- the chasm and the precipice -

  1. dub
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    The chasm and the precipice on Mt. Utopia

    Alan Greenspan is tasked with guiding a weak climber - the ever-expanding currency system - to the peak of Mt Economic Utopia. To the left is the chasm of hyperinflation and to the right the precipice of deflation, and the path narrows as it rises up to the distant summit.

    On the lower sections of the mountain path it is wide enough to let our guides turn us round. But the closer we get to the summit the more everyone believes it is achievable. Mountaineers suffer the same problem. They call it "Summit fever" and it claims far more lives than bad luck ever did, by corrupting the powers of good judgment.

    It takes a lot to turn one person away from a summit. Turning round a happy crowd is quite impossible. They would rather believe the optimism of the guides who talk of spectacular rates of ‘sustainable growth’. They prefer government statisticians who add mandated public sector expenditure into economic growth figures, and they listen to commentators who refer to ‘Goldilocks economies’ and ‘productivity miracles’. So they buy more sports utility vehicles on borrowed money and re-finance their houses.

    Yet domestic economic activity has no real growth, and high imports cause huge trade deficits. Savings rates diminish, financial instrument yields evaporate, governments borrow and spend and call it ‘investment’, corporations report profits which have nothing to do with earned cash, financial trickery permeates all levels of society and credit is offered to an ever increasing set of less well qualified borrowers, whether sovereign states, companies or individuals.

    The majority cannot see these signs for what they are. Only a few miserable realists look around and, seeing the dangers on both sides, turn back on their own and face the cheerful smiles of those who continue on up.

    It’s a long lonely walk down and there’ll be no-one waiting at the bottom to cheer your safe return.

    That comes from an article by Paul Tustain you can find at http://www.financialsense.com/fsu/editorials/tustain/2004/0327.html


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