It’s been raining in London. And raining and raining. The economy has also been falling down, and the prospect of Olympics gridlock has not improved the British mood as British banks like Barclay’s get critical scrutiny.
“Please don’t stop the music,” Rihanna still sings. And the markets and central bankers have been singing that chorus as they applaud any new fresh credit stimulus.
But in London’s Hyde Park, after Paul McCartney recently joined Bruce Springsteen on stage, local authorities cut the power in the middle of “Twist and Shout.” The Boss was not pleased, but the concert had gone a half hour over the local curfew.
We all now know that you are not supposed to lie about Libor, but now we know that you cannot keep singing “Twist and Shout.” Even in London, bankers and economists seem to believe that Keynesian economics will bring satisfaction to a stalled global economy
Adam K. Raymond wrote in the July-August issue of Mental_Floss Magazine: “A Keynesian cook would be a big fan of risotto, a dish that requires a fair bit of intervention on the part of the cook (the government). Unlike regular rice, which is dumped into a free market pot of boiling water and let to fend for itself, risotto must be regulated. The cook adds ladlefuls of hot stock to a pot, allowing the rice to absorb it. When it begins to dry during a stock recession, he intervenes with another ladleful, refusing to let the free market forces of unregulated Arborio rice dry out and ruin dinner.”
Neither rain, nor hot stock, or ladlefuls of credit expansion is likely to heal what ails this economy – which already seems dried out and ruined. In Spain, Budget Minister Cristobal Montoro recently announced: “There is no money in the public coffers. There’s no money to pay for public services.”
If we are looking for real satisfaction rather than shifty dance moves, it is time to replace the Federal Reserve’s Operation Twist with a gold standard. That’s the recipe.