This is from the Guardian this morning:
At its heart, today's market panic shows that investors are losing faith in central banks' ability to keep the show on the road.
So argues Jasper Lawler of CMC Markets, who writes:
The People's Bank of China has spectacularly failed to stimulate the Chinese economy, Europe's whole recovery is based on a lower euro which was just undermined by the yuan devaluation and the US is experiencing its slowest post-recession recovery on record, despite huge stimulus.
Those stimulus measures involved ultra-low interest rates and massive bond-buying through quantitative easing.
That drove many world stock markets to record highs in recent years, but didn't resolve the underlying problems in the global economy.
So what we need is a stimulus by central banks that gets money into the real economy.
That's People's Quantitative Easing, of course: central bank made money for benefit of the real economy, not the speculators.
I hate to call that rocket science, and yet apparently it is.
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But what I ask, is the “real economy”? Is it possible that a “real economy” no longer exists? History suggest that forcing money into an uncertain economy invariably puts it into the wrong hands.
Demetrius, that’s why Richard argues for a courageous state to invest it strategically, and not to just hand it over to banks to do with as they please, as with the previous rounds of QE where exactly that happened.
The Government could quite easily start up a range of mid to long term infrastructure projects, such as rail electrification and expansion, which would bring with them mid to long term economic benefits.
At the same time, they should also be investing in projects which will reap a more immediate benefit in terms of employment, which could be for example, mass schemes for installing insulation in houses and modernisation of social housing stock.
Both of those two ideas just as starters give a good example of why a strategically minded government could make a big difference starting now.
Of course the real economy still exists. It’s just the real work is mostly done by machine, and the non-owners of production have no way of buying the produce.
Read Paul Mason’s latest
For the record, and at the risk of being dull, “the real economy” is phrase a that enjoyed popularity among journalists post-GFC and it distinguishes the material economy from the financial sector casino that doesn’t actually produce anything. Casino capitalism increases its share at the expense of the real economy.