public assets and improvements in infrastructure that would help to increase economic efficiency and encourage more private sector investment. SOMETIMES THOUGH, not even that kind of investment will pull an economy out of the doldrums especially when recessions have resulted from the popping of phony gross asset bubble booms that should never have been allowed to develop in the first place but the right monetary and fiscal measures were never implemented to retard them.

        If you listen to much central bank rhetoric today you will hear little about increasing investment but instead increasing credit so consumers can consume more stuff, frequently largely composed of imports that helps worsen the trade balance and the balance of payments on current account. If you want to look at a bad story have a look at the massive trade imbalances the USA is running but they are not alone. As for lending to business, the banks would rather gamble a large proportion of their available funds through their trading desks than lend it out for productive capital investment and the central banks are essentially saying “we are fine with that” but of course not in so many words. Then when business does borrow you have some of them using the cheap cash to buy back their own shares most commonly when their shares are already trading at frothy prices. On the issue of credit where did Keynes advocate sub prime lending as a measure for sound economic growth whether it be for property or motor vehicles or other assets such as marginal and risky resource projects etc etc.

        Keynes died in 1946 and would be turning in his grave at the extreme economic policies and measures (if you could call them that) that are being attributed to his writings.

        When it comes to the central banks and monetary policies, some of them are quite obviously driven by what they deem to be in the best interests of the banks which the CBs then try and sell as measures that are needed for the benefit of the economy. It is frequently spin and hogwash of course and it does not follow that what is in the very best interests of the banks is automatically the best for the broad economy. You need look no further than the Fed and the ECB as the prime examples.

        • Keith says:

          I think it is all propaganda do discredit Keynes so people don’t find the good things he had to say.

          Ditto Marx.

          Strangely they happily hide much of Adam Smith’s work.

          “The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers.”

          Here Adam Smith equates wealth with idleness and notes how the labour of the poor keeps them in idleness.

          Like most classical economists he differentiated between “earned” and “unearned” wealth and noted how the wealthy maintained themselves in idleness and luxury via “unearned”, rentier income from their land and capital.

          No throwing the baby out with the bathwater when it come to Adam Smith, they just hide the bits they don’t like.

        • Keith says:

          Today’s nonsense economics does not allow China to make the necessary reforms.

          Western savings rates have approached zero due to the welfare state safety net.

          Western consumers can spend nearly everything they earn.

          China has high savings rates because there is almost no welfare state and they need to save for a rainy day.

          Chinese consumption is impacted by high inequality, low wages and no welfare state.

          The wealthy Chinese are out blowing top end property bubbles in major cities around the world.

          This does nothing for China.

          Using the old economics …….

          High taxes on the wealthy to provide a welfare state for those lower down the scale would have boosted China’s economy.

        • Wolf Richter says:

          Thanks, Cameron! I’ve long wanted someone to post something like this!

        • nick kelly says:

          As I’ve said several times here and on David Stockman’s site: Keynes was a balanced budget guy. But he believed in balancing it over the economic cycle. So to spend or run deficits during a recession- the government would have to run a SURPLUS during periods of growth. Kind of like seven years of fat seven years of lean -who was it in the Bible who stored grain during the good times?
          Needless to say our politicians took more to the spending side than the surplus side.

      • Eric Patton says:

        This happens all the time. Everyone at ZeroHedge is constantly attributing the expansive monetary policies of Milton Friedman to Keynes. But Keynes, as you say, was an advocate of expansive FISCAL policy, i.e., government spending — not central banks just printing money. David Stockman does this in everything he writes, too.

        It’s aggravating. Libertarians hate Keynes so much that they’re desperate to discredit him in any way possible, even if they have to lie to do it. They hate the idea of people getting “free shit,” because they just generally can’t stand poor people, especially poor people who aren’t white. They also think like business owners and managers, because most of them are, or want to be.

  2. walter map says:

    “And yet, financial markets have plunged, and banks are in trouble.”

    That’s what you get when you let the financial economy gut the real economy on which it depends.

    When the prey population collapses, the predator population must also collapse. It’s simple ecology – much too sublime a concept for banksters who are exclusively out to make quick profits, at the cost of future survival.

    Still no talk of reining in the banksters, even though it should be clear to anyone that the rest of us really have no actual need to be the victims of predators and parasites and would be vastly better off without them.

    Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy


  3. Bananas says:

    It really bugs me when people use the word “literally” when using an idiom. Policy rates are figuratively “through the floor”.

    • Wolf Richter says:

      You better get used to it! It’s now THE most misused idiom and as such has become literally a permanent fixture of the English language.


    • Michael Gorback says:

      Is that worse then using “then” instead of “than”? ?

