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  • OIL - ENERGY MARKETS

The death of macro-economics

The end of nearly six years of expansionist monetary policy has yielded nothing.  Its place should have been limited to providing liquidity as financial institutions approached bankruptcy.  Creative destruction was averted in favor of intervention.  Congressional abdication favored a technocratic approach of experts, who, being informed from the failed ideology of neoclassical economics (Keynesian), sought 'stimulation' through arcane monetary means (quantitative easing, debt monetization.)  As a policy, the Central Bank sought to relieve Congressional authorities from having to implement policy consistent with their authority.  They simply punted to 'The Fed.'

Its now over and the failure of a Keynesian imprimatur as a panacea is worthy of deep reflection.  

Both Bernanke, Yellen and Draghi know one thing:  Central Banks around the world have not conjured growth!  This is what animates the policy convictions of both Yellen and Draghi as they seek an exit from political spheres that remain tethered to elected officials.  This is why Draghi has allowed M3 to fall.  

What did the intervention of $4 trillion dollars get us? 


Q.E. bond buying helped in round one to get capital flowing.  

But let's remember what institutions did the heavy lifting.  Treasuries Temporary Guarantee Program of money market funds worked, along with FDIC's Temporary Liquidity Guarantee program that unfroze the banks and shored up interbank lending.  

The Fed's Q.E. bought treasures, secular instruments, corporate debt and government backed mortgage bonds; but remember, these classes were NOT  under duress.  This permitted government to expand itself and its debt obligations under the benevolence of zero interest rate policy.  But the 'zero bound' level never helped main street.  

We should remember previous growth cycles and how they were achieved.  

For those old enough to remember the near death spiral of American leadership immediately before Reagan in 1979 understand the moral, political reserve required to underwrite an expanding, credible, global IMPERIUM.  We know the intimacies and battles that monetarism embodied from 1984 forward, namely the replacement of fixed exchange rates with adroit policy mix under Volcker.   The 'Great Moderation' as policy has deep abiding intellectual patrimony.  

We here at COUNTERSTRIKE MEDIA seek to expose the vacuity of contemporary policy that eschews the very achievements embodied by Reagan, Milton Friedman, Ann Schwartz, George Melloan & the late great Robert Bartley.  

How else to say it?  The achievement of sustained GDP growth exceeding 5% happened, beginning in 1984.  It can be gone again.  

On Monday, October 14, 2014 the IMF's (International Monetary Fund) Dr. Christine Lagarde revealed a notion unbecoming to any centralized banker.  She's admitted that central banks around the world cannot conjure growth.  She termed it 'the new mediocre'.  It's nothing less that the death of Keynesian thought.  

Monetary policy cannot by itself drive growth.  Dr. Lagarde's admission is a reminder that the application of androit policy mix between monetary and fiscal authorities is required for growth.  This was implicitly understood by both Volcker and team Reagan immediately after the demise of fixed exchange rates.  

Having credible authorities at the helm matters. 

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