Financial fairy dust: G20 detached from real world
For those who consider economics a cheap conjuring trick, the latest G20 finance Ministers’ meeting seems to have delivered concrete proof.
Several hundred million dollars have apparently disappeared in a meltdown at what was once ‘Magical: The Gathering Online Exchange’.
Simultaneously, G20 finance ministers enjoyed a weekend’s groupthink in Sydney and it was immediately obvious from the communique that somebody had been sprinkling mystical fairy dust on the memo as opposed to actually proposing anything resembling economic coherence.
Two pages of communique later, I am convinced the political classes really have lost the plot. Perversely, Mt. Gox may come and go but there is a certain coherence to bitcoin.
Communiques usually alleviate insomnia but the February 22-23 G20 message demonstrates how the political/central banker class has achieved a remarkable elevated state entirely devoid of attachment to the real world.
The opening point praises the world’s great Quantitative Easers - the US, Britain and Japan - in increasing growth. A deft syllogism albeit not mentioning the fact that crackpot central bankers have used ‘funny money’ to get the economy to where it is...i.e. the verge of another crisis without sustainable growth and lots, lots more debt in the system. Generously they name-check China’s ‘continued solid growth’, even though its developing banking crisis could yet induce global panic.
The second paragraph is a deep dive of bureaucrat speak which basically covers every delegate’s backside, lest the economy collapses before they have submitted their expenses claims.
In paragraph three the weirdness quotient ratchets up with phrases last seen when Bilbo Baggins led a delegation of Keynesian hobbits to a Middle Earth economic convention:
“There is no room for complacency. Addressing these challenges requires ambition. We commit to developing new measures, in the context of maintaining fiscal sustainability and financial sector stability, to significantly raise global growth. We will develop ambitious, but realistic policies with the aim to lift our collective GDP by more than 2 percent above the trajectory implied by current policies over the coming five years. This is over US$2 trillion more in real terms and will lead to significant additional jobs. To achieve this we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies. These actions will form the basis of our comprehensive growth strategies and the Brisbane Action Plan.”
I know, I know. I couldn’t make this stuff up. Back when the South Sea Bubble was inflating in 1720, a shrewd thief published a prospectus “for carrying on an undertaking of great advantage, but nobody is to know what it is.” In pure bubble mode, investors bought all the offered stock and the founder promptly emigrated never to be seen again.
Thus the G20 communique effectively presumes we, the citizen taxpayers who fund government, are mugs. Led by Australia’s Treasurer Joe Hockey, the G20 finance ministers want us to believe that they have a brilliant world-beating idea which will add a couple of trillion of growth to the world economy - but they aren’t going to tell us what it is yet.
In an atmosphere without scope for complacency, we have to wait nine months to hear the master plan. Isn’t that a tad oxymoronic for starters? Meanwhile ‘fiscal sustainability’ is presumably code for taper - er, hello! The damage is already done there!
The reason the master plan remains private is because they don’t know what it is. I suspect Hockey has an idea, but being a G20 neophyte he hasn’t worked out how to break the news to most leaders that it means disassembling their corporate socialist plutocracy. Hockey may have a sensibly Thatcherite vision like the one that rescued Britain in 1979 based upon dismantling rubbish apparatus which strangles innovation and development - like, well, government.
That’s a nice idea when you’re in Australia and recently elected, but when you’re up against the entrenched tax and spenders of France, Germany, America and contemporary Britain, this policy lacks adequate ‘third way’ delusion. After all, if politicians actually could induce growth through intervention, we wouldn’t need a G20 communique promising growth (through intervention).
Hence, we ended up with the fairy dust sprinkle approach: the entire G20 communique boils down to “we have a magic wand and we’re going to wave it to save the world.”
The likelihood of anybody living economically happily ever after is currently a dim prospect.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.