![]() This is what’s believed at the same Fed that said bank bailouts were essential, and that credit can be decreed easy: prosperity is inflationary. Others argue that too much growth is inflationary, that productivity could outstrip available labor and factory capacity on the way to rising prices for both. The Fed can only redistribute what we’ve already produced, or as is too often the case, reduce the amount of credit on offer by decreasing the cost of borrowing what we've already produced. They’re one and the same, and that’s why readers should always cast a skeptical eye on central bankers who promise to ease availability of credit. So if the economy is booming, so will be the availability of credit. Lest we forget, credit is merely access to goods and services produced in the real economy. Some will say “Goldilocks” merely presumes reasonable access to credit that booming growth would cause demand for credit to outstrip supply. It’s also the case that we’ll never run out of room to grow so long as these same aforementioned conditions apply. But with human wants unlimited, with poverty still the norm in many parts of the world, and with something as basic as plumbing still a luxury in much of the world, there could never be too much economic growth. Implicit in “Goldilocks” is the ridiculous belief that there are limits to growth, or better yet, that there can be too much growth. economy could soon be the lucky recipient of a thrust of innovation along the lines of cars at the beginning of the 20th century, or the internet at its end, would pundits like the New York Times’ Jeff Sommer wring their hands over a growth spurt that would presumably disturb investors allegedly happy with the illusory monument to average that is “Goldilocks”? High achievement is what individuals strive for, not the mediocrity that confused pundits and economists have a tendency to elevate.Īssuming a booming economy, would these same pundits who think that “too hot” is unfortunate blanch at healthcare, retail, software, or transportation innovations if any of them meant much faster growth, including growth that would take us past the comically deluded notion of “full employment”? If the U.S. ![]() ![]() Is Le Bron James better off when his 30-point games are besmirched by a high number of turnovers? Would Tom Brady, Peyton Manning or Aaron Rodgers prefer to throw two touchdown passes and two interceptions, versus four touchdowns without any picks?Įconomic activity outside of sports is no different. Economists and politicians say that government consumption of capital taxed and borrowed away from us is “good for the economy.” But in an economy of individuals, and that’s the only kind, can any individual say his personal economy is made better off when politicians tax away his earnings so that they can be handed over to errant banks, overstretched homeowners, or failed carmakers? Just a question, and a worthy one since maintaining the health of the economy was floated as the reason to fleece the prudent in favor of the profligate in 2008.īack to Goldilocks, an economy of individuals mocks the obnoxious conceit that says the individual is elevated by tepid conditions, and harmed by abundance. Politicians sometimes disagree, they’ve been known to shackle success with higher taxes, suffocating regulations and debased money, but most wouldn’t say with a straight face that the economy is made better off if and when barriers are erected in front of the talented.Īllowing for a quick digression, readers might think about government spending in the same way. An economy is once again comprised of individuals, and as such, the merely breathing comprehend that there really is no such thing as an individual achieving too much.
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