  4. Michael Gorback says:

    “having brought forward demand for years, tomorrow is now yesterday.”

    IOW, “Sorry Wimpy, it’s already next Wednesday”.

  5. walter map says:

    Why, when the situation is so clear and alarming, does it remain so stubbornly intractable to change? It’s because those who have power in the world want it to be this way.

    These crises have exactly one purpose: they provide bigger and better rationales for robbing the general population. That is, in fact, what these crises are for, and why they are engineered.

    What, did you really believe that fabulously wealthy banksters had really run out of money? They can’t run out of money. They create the stuff out of thin air. They’re just accounting fictions, invented for the purpose of coercing control of real assets. Someday soon they will own everything, and very few others will have anything.

  6. CENTURION says:

    Since the major world Government are saying your paper “money” is worthless to us (negative %) and the private Central Banks are also saying your worthless “money” is worth negative % to us (since they print the paper), it is time to remove ALL you “cash” out of all banks and either put it into gold (which the families that own the Central Banks have done) or silver US coins.

    The end is withing 2 years. PLEASE, have 1 year of food, water source, guns, ammo, Rx medications and mental health. It Is Coming.

    • Vespa P200E says:

      I’ve been a gold bug investing in gold miner ETF GDX for last few years (and lost $s) and buying gold coins; nibbling since March 2014 and actively since June 2015. Bought 2 AR-15 and a shotgun in Dec 2014 after seeing Ferguson riot. Bought 9mm pistol back in 1992 after LA riot seeing how nice if would be if I had gun to protect my family if riots get out of hand.

      That said I think FIAT paper currency will be with us for a while. All bets are off on paper currency once NIRP kicks in followed by elimination of the paper currency allowing the sovereign governments to create FIAT digital currency out of thin air (not even in print so once can hold it) as well as confiscate people’s digital money (has happened in Cypress).

      • Nick Kelly says:

        The only G20 country where you can buy AR15 is the one having the overwhelming number of Ferguson type events.
        Your best protection are sane gun laws. I live in Canada and have owned several guns and done a LOT more hunting than the typical US gun owner but I’ve never owned a hand gun or assault rifle nor do I wish to.
        The mother of the Sandy Hook shooter had bought the gun for protection and put the kid through some kind of course. He took her out first.

  7. d'Cynic says:

    Does anybody have an insight into what these G20 get-togethers are supposed to accomplish? What fresh ideas are supposed to spring that have not emerged, yet? Like banning cash. They do give a boost to local economy. An yes, the final group picture was very nice.

  8. Gil Obrero says:

    If you think about it long enough you see the reason why certain things happen.
    The filthy toxic poisonous fake currency, the voucher or coupon called the euro went NIRP and it rose in value, the equally toxic but sovereign currency the Yen went NIRP and rose in value.
    The morons cannot understand it. Ho can this be.

    The US WILL go NIRP, its because they have no other option and it is baked into the puerile fallacies that every dumb half witted economist harbors.

    When the $ goes NIRP that is when the buying frenzy starts in earnest.
    What buying frenzy you ask.
    Dollars of course, every single note in circulation will be bid in a desperate attempt to get hold of physical cash to hoarde.

    Those holding physical will see the ramp up of the value go t5hrough the roof whilst digital and instruments of digital, such as stock, bonds, CDO’s, CLO’s etc will collapse.

    It is estimated that only $250 billion of physical cash exists today in the US and that it will take up to 20 years to physically print the difference to cover all claims on real assets at current account balances, and that precludes any form of speculative gains in any market whether stocks o bonds, effectively valuing them at zero which includes all pension assets, endowments and debt holdings in every single asset class.

    In other words that means only the cash that people believe they hold, such as in instant access bank savings accounts and checking accounts.

    How high will the physical dollars be bid. I have no idea, but one thing I am certain of is that if people rush to hoard physical cash of which only 2 % exists to what people think they have instant access to then something pretty dramatic will happen.

    Does anyone really believe the US can go instantly digital overnight whereby no cash at all is allowed in the system. or that could possibly be implemented in time to prevent the run on cash.

    I’m stacking $20 bills, every opportunity, brand new in $2,000 bundles straight from the bank and have a safe filling up nicely now.

    As that rises so will physical gold

    • memento mori says:

      stacking $20 bills… that sounds totally nuts. It is just paper. If you were hoarding some commodity, I could understand, but $20 bills?
      What is to prevent the FED from printing higher denominations, like $10 000 dollar bills? Why you think it will print $20 bills for 20 years?

    • Nicko says:

      You gun-nuts are a bit scary ;)

      Stacking $20 bills? I live in a developing country with a current cash crisis. USD is in high demand, I can sell it on the black market for a 10% mark-up (though that is technically illegal). The point is, $100 bills get the best premium, while smaller bills are effectively worth less. So don’t waste your time hoarding $20’s, $100 is where it’s at. However, unless you live in a developing country with a cash crisis, you’re just being paranoid.

