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David Stockman: ‘You Cannot Build An Entire Economy On Pilates Instructors’
By David Stockman as originally published on Contra Corner and reprinted here with permission
The punk January industrial production (IP) report brought another reminder that the Fed has stimulated nothing at all on the output/employment prong of its dual mandate.
Indeed, as they celebrate a purported "mission accomplished" full employment recovery and confidently prepare to plow forward with an epochal pivot to QT (quantitative tightening), our Keynesian central bankers have remain
Very interesting article. As a (at least relative to the level of knowledge of the author) non academic (only experience is working in financial markets for the better of 50 years now) “economist” I fail to see a reliable statistic, how much capital in engaged in various subgroups of industries over the last 30- to 40 years. Comparing level of investments with the GDP output might show, that modern industries (software; bio-technology; automation or what have you) needed progressively less capital for their growth rates they experienced in the last few decades. Wouldn’t that be part of explanation, that QE no longer has the same effect as it would have had say 30 years ago, when the share of productive industries in the GDP used to be much higher than it is nowadays. ?
Some modern industries do require less capital, but most simply need more specialized capital. Automation, server farms, even bio-tech. QE masked these distortions against a disinflationary backdrop, with the objective was to stimulate productive industries. This was unthinkable 30 years ago, as massive QE combined with ZIRP would have resulted in an extreme inflationary whipsaw, huge misallocation of capital, and no clear direction. This situation still exists, except with huge inflation in risk assets and (apparently) little growth in productive industries. As the title says, you can’t build an economy on pilates instructors, or more aptly you can’t have perpetual growth on the back of non-productive industries.
Anton Sommers — So much punctuation yet so many run on sentences. Your literary skills are on part with the jumbled indicators you so valiantly seek to defend.
If you’re not going to give a real response to the person whose ideas you criticize, please don’t bother.
Well sir, my mothertongue is not english. And my profession was not teaching. “Bas” made a response, which helped me.