Is Growth Potential Still "Open For Discussion"?

Some days, it's not easy to know for certain. And yet economic circumstances, given the chance, could change for the better in the near future. Substantial gridlock might be overcome (!) - which would make an "upgrade" to the present growth trajectory more likely. Even so, would it be possible to convince central bankers of such a possibility? This matters. After all, it helps to remember that any resolve on the part of populations for continued progress, needs to be central bank resolve as well.

Or, at least that holds true insofar as how monetary policy is presently defined. In other words, we still need the "blessing" of central bankers to move forward, monetarily and economically. What's more, the interests of governments and central bankers have become more aligned with finance interests over time, which bear considerable responsibility for pulling back on growth. Too many still find it difficult to imagine the citizen as producer of one's destiny. Instead, the consumer role which became so important in the 20th century, still prevails - along with the interest rate focus which came to define it.

Not only are citizens uncertain of the Fed's role, but many also see the symbolic role of money differently as well. Until now, many who questioned the existence of the Fed, often did so on the premise that the Fed was providing too much monetary backing in the present, instead of not enough. Requests for the Fed to print more money when needed, are not quite recognized for what they represent. The request for monetary backing based on behalf of all engaged (total spending capacity) not only remains unfamiliar, but unemployment "targets" are not the same thing. Nor are such targets suitable for the job that needs to be done.

Right now, central bankers and governments mostly have each other convinced that it's not reasonable to expect better than this subdued recovery - indeed, well out into the future. How might governments and central bankers respond to the fact their citizens do not want to give up on hopes and aspirations? Are the present economic circumstances too beneficial for special interests, for anyone to "rock the boat"?

Because all too often, the public is now being told in so many words, to dial down its hopes. Governments need to rely on the judgement and decision making abilities of their citizens for today's challenges, so that disappointment and frustration does not get further out of hand. Relying on the knowledge use and skills capacity of citizens, means tapping into the tremendous efforts they have made to be a part of society in the course of their lifetimes.

What's more, governments do not have to directly employ their citizens in order to make their voices heard and their efforts count. Citizens have the ability to coordinate mutual employment for knowledge use and services among one another. They would be able to monetarily back one another, through systems in which equal matched time use becomes local product. This would also allow ongoing issues and problems to be addressed in local settings.

After all, the services which governments have struggled to indirectly provide, are what citizens have already invested in, through their own time and sacrifice. It is wrong to just dump the efforts of so many into the dustbin of history, because of an arbitrary slowdown in economic growth. If for no other good reason, include citizens in problem solving just for the sake of the happiness factor, just as the example of dogs in this great article.

True, a "new" growth path was stabilized since the Great Recession in the U.S., but the fact that it is now a lower trajectory, has mostly been rationalized away. Fortunately, not everyone is ready to forget what the earlier growth path was all about. James Pethokoukis, in Sorry America, the 'new normal' may be here to stay, wonders if "the good times may be over for good". And Binyamin Applebaum in a recent NYT article, writes:

For more than a century, the pace of growth was reliably resilient, bouncing back after recessions like a car returning to its cruising speed after a roadblock.

It seems that many among the elite gave up on the growth capacity of the country, just as an earlier consumer led form of growth reached a certain tipping point. Perhaps some even imagined that tipping point coming, for the Fed to withdraw monetary support to the extreme it did - instead of meeting the problem head on. And meeting the problem head on would have meant serious discussions with the public about better forms of future growth - something which governments have been too reluctant to attempt.

As a result, monetary policy continues in a subdued growth pattern. It's a pattern which thus far has been interspersed with lots of hand wringing and blame games, rather than the sanity which a level nominal target could provide. Instead, there has been a growing mountain of excuses why a better growth based outcome is supposedly not possible. At some point, the excuses need to be recognized for the stalling tactics they actually are: tactics to delay the possibility of greater monetary stability.

With a little luck, the topic of growth will remain open for discussion. After all, in some respects, the discussion has hardly even begun. Excuses why we supposedly need to give up on growth are still coming in, even as I attempt to complete this post. Those who have given up, need to be proven wrong.