An "investment" that requires more and more cash to be shoveled into it isn't an investment, it can be a hobby (boats, racehorses) or a Ponzi scheme, but an economy that can't function without deficit spending is nothing but a Ponzi. Strictly business, no room for hobbyists.
We track the amount of Federal budget deficit required to goose 'X' amount of growth in the Gross Domestic Product and the current projection of the deficit for the fiscal year we just entered (Oct. 1 - Sept. 30 federal FY) is $1 Trillion. The forecast growth calendar year 2022 to 2023 is $630 billion. Call it bang-for-the-buck or or debt saturation or marginal productivity of debt, whatever, we are now in the position that to keep the hamster wheel spinning we are going to run (CBO estimates) deficits averaging over $1.6 Trillion per year for the next decade.
That's, by definition, a Ponzi, a scheme that collapses unless new, and rising amounts of new, money is injected into the fraud.
And I'm not even getting into the Cantillon effects of QE and zero interest rate policy.
From Jacobin Magazine, October 9, 2022:
In 2016, on the eve of Donald Trump’s victory, the BBC released a provocative documentary from British filmmaker Adam Curtis. Like all of Curtis’s movies, the film is kaleidoscopic in its presentation and sprawling in its scope, but it centers around a relatively simple thesis. Over the past forty years, our leaders have abandoned mass politics for a consumerism whose convenience and seeming security have enabled them to preserve their grip on power. “Extraordinary events keep happening that undermine the stability of our world,” he declares toward the beginning of the documentary. “Yet those in control seem unable to deal with them. And no one has any vision of a different or a better kind of future.”
Curtis calls this experience (and the film that explores it) “hypernormalisation” — a term he borrows from the Russian science fiction authors Arkady and Boris Strugatsky, who captured the alienation of late Soviet society in their novel Roadside Picnic (the novel later served as the inspiration for the Andrei Tarkovsky film Stalker). In her latest book, Goldman Sachs executive–cum–journalist Nomi Prins coins the titular phrase “permanent distortion,” which she uses to describe a related phenomenon: the growing cleavage between global financial markets and real-world economies.
While it acknowledges a range of bad actors ravaging working people, Permanent Distortion sets its sights on the US Federal Reserve and the practice known as quantitative easing. In the wake of the 2008 crash, Prins writes, the Fed poured trillions into banks with no strings attached, while millions of people sank into destitution and despair.
If the Federal Reserve is the progenitor of permanent distortion, she argues, then the subprime mortgage crisis serves as its villainous origin story. On October 3, 2008, amid historic financial losses, President George W. Bush signed the Emergency Economic Stabilization Act, creating $700 billion as part of a Troubled Asset Relief Program (TARP). Two months later, the Fed cut interest rates to zero, where they would remain for seven years. Taken together, these moves signaled the emergence of the Fed as a new “sub-superpower” — one that could bend global markets to its will by providing credit swap lines to other central banks to convert their currencies into sought-after US dollars.
The rest is misery. Citing the research database RealtyTrac, Prins notes that foreclosures leapt 21 percent in 2009, affecting nearly three million households. As many as 3.7 million slid below the poverty line in 2009, per the Economic Policy Institute, while one in five children were living in poverty. The banks paid their fines and emerged largely unscathed. By 2014, Prins observes, their stock index was up 280 percent from a market low five years earlier.
The federal government could have addressed the economy’s persistent stagnation through fiscal policy. Instead, it leaned on the loose monetary policy of quantitative easing, or QE.
“The idea [was] that ultimately business and people living in the real economy would be able to borrow more and pay less interest on their debts,” Prins writes. She further explains:
These [QE] injections were intended to generate more consumption and investment that would impact real people at every level of the economy. . . . The problem with the QE premise was that it relied on big banks doing their part. It assumed that megabanks acted in predictable ways and would work to support and build out the broader economy. The injected money would then flow to smaller businesses and the general population instead of megabanks using the funds to fuel speculation and market-oriented trading activity. Reality was much different.
At a time when the Fed is violently reversing its post-2008 easy-money policies, events would appear to have eclipsed this critique. But for Prins, the pandemic ushered in a new stage of capitalism whose dimensions are still being determined by the QE experiment that preceded it. Even before the first official COVID-19 infection, a kind of hypernormality had already overtaken our financial system, warping economics as we had previously understood them. In 2019, eleven years after Lehman Brothers filed for bankruptcy, the Fed announced another rate cut — its first since the crash. This wasn’t a response to a specific crisis. Instead, Prins contends, low rates and the seemingly limitless ability to print money had become a “permanent fixture” in the Fed’s toolkit.....
....MUCH MORE
Be not afraid, all is proceeding according to plan.
If interested see also yesterday's "Flashback: That Time Just Weeks Before Covid That BlackRock Told The Fed Exactly What It Wanted The Fed To Do (BLK)"
