Perpetual Money Machine
US economic policy over the past few decades
reminds me of proposals for perpetual motion machines,
which are known to be impossible because you can't
create something (energy) out of nothing.
The laws of thermodynamics say it is impossibled
to create energy out of nothing.
Similarly for wealth. How can financial manipulations
create new wealth out of nothing?
John Mauldin in his blog post
We Can't Take the Chance
under the section A Few Impossible Things"
discusses this and what needs to change.
Here are some select quotes:
... whereas the belief of some marginal scientists in a perpetual
motion machine had essentially no impact, its financial equivalent
has been the hidden cause behind the current economic impasse.
A case in point is the myth, developed in the last thirty years,
of an eternal economic growth, based in financial innovations,
rather than on real productivity gains strongly rooted in better
management, improved design, and fueled by innovation and creativity.
This has created an illusion that value can be extracted out of
nothing; the mythical story of the perpetual money machine,
dreamed up before breakfast.
But, the policies implemented since 2008, with ultra-low interest rates,
quantitative easing and other financial alchemical gesticulations,
are essentially following the pattern of the last thirty years,
namely the financialization of real problems plaguing the real economy.
Rather than still hoping that real wealth will come out of money creation,
an illusion also found in the current management of the on-going
European sovereign and banking crises, we need fundamentally
new ways of thinking.
Read the entire section A Few Impossible Things at
We Can't Take the Chance.