I’ve recently been made cognizant of this personality type that’s rilly, rilly wound up about what the Fed does with interest rates. But, I dunno… such that I think I’m newly cognizant of these guys, they resemble the old gold bugs. I’m not sure they aren’t the same.
I think they have a better argument than the hard money people did though. Far as I can tell it goes like this:
A necessary / mandatory component of “growth” is positive interest rates. Easy enough, but we have central banking, and Fed won’t raise the benchmarks. They say it’s because we have a structurally soft economy, but it’s actually because the government’s debt expense would be huge(er) with it accruing at real world rates.
Now, some of these guys have an inflation phobia that hasn’t come to pass, but I have some sense their finger on this Fed / rates thing is on the mark. You got righty and lefty economists saying, hey increase the rates… fed won’t do it. Why? Is the economy really that soft? I don’t think it is, not that soft here.
Anyway, they won’t raise rates, business still has to make money. If business is not doing it easy in a commercial expansion in a growth environment, they’re doing it by imparting productivity. The obvious way there is to reduce your labor input, and you do it by reducing the amount of man hours or by reducing the man hours’ cost. Generally you steer away from reducing man hours…. You’d reduce output and then have no product. So what’s sought almost universally is a way to reduce your labor cost.
These Brits were pissed about a lot of things. Such that it was ‘migrants’, it wasn’t primarily ‘refugees’ they objected to. It was Poles and Serbians let in by EU rights to migrate, that were taking jobs from native Brits: http://www.vox.com/2016/6/22/11992106/brexit-arguments
So its trade, right, a globalism thing as much as the trade agreements. Cept you can bring in cheap labor instead of cheap products. We’re having that discussion here in the US
I don’t know where I was going to end up with this, narratively, but its Trumpian, basically: this business of undercutting native labor rates to keep commerce chugging along in a no growth environment is a sop to the 1%. Here, Democrats are way, way complicit in that. You’d just not think that would remain tenable. Maybe it won’t.