The New New Economy

Actually, it's the old economy. In the old economy, when asset values inflate, the cost of money to acquire them goes up (unless the Fed artificially maintains low interest rates). In the old economy the rise in asset values would exclude buyers who cannot afford to pay (unless lenders give money away for free, courtesy of the Fed). In the old economy, when companies produce goods and services that nobody wants to buy, sometimes at any price, they go out of business (unless the government declares them too big to fail).

We know it's the old economy because despite the best efforts of woolly-headed community activists and the policymakers trying to please them, the market finally declares a holiday on the misallocation of productive resources and deflates to properly reflect the real value of our choices. The sad but entirely predictable result is the loss of jobs devoted to the making and selling things that nobody wants to buy.

In the old economy, this is called a recession. It's an opportunity for consumers to reprioritize wants, adjust expectations, and save for the future. It's an opportunity for businesses to reinvent themselves - jettison old ways, strengthen connections to stakeholders, and innovate new products and services.

In the New New Economy, such adjustments are seen as bad. Instead, in the New New Economy, politicians deny their own excesses, scapegoat the rich (who are the only group with enough risk taking capacity to restart the engine of wealth creation), and force feed more money into communities, companies and banks already suffering from an overdose of the cheap stuff.


Like mainlining alchohol to the drunk, politicians in the New New Economy cannot seem to arrest spiraling asset deflation and job losses but are intent on making sure we cannot feel the pain. In the New New Economy, it seems, the only destination is a White House-induced Depression.