Stable Economic Conditions = Stable Personal Conditions
Sounds like a "no brainer", right? Except that such a seemingly simple equation is not simple, as daily examples of arguments to the contrary abound. We hear that if people would just "get their acts together" they would not be without a job, a life...etc. Or we hear that if government would just do X, then clearly Y would take care of itself, except that Y had plenty of time to take care of itself when X was in abundance. If this were a chicken and egg problem, stable economic settings would be the egg (beginning with NGDPLT), but people would rather play the game of chicken with one another than acknowledge that reality.
There's plenty of "blame the victim" (loser) or "blame the aggressor"(unworthy) discussion on a daily basis which neatly sidesteps a growing problem: people aren't as willing or able to give a helping hand to others in the present, in part due to the growing degree they have to fight for their own share. Any smooth sailing ship with fully engaged passengers is (nevertheless) going to list like the Titanic, when too few are actually involved in economic life. Eventually there's just not enough lifeboats, and it's easier to point fingers than to think about why that may actually be the case.
Part of the problem is that most disciplines and endeavors are set up to deal with the minutiae of daily life, which in good times is what normally demands our attention. Enter rough waters and general notions as to overall stability, and people have a difficult time finding a category for novel ideas in their minds. What, exactly, to do with a general principle or rule? Who or what does one assign such factors to? Just as in healthcare, general practitioners are but a gateway to what the "patient" usually needs to seek out in terms of help. In terms of nominal stability, Ben Bernanke, our "general practitioner of economic matters", is the "go to" U.S. source. But even he has his limits, when it comes to implementing what appears rational, in light of problems today with interest rate targeting.
Even though a growing number are convinced that real change needs to happen for central banks, such places are filled with people whose lives are vested in the very strategies that are no longer working as they once did. That's just one of the reasons so many people in power continue to look the other way, even though the youth of their country may have little success finding work. It is human nature to be in denial over such dramatic change. How to react to the fact that something which worked so well for oneself, no longer works for others? Even family are not immune from the lockout that often occurs when a family member fails to find work, and consequently, respectability even at home. The larger scale version of this now becomes evident, as nations even question their own "lower" production areas.
Ultimately, the present economic gridlock has to break. Because - until it does - real economic and social stability in developed economies will be hard to come by. Even though present strategies of quantitative easing are no panacea, at least they are buying us time and keeping matters from being even worse. Recent highs in the marketplace are a good sign for Wall Street: it's Main Street which needs to face its own "demons" in the present, as local economies continue to grapple with uncertainties about globalization. Main Street, monetary policies want to ensure your continued success, and to complain about printing money because "no one wants to buy anything" is to miss the point. You know plenty of people who would be buying goods right now if they could figure out a way to do so. Others among you might respond, "fine, we'll just use our own currency since national currency isn't doing the job here". Main Street, that strategy is also missing the point. Wall Street has not yet missed a beat, in terms of globalization. So Main Street, it's "your move". (To be continued)
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