  9. Keith says:

    By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce.

    They knew that if wealth concentrated too much there would not be enough demand.

    2014 – “85 richest people as wealthy as poorest half of the world”

    2016– “Richest 62 people as wealthy as half of world’s population”

    Extrapolating into the near future – one person owns everything.

    Doing the maths and assuming a straight line …….

    5.4 years until one person is as wealthy as poorest half of the world.

    Why is demand so weak?

    (Come on students this is really easy).

    • rich says:

      In a consumer-based economy, when the number of consumers, out of the workforce, continues to grow, and the wages of those consumers, still in the workforce, continue to shrink, and credit card rates are 15% or higher, it’s hard to imagine how NIRP might facilitate economic growth.

    • Mark says:

      This is nothing new.
      Throughout the history rich had always claimed 99% of wealth, but at the same time we never had so many well off individuals all around the globe.
      I have no problem with rich people I have problem with people with no skills demanding sky high wages and quality of living.
      We are not entitled to wealth, we create wealth and for smart individuals it was never easier to do so like today.

      • Keith says:

        When inequality gets too high it kills demand.

        Have you had a look at global stock markets recently?

        If you have no one to sell products and services to, running a business gets difficult.

        You will be waking up to reality soon.

      • Jim says:

        You confuse “creating wealth” with rentier activities capturing wealth in a parasitic manner.

  10. MC says:

    “Growth has serially disappointed”.
    Careful there Governor Carney, you are threading on thin ice. The narrative has been carefully constructed to give the impression even Brazil, which is facing what’s possibly the worst recession in its history, is actually dealing with a minor correction that will be over as soon as… let me get the latest news from the Ministry of Truth… China will embark on a stimulus program. Yes, that will do.

    To be completely honest I’ve come to be deeply cynical about every single official data over those past seven years. They just don’t match the reality I am seeing on the ground.
    By seeing how much manufacturers charge me or the difference between what shipping companies ask for sending a container from X to Y and how much I pay at the post office to seed a packet of heirloom seeds to a fellow enthusiast, I’ve come to believe deflation truly exists but is “contained”, meaning it never trickles down to those consumers who are apparently the main drivers of the worldwide economy.
    They get stiffed at each and every turn, and only see benefits when storage facilities threaten to explode and some inventory downsizing is desperately needed.
    That continuous stiffing of consumers, which often happens in form of unreported inflation (or creeping debasement, as I like to call it) has been the only driver of GDP paper figures for the past seven years.

    In short whatever growth we’ve had since Lehman collapsed has been obtained by squeezing consumers harder and harder in face of not exactly fundamentals. There may be jobs right now, but they pay less than they used to. I have a friend who has been working for the same company for the past fifteen years. He recently did the homework and found, using official CPI figures, he now earns 0.3% less than when he started, despite having been promoted several times, meaning he got increased responsibilities. When I mentioned creeping debasement, he simply threw his arms in the air.

    After being squeezed for whatever little juice they may have left, consumers are then lectured at length about the benefits of monetary policies that are supposed to benefit them by allowing them to consume more now and pay later, another point Governor Carney has made but which surely fell on deaf ears. The only people caring about the future right now are responsible parents and business owners with a long time frame in mind. The rest of the world live in the immediate and fails to see beyond the next quarterly report, election or end of the year bonus.
    Responsible parents and business owners are square in the sights of the “growth right now, no matter the cost” brigade. Those ominous rumbles about outlawing certain banknotes are like a mafia don sending his heavies to tell local businesses “Pay up, or else…”.
    They are effectively telling me there’s no escape from NIRP’s and I’d better spend my money as fast (or faster) as I can make it otherwise “something bad” will happen to my savings.

  11. Dan Romig says:

    My bank in Minnesota only pays me 0.01% interest on funds in my checking account, but I can write checks (to pay bills by US mail-not via a credit card) for no charge. This is, on a small scale, ZIRP, and I am happy with this arraignment. If the Fed goes NIRP, my bank can go along with it too, and the cost to me would be measured in nickels and dimes adding up to a buck or two at most over a year.

    On the other hand, if my cash holdings in my investment accounts are charged ‘negative interest’, I would be forced to keep my “dry powder” elsewhere – and I would not be alone. I pity the people of Sweden who have had this CB theft shoved down their throats.

  12. rich says:

    The canary in the coal mine:

    “Though Danish banks stopped short of charging their clients to hold deposits, for fear of losing customers, lenders elsewhere did. State Street Corp. and Bank of New York Mellon Corp., two of the world’s biggest custody banks, revealed last year they were charging clients for Danish krone deposits.

