Triumph of Optimism?

Well one of my favorite websites, has decided to close up shop.  The site will still be up but the editorial team will no longer update it.  For those unfamiliar with their work, the site sought to analyze contemporary economic events from a somewhat strict Austrian point of view.  One of my favorite geopolitical analysts, Joseph P Farrell, referenced them in his work a while back.  So I looked them up, subscribed and enjoyed their daily newsletter that would frequently go into areas of economic analysis that the contemporary corporate media would fear to consider.  They provided an important counterbalance to mainstream economic news that I will miss dearly.

Here is an excerpt of the note sent by the Editor –  

The struggle for freedom, especially today, continues to be both a challenge and a promise. The Austrian-oriented Daily Bell has pioneered insights such as the concept of the Internet Reformation and contributed to the understanding of how globalists use fear-based scarcity promotions to frighten middle classes into accepting international solutions such as the United Nations and the International Monetary Fund.

The Daily Bell helped expose the real agenda of the Soros-funded Occupy Wall Street movement, which apparently remains intent on generating what could be a French Revolution-style bloodbath aimed at the “one percent.” The Daily Bell has also relentlessly exposed the “public banking” promotion aimed at making quasi-private central banks the exclusive province of the state. The idea here is that globalists sponsoring this promotion, including the idea of a “living wage,” remain in charge of monopoly money creation behind the veil of the state. It provides further cover.

Finally, The Daily Bell regularly exposed the hoax of central banking itself, the idea that a group of good, gray men can efficiently fix the value and price of money and produce anything other than serial disasters and increasing ruin.

Part of me was not surprised to read this.  Earlier this month in an editorial called “Drumbeat of Monetary Sophistry” the team seemed on the defensive as they responded to a piece in The Atlantic (another website I subscribe to and faithfully read (almost) daily).  To be fair, The Atlantic’s article did seem like a full frontal attack that went to the very core of what stood for.  Here is an excerpt from the article in The Atlantic –

The Derp and Fall of Inflation Fearmongers … Eventually even charlatans, cranks, and economists notice when the world isn’t cooperating with their grand pronouncements. Eventually reality wins. And after four years of making relentlessly wrong predictions about the second coming of Weimar, that eventually has come now for the inflation chicken littles. At least a little. Back in March 2009, the Fed began expanding its first bond-buying program, and the usual suspects began hyperventilating about hyperinflation. They just couldn’t conceive how all the Fed’s “money-printing” wouldn’t end with double-digit inflation, if not people needing wheelbarrows full of cash to buy the most basic of necessities.

It’s also been a bull market for crackpot economists the past few years. Now, so-called Austrian economists did do a good job predicting the housing bubble during the boom, but they could hardly have done a worse job during the bust. They’ve looked at the Fed’s ballooning balance sheet, and screamed that Zimbabwe is coming, Zimbabwe is coming! Well, it hasn’t, and it’s not.

But that hasn’t deterred the Austrians: they think the price of gold shows the “true” inflation from the monetary base expanding, so they’ve been right all along! But what about now? Gold is down 24 percent from a year ago, and 36 percent from its August 2011 highs — and that despite more “money printing” by the Fed. So where’s the inflation now? (And, sorry Austrians, an increase in the monetary base doesn’t count if there’s no increase in prices). 

– The Atlantic

TheDailyBell went on to refute the Atlantic’s Keynesian interpretation of inflation as price inflation and emphasize the Austrian view that inflation is a monetary increase and that it doesn’t matter whether the currency circulates or not because it still distorts the market. 1040 US Singapore

To be completely honest with you, I think that both the Keynesian and Austrians are right, in a way that all the blind men in the story about the ‘blind men and the elephant’ were right.  Both Keynesians and Austrians have a piece of a single puzzle.  It’s just that theorists sometimes ignore the real influence of geopolitical forces, market manipulation and outright corruption that close the gap between what is predicted to happen in theory and outcomes we observe in our reality.

As I continue in my personal quest to understand the world around me, I read not only the work of theorists but also the work of the practitioners.  My spirits were lifted this week, as I read a report from McKinsey & Co called “Game changers: Five opportunities for US growth and renewal” which is freely available online.  As the title suggests, the report identifies catalysts that can spur productivity, boost GDP by hundreds of billions of dollars, and generate significant numbers of jobs by 2020. 

After evaluating a larger universe of ideas, we arrived at a set of five opportunities that could accelerate growth: shale gas and oil production; increased trade competitiveness in knowledge-intensive manufactured goods; the potential of big data analytics to raise productivity; increased investment in infrastructure, with a new emphasis on its productivity; and a more cohesive and effective system of talent development in both K–12 and post-secondary education.

These game changers are different in nature, but mutually reinforcing. Some are relatively sector-specific, while others are broad and cross-cutting. Some are already rapidly unfolding and can boost demand to speed the recovery, while a renewed emphasis on infrastructure and workforce skills will lay the foundation for long‑term growth, delivering even larger returns by 2030. But they all share a common thread: an immediate window of opportunity for substantial impact. In all five of these areas, forward-thinking investments and continued innovation from the public and private sectors alike could place the United States on a faster growth trajectory by 2020—setting the stage for higher living standards and greater prosperity in the decades that follow.

 – McKinsey

What is even more encouraging to me, is the extent to which much of this is private sector driven and does not necessarily depend on political intervention.

So as always, while I continue to pay attention to those who provide an intelligent counterbalance, I remain very optimistic about the future.  Each of us just needs to ensure that we are well positioned to benefit from what is happening around us as the great shift continues.  Read more on   

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