Courtesy of Mish.
Financial Times writer Wolfgang Münchau says Reform the Economic System Now or the Populists Will Do It.
“It is one thing to say, as some of us have done, that the western liberal elites should stop doubling down when faced with a populist threat. But beyond that, what should they actually do?” asks Münchau.
Münchau cites Marine le Pen in France, but misses the far greater threat of Beppe Grillo’s Five Star Movement in Italy. I am sure he would agree Italy is a bigger threat right now.
When I first read his article, loaded with Keynesian references, I thought he was proposing more Keynesian bullsheet.
On second glance, I am not quite sure what he proposes, if anything.
Autopilot
Münchau writes “We should put fiscal policy off the autopilot and challenge the tyranny of the ubiquitous 2 per cent inflation target. And we should start making a distinction between the interests of the financial sector and the economy at large. Failure to do so was one of the reasons for the Brexit vote.”
I wholeheartedly agree, but is Münchau asking for more inflation or less inflation?
A correct approach would be to get central banks out of the equation altogether. Central banks’ push for two percent inflation in a price deflationary world is madness.