    “It’s costly for banks,” Niels Roenholt, a senior economist and vice president for economic research at Jyske Bank, said in an interview. “They have problems increasing rate margins.”

    It’s also proving a disincentive to save in a nation that is home to the world’s most indebted consumers, according to figures provided by the Organization for Economic Cooperation and Development. Danish households owe their creditors 321 percent of their disposable incomes, the OECD estimates. Though partly offset by pensions and home equity, the central bank and the International Monetary Fund have warned those assets may be hard to tap when markets are squeezed.

    Central bank Governor Lars Rohde said in May there’s no limit to how much he’s willing to cut Denmark’s deposit rate to defend the krone peg. The lending rate can’t drop below zero, he said.”

    • rich says:

      “Something is rotten in the State of Denmark”

    • walter map says:

      “Central bank Governor Lars Rohde said in May there’s no limit to how much he’s willing to cut Denmark’s deposit rate to defend the krone peg.”

      Rohde should be replaced with somebody who understands economics and hasn’t sold out to the banksters before they reduce the Danes to destitution. One Haiti is one more than the world needs.

      A currency peg amounts to conceding monetary policy to that country which controls the currency to which it is pegged. When China, for example, pegs its currency to the dollar, China is effectively conceding its monetary policy to the U.S.

      Bad as that can be, it gets worse. I don’t know how it is with you Yanks, but British professors of economics require their first years to provide the simple proof that a dependent monetary policy ultimately and necessarily precludes the possibility of an independent fiscal policy as well. And for a country desperate for an economic recovery the one and only thing that can save it is an effective fiscal policy.

      Since adoption of the euro the Greeks have become excrutiatingly aware that such a policy is potentially, if not actually, catastrophic. The lack of an independent monetary and fiscal policy has made it infeasible for Greece to follow the example of Iceland, which did not fall for the euro bait, in repudiating the loan sharks, with the result that now everything Greek is a debt peon to banksters who know no limits to their rapacity.

      Greece was, of course, just for practice.

  13. walter map says:

    “I studied JM Keynes and he never advocated any of those excessive and ridiculous economic measures and policies yet commentators continue to use his name in vain as if he did.”

    Thank you for the rant, Cameron.

    Abuse of economics by the Financial-Industrial Complex has been one of my pet peeves for decades. Evidently such abuse has been a valuable weapon in the Hundred Years Class War and has led to the bizarre distortions we now perceive with such amusement, loathing, and despair.

    I could write a book, but my fear is that it would turn into a multi-volume set and could never actually be finished. Not something I’d care to waste my life doing.

  14. Mike R. says:

    I really can’t come up with a plausible/probable mechanism where people in mass would attempt to ‘get out’ of fiat money. Hoard currency, OK. Buy some gold/silver, OK. By other fiat currency, OK. But the reality is, FIAT (and in this case the dollar) pretty much captures its users.

    Even if we had high inflation, people will continue to use it; they just would alter their spending/investing choices. Hyperinflation like Weimar, I don’t see as plausible/probable. Major default on debt, what are you going to buy bread with?

    So I think this can and will go on for a very long time. A drawn-out drama until a structural element forces a major change in the economies of the world (such as much more expensive oil).

  15. Julian the Apostate says:

    I have yet to see a cash paper US note with a date later than 2013. Attrition pre-plan for going cashless? In defense of the Adam Smith quote earlier Smith was describing an Aristocratic system of landed gentry. The early Rebublic in the US when it overthrew the aristocratic system became a meritocracy. To this day some Americans object to being addressed as ‘sir’ or being called a gentleman. It is not fair to slam Smith and suggesting he is describing a modern capitalistic system.

    • Keith says:

      In the UK we still have an Aristocracy and a privately educated elite.

      The US has the same atrocious social mobility as the UK.

      The US is as socially stratified as the UK, its just better hidden.

      OECD stats ….


    • Jim says:

      For just one example: did the Walton heirs attain their massive wealth – which has translated into outsized political influence – through “merit?”

      Did the financial sector’s share of profits swelling from around 8% to over 40% occur due to “merit?”

      The dynamic Adam Smith described in the quote above quite aptly captures our current situation.

      • Jonathan says:

        Of course not.

        What is really infuriating is the average person accepts that non-grudgingly, because subconsciously they WANT to be them and enjoy all the inherent unfairness of the economic system even though it is clear as day that there is no chance in hell they ever do.

  16. Onwentsia says:

    Continued government and central bank efforts to avoid or further postpone the moderate, necessary discomfort of correcting decades of fiscal and financial excess risk bringing on uncontrollable, catastrophic pain.

Comments are closed.