Hi, David, and thank you for posting the above article. I tend to agree with your assessment of it. My one observation is that while the author impugns the Fed, and justly so, as a principle player in fostering the zeitgeist we hope Mr. Trump will cause to be successfully addressed, he makes no mention of a fiat monetary system that enables the Fed to play its role so generously. Is it fair to view that as a significant omission or am I flirting with the danger of the single story?

David Fuller's view

I think the Fed or any other central bank is always going to be controversial, not least because they have so much power and influence within fiat monetary systems. My own view is that they generally help economies more than they harm them.  For instance, I maintain that following 2008 we would have seen widespread depressions, rather than many lengthy recessions. 

More recently, the Fed and other central banks have been widely criticised for discouraging economic recovery, not least by making commercial banks less profitable so that they were reluctant to lend.  Critics have also said that only rich people, mainly with equity portfolios, have benefitted from record low interest rates. 

There is definitely some truth to these points.  However, I also think that governments could and should have increased fiscal spending, but very few did so.  With minimal GDP growth, many corporations were also reluctant to spend.  The leading central banks often called for more government and corporate spending but were generally ignored. 

This situation may have looked like the question: Which came first, the chicken or the egg?  However, I think governments were more at fault than the central banks, which were too often left almost solely in charge of providing stimulus. 

In the US, this problem certainly contributed to the election of Mr Trump, who many people said was unqualified to be president.  Like him or loath him, at least Mr Trump proposed very stimulative policies for the US economy, which we never saw from Mr Obama and which Mrs Clinton was not proposing.  

By my count, Trump wins the first round comfortably, before he is even inaugurated.  Of course anything can happen over the next four years and it will certainly be interesting.