There is an implicit, if unspoken consensus among many—if not most—in the economic community of the west that the worst portion of our current economic difficulty is behind us. That the economy, weak and shaky as it may be, has avoided the danger of complete collapse. The opinion holds that we can look forward resignedly, if not confidently, to a period, however long, of subpar economic growth, but growth nonetheless.
I fear that confidence is misplaced. The fiscal and monetary policy mix we seem determined to pursue, is not only unwise, but presents grave economic risks that should not be overlooked. I am not the only one to feel this way. On Monday, Professor Kevin Dowd gave the address shown below at the Adam Smith Institute, the UK’s leading Libertarian think tank. It’s entitled The Decapitalization of the West, and it’s primary theme, as a survey of the economies of the West, and their policy results, can best be encapsulated with the lyrics of a Noel Coward song: " There are bad times just around the corner, There are dark clouds hurtling through the sky".
It takes an hour of your time to watch this. You owe yourself that hour, if for no other reason than to learn how you might prepare for the economic troubles for which 2009 was just a prelude.
"Keynesianism has been tested to destruction," and we’re about to pay the price for that testing.