The economy of 2015 started out ‘unexpectedly’ weak before succumbing to ‘global turmoil.’ It was the events of last summer that began to sow serious doubts about not just the economic narrative seeking to dismiss weakness (‘transitory’) but rather central banking and QE itself. The repeat in January/February further eroded mainstream credibility, particularly since only a few weeks before the Federal Reserve in particular pronounced full health. It was an embarrassing but poignant ‘dollar’ rebuke.
In the middle of 2015 just prior to the outbreak of the ‘dollar’ ‘run’, it was perhaps somewhat understandable for the layperson or the general public to wonder what was going on. Any disruption in terms of the domestic economy did seem as Janet Yellen was claiming. For all the grief even by late July last year, everything seemed to be limited to overseas events; a fact which economists and policymakers played up whenever they could. They should have known better.
I wrote at the end of last July that what was going on overseas was yet another warning even though it may not have seemed like it had anything to do with the United States:
Sticking with purely financial expression of the eurodollar standard it is easy at times to forget such monetary influence has very real consequences. That is true in the US in particular, as even though the recovery is both deficient and waning it isn’t the disaster it is in other, connected places. It was, after all, the rise of the eurodollar standard as a wholesale system starting in the middle 1990′s that more tightly stitched the global economy, an open system architecture that eludes, still, the grasp of monetary policymakers. As such, they have a great tendency to miss and misapprehend what is really happening and because of that they will simply make it all worse without much hope for an upside.
This post was published at David Stockmans Contra Corner on September 20, 2016.
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