Tuesday, August 16, 2011

McArdle Waxes Poetic About German GDP

As Germany's GDP edges closer to negative territory, Megan McArdle writes:
The German economy has been one of the few bright spots in the global economy over the last few years.  To be sure, it's not very bright . . . more like a night light than a shining beacon.  But in the long darkness that seems to have settled over the rest of the developed world, that low-wattage glimmer of hope shines like the top of the Empire State Building.

Or perhaps I should say shone.  New data seems to show that our little bright spot may be flickering out.

All true, but this Koch featured speaker fails to give the backdrop to this decline, which any student of Ludwig von Mises and Murray Rothbard would spot in a minute.

As I wrote roughly a month ago in the EPJ Daily Alert:
Europe looks like it will open strongly to the downside. With the current tight money policy of the ECB, this should not come as a surprise...Things don't look pretty for the eurozone. I have been advising to stay short the eurozone nothing changes my mind with this news.
A few days later in the Alert on July 29, I wrote:
ECB tight money policy is likely to continue through the Trichet regime which ends at the end of October.  It is unlikely incoming ECB head Mario Draghi will shift policy to an easier stance until there is some strong evidence of an economic downturn or a Euro wide stock market crash.
Bottom line: Watch money supply trends (and demand for cash balances) as Mises and Rothbard taught and you will be way ahead of the numbers. When the numbers are released, it may make some aware of what is going on, but they may still be confused as to the why, and instead will blog about lights, low wattage glimmer, hope, the Empire State Building and things.

For the record, its not "a low wattage glimmer of hope" but the heavy foot of a mad scientist, Ben Bernanke, that is the key. U.S. money supply growth is currently accelerating, which very likely will mean a much improved U.S. economy in terms of the macro numbers watched. McArdle may very likely describe this as a locomotive rolling down the tracks so powerfully that not even a Koch brother or Superman could stop.


  1. U.S. money supply growth is currently accelerating, which very likely will mean a much improved U.S. economy in terms of the macro numbers watched.

    What if this money is hoarded instead of spent? I don't see how you can claim with certainty that rise in cash balances for some equals better economic statistics overall. Not when there is credit deleveraging taking place anyway.

  2. Yes, poetic to be sure, but I never cease to be amazed at their optimism.

    I mean, you never hear them write or say things like "We woke up from our drunken stupor after a night of debauchery and rolled over only to discover we took home the ugly, fat one and we're not telling ANYONE!", now do they?

  3. Bob, did you see this?
    Allstate suing Goldman: