Of economic analysis to exercise the concept of addiction

In my opinion, the greatest men have their prejudices. One learns the elements of the science of the others and each student has a difference more or less authority, especially young students, no matter what type of care linger too long on principles, but to take on trust rather inclined: And things early admitted by repetition become familiar: And this exceeds familiarity length proof.

Bishop Barkeley 1685-1753. The above passage comes from “an address to magistrates and men of power (1736).”

I was not surprised to learn that the origin of the word comes from the Latin addictus dependence: a person who is related to and dependent because of unpaid debts. Metaphorically, the term was used for any behavior that is the result of a high dependence on something, like a drug. But here we are not trying to understand the concept of alcohol and drug abuse in relation to drugs. Instead, the dependence of the role in the formulation of our economic thinking and policy response to the economic challenges. Addictions such as easy access to cheap money or dependence idea that the real growth is just around the corner are some examples of this dependence.

The journey of a habit of addiction is not so far away. First, it is assumed that the consumption of a substance can see that you are consuming too much the norm. Anything out of the ordinary, even if the people around you But of course, you’re still under the impression that no, it’s all under control. However, the body has its own limitations. This unregulated consumption creates an imbalance between serotonin and dopamine (the two main chemicals in the brains) and because of this imbalance, the mind is detached from reality (the consequences) and creates an internal reality (perception). Now we are in an interesting phase of understanding the world through this imbalance and our actions will demonstrate. After the establishment of the reality, the dependence stage moves in an area that I call the “No Impact Mindset” or NIM where manufactured reality not see. Consequences of an action

In this reality, the hypothesis is as follows: the substance that causes the addiction is an abundant supply and will never run out. This is a very powerful point, because the addict’s ability to make a distinction between perception and reality is lost. As long as the stuff is there, okay. The economy is getting better. The crisis was averted. The stock market is up so our economic challenges fade slowly. Jobs were created. We are on the road to recovery. Happy days are here. Well, you get the picture.

This is the result of a powerful drug called cheap money provided by central banks. This medicine is an abundant supply and will remain available as long as there is a dependency. But as we all know, the dependence increases, the amount of a particular substance. The two foods together creating a vicious circle with no end in sight. This process, if continued for a long time, it will be very painful to get rid of this addiction. So, more dependency, more is the amount needed to feed this addiction. This analogy fits perfectly with the global frenzy of buying bonds. Interestingly, the similar position taken by the legendary Bill Gross of PIMCO. He wrote: “Every extra dollar of credit appears to create less heat in the 1980s, it took four dollars of new credit for the past decade, generating $ 1 in real GDP, he took $ 10 and since 2006, $ 20 .. in order to produce the same result.

This astronomical growth of cheap money has changed the collective psyche of those who have been trained in the classical sense of the concept of the role of monetary policy and its impact. But as we have seen, the dogma zero changed the definition of the real growth of the economy. Inflated figures and elevation lost in the stock market indices are the result of this dependence on cheap money. But it must be balanced in his analysis of the serious problems of the day. Blaming the Fed, the ECB and the BOJ only is it not possible to do a thorough analysis of the current economic mess has to offer.

When “growth” based on borrowed money or printed is celebrated and preached the fault lies in the whole social order. In that sense, we all depend. Addicted to cheap credit to buy things addicted to living beyond our means by excessive alcohol (this applies to both the public and private sector) and addicted to our immediate needs, regardless of the future consequences of our current economic behavior. In this context, it has been said many times, structural changes are urgently needed with regard to how we analyze, understand and implement economic policy decisions at the highest level in the decision-making bodies out. Otherwise, you can be sure, will continue collective dependence.

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