In one of yesterday’s Markets and Money articles we discussed the thought that people stop believing something when it no longer promotes their survival. We realise this is problematic with regard to say, religious belief. In that case, if your belief calls for the extermination of non-believers, it’s not just about what you believe. It’s about the world you try to create and how you coerce others.
It would be much easier if, say, you believed you were a superhero who could fly. One leap off a tall building would be enough to disabuse you of the notion and clean the gene pool up. The veracity of every belief is not so easily tested, though. The world is full of things we don’t know, can’t know, and don’t even know we don’t know.
But let’s leave those matters aside and focus on finance. When will people stop believing in the healing powers of Quantitative Easing and the virtues of perpetual government debt? Well, that one’s easy! They’ll stop believing in the Keynesian claptrap when they realise it’s making them poorer and lowering their quality of life.
Proof of this lower of quality of life equals: declining levels of home ownership, higher unemployment, higher consumer prices, lower returns on mandatory savings, lower returns on voluntary savings, higher taxes, more regulation, more calls for ‘shared sacrifice,’ continuous campaigning by public officials for more laws, the Kardashians, and more.
Some of those indicators are quite real and tangible. And some of them are perceptions. But social moods evolve just like bull markets and bear markets. Unnaturally long booms financed by excess credit are followed by unnaturally long busts, where the cultural memory of going broke lingers like a visceral experience. Sometimes you have to experience something to appreciate it. No amount of book learning will do.
for Markets and Money
From the Archives…
William Knox D’Arcy: The Greatest Australian You’ve Never Heard Of
30-11-2012 – Callum Newman
Credit and Credibility
29-11-2012 – Greg Canavan
Nothing More than Feelings… For the Aussie Dollar
28-11-2012 – Dan Denning
The Thanksgiving Gift from the Feds
27-11-2012 – Bill Bonner
The Aussie Dollar Dilemma
16-11-2012 – Dan Denning