Booms and Busts

While the world is abuzz over artificial intelligence (AI), present technologies are limited more than most people want to believe. The situation is ripe for malinvestments.

Keynesians believe that if there is a bout of inflation, central banks can slowly guide the economy to a “soft landing” which minimizes unemployment and income losses. Such policies, however, only lead to further boom-and-bust scenarios.

The Nigerian government has passed a new minimum wage law, and the usual suspects are happy because the country "is getting a raise." Economic reality, however, will set in soon enough as people find that government edicts do not create wealth.

Politicians say "greedflation," and profits are what fuels rising prices, but the real culprit is fiat money creation fueled by the central bank. 

Politicians say "greedflation," and profits are what fuels rising prices, but the real culprit is fiat money creation fueled by the central bank. 

We are stuck in the middle of the road, far away from full socialism or the unhampered market.

Keynesians believe that if there is a bout of inflation, central banks can slowly guide the economy to a “soft landing” which minimizes unemployment and income losses. Such policies, however, only lead to further boom-and-bust scenarios.

The Nigerian government has passed a new minimum wage law, and the usual suspects are happy because the country "is getting a raise." Economic reality, however, will set in soon enough as people find that government edicts do not create wealth.

Although John Kenneth Galbraith promoted socialism and Keynesianism, at least he was an entertaining writer. His book, The Great Crash, 1929, provides a readable history of the stock market crash that helped bring on the Great Depression.

Keynesian economists claim that the economy needs at least 2-3% inflation in order to avoid business cycles. But these inflation rates over time are economically ruinous and they actually harm economic growth.