by Rick Ackerman, Rick Ackerman.com:
[In the guest commentary below, Erich Simon sees Quantitative Easing as the death rattle of the U.S. economy. Americans will be taxed just to stay afloat as the financial system edges toward a seemingly inevitable day of reckoning. And although the gold coins you’ve socked away will probably be easy to barter in very hard times, they will not save the day for a global economy that can be brought back into balance only by a violent wrenching of the gears. RA]
In the good old days, before Quantitative Easing was used to “stimulate” the economy with printing-press money, bank loans were invested with the goal of producing sufficient profits to retire the loans. Sound investments produced profits, and society advanced — both fundamentally through the creation of new businesses; and economically as a result of new jobs created and the wealth-multiplier effect. Money remained sound, and its desired property as a store-of-value was affirmed.
But we are no longer in a growth economy. Rather, the economy is akin to a mature and declining product life-cycle. We have squeezed the final drop from the last technological apple plucked from the tree of the Industrial Revolution. The Green Revolution is similarly over, leaving behind state-sized swaths of barren, cracked and salt-encrusted clay, growing nothing more than the next generation of genetically modified Soylent Green. Inventions like penicillin have all been fully exploited. The latest medical breakthroughs, to fight cancer mostly, consume prodigious resources. The dot-com boom was the grand finale, an essentially frivolous exercise in non-productivity masked by its supposed social “contribution.”