November 8, 2019
Just as forestry management's policy of suppressing forest fires insured uncontrollable conflagrations, so central banks' attempts to eliminate recessions insure a financial conflagration that will burn down the entire global financial system.
The first task of those at the levers of neoliberal global capitalism is to deny that global capitalism is in crisis. One manifestation of this is the no recession ever again policy that is the implicit goal of central banks and governments globally.
Any hint of global slowdown draws an immediate and overwhelming deluge of credit and currency as central banks slash interest rates, buy bonds and stocks to push markets higher and unleash a tsunami of fresh credit so corporations can buy back billions of dollars of their own shares and consumers can continue to buy vehicles, houses and other goodies.
Neoliberal global capitalism has one unstated law: credit must always expand or the system dies. The rate of credit expansion can increase or decrease but it must continue expanding forever.
This is the foundation of the no recession ever again policy: as long as governments, consumers and corporations continue to borrow more, nothing else matters.
But as the Yellowstone Analogy illustrates, something else does matter: the financial dead wood of mal-investment, bad debt and excessive speculation is piling up, creating the ideal conditions for a financial conflagration that will consume the entire system.
Let's start with neoliberal global capitalism.
Neoliberal global capitalism has two elements: one is the ideological quasi-religion that everyone prospers when everything is turned into a global marketplace of freely flowing capital, labor and buyers-sellers.