Cantillon Effects - latest commentary CantillonCH

Far too many commentators seem unable to decide whether to fret that we owe too much or that we are borrowing too little. They all seem to regard saving as a vice, not a virtue. Such confusions are symptomatic of a society uncertain of what it should believe in and in whom it should place its trust. Those at the head of that society believe only that THEY should maintain their place there and are willing to unleash dangerous forces – economic, political, and social – to try to do so.

While politicians anxiously check the shifting weather-vanes of public opinion and scientists squabble over facts as well as interpretations, central banks are resolutely doing what they do best - wildly exceeding their briefs and trying to drown all problems in a flood of newly-created money.
As ever, the underconsumptionists worry that a lack of demand will usher in deflation, in spite of all such efforts. Some of us, however, worry more about what it will do to supply.
Here, we explain why.

The MMT crowd want to give the government unlimited power to borrow and spend money; half their audience thinks this is great because -along with everyone else- it already owes so much money that it can't possibly allow interest rates ever to rise; and Kenneth Rogoff wants to PAY the state to borrow, not charge it for the privilege. Running the printing presses hard, behind the scenes, stands everyone's favourite open-handed uncle - Fed Chairman Jay Powell.

Should we be more worried about #Covid19 or about the response of the authorities to its outbreak? Is the media, once again, doing us a disservice in adopting an undifferentiated, car-crash approach to events? What does all this tell us about science and the role accorded to those calling themselves, 'scientists'?

Beguiled by Their Own Augury
If the wizards who populate our central banks had wanted to ignite a further wave of speculation in an already overheated market, they certainly succeeded in that aim by holding out the promise of imminent ease. But can our Mickey get the buckets and brooms to behave again before his master returns to chide him?

We often talk of consumers as those 'driving the economy' or of representing its largest component. Official policy is usually aimed at stimulating as much consumption as possible, usually through forcing the interest rate lower in order to encourage borrowing.
But does the concept make any sense and does that policy do more harm than good? Part 1 of 2.