These Shouldn't Be The Most Watched Lips On the Planet
Leonard Read’s “I, pencil” taught us how complicated something as simple as a pencil is to produce. It requires coordination of hundreds, if not thousands of people and incredible machinery in a process so complicated that probably no one who is part of it knows how to do it end-to-end. It’s the market that coordinates everyone through trade and price mechanism to the successful delivery.
And that's just the pencil. Now extend that to the stationery industry, or to whole office and school supply sector, to the whole economy. The complexities, relations, skills and underlying capital structure are immensely complicated, yet won't stop delighting us with ever more beautiful, practical and accessible products.
All of that happens without any central planning element. In fact, as the case of Soviet Union (and its sphere of influence where I spent early years of my life) shows, it actually stops happening the moment central planning is involved. That's when people die of hunger or get murdered en masse for trying to change, expose or run from it or simply for having the wrong origin or “class” affiliation.
Except for a few days a year, few places on Earth and one (arguably the most important) part of our economy. One of those places is Federal Reserve Board’s Eccles building, where a bunch of suits reconvene quarterly under the spotlight of the whole world to discuss allegedly the one sector which operates in a parallel universe where central planning works: money. Today is one such day and it is the first one of the new FED chair Jerome Powell.
For a couple of hours today, his will be the most watched lips on the planet while trillions worth of money and financial instruments will be eagerly waiting to unleash themselves onto the market in case their traders detect as much as a glimpse of something unexpected. And if they do, media will report how much value was “destroyed” or how much the elusive “market cap” has grown without a single factory slowing down its production or being launched. And that despite the fact, that this unaccounted and unelected bureaucrat is relying on models which have zero chance of coming close to the complexity of the whole economy and are off from reality by multiples in as short as there months projections.
What’s messed up, there is a real reason why this bizarre theater is playing and it is the importance the rates of interest play in capital structure and consumer preferences. When these morons get things wrong (and they always do), the consequences are nonlinear to the difference between their assumptions and the real situation in the economy.
Even worse, in the bubble economy, the recessions on the street with consequences for millions of real people get triggered by these elites in empty suits who think they know better and the mainstream media talking heads will assure them of that every minute of the airtime they receive.
No wonder that for decades the chairs of the worlds’ largest central banks have been extreme interventionists, drunken with their own influence, power and celebrity status, let alone their contact list full of people willing to give them fat paychecks the moment they leave their allegedly independent seats. As a result, every new bubble is worse than the previous one and those involved openly admit today, that even the smallest swing in the main central planning parameters can collapse the insanely bloated house of cards, so the cacophony of talking heads and corporate financial analysts warn against it.
Where free market and decentralized economies clean up accumulated inefficiencies very quickly before they become systemic (or “too big to fail”), everything that is too close to government central planning is bound to serve only handful of cronies and blow in everyone’s faces sooner or later, which is the situation we are facing now.
This is why we need to build parallel, distributed crypto structures for everyone.