Addicted to cash and vaccines

World needs other cures for economy and our health

Are you getting the feeling we may have reached that part of the road where all the cans have accumulated? Or is this just an age thing? Just as our bones become more brittle with age, perhaps our brains can’t drum up the flexibility needed to imagine our way out of the current mess. Perhaps younger, more agile brains can see a solution that doesn’t involve more kicking of cans down the road.

Because right now it does look as though we might be in a cul-de-sac, knee-deep in cans that have been kicked down the road at some stage during the past several decades.

There are, of course, huge amounts of environmental cans down this cul-de-sac, which, as you can imagine, offer absolutely no chance of disappearing through some magical biodegradable process.

Then there are the vaccine cans, some of which have my footprints. It is, of course, possible that our bodies have infinite capacity for absorbing all manner of vaccines without significant adverse side-effects. And it is equally possible that really clever young scientists are right now busy devising ways for humans to avoid any nasty side-effects in perpetuity.

This would be unlike what scientists have been able to achieve in dealing with our liberal use of antibiotics. The overuse and misuse of everstronger antibiotics has, in recent years, led to the emergence of “superbugs”, which are potentially more dangerous than the bacterial infections we’re trying to fight.

Then there are the financial cans. More prosaic perhaps, but nevertheless eye-wateringly large and potentially just as dangerous. Reuters has estimated that the G10 group of major economies pumped $15trillion into their economies to shield them from the impact of the Covid lockdowns.

That splurge seeped into the global economy just as it was making a slow recovery from the global financial crisis.

In response to that crisis, Western governments pumped trillions of dollars, sterling and euros into their economies in a desperate bid to stabilise markets and prevent recessionary conditions.

That crisis was the worst economic disaster since the Great Depression in the 1930s. In the US the stock market shed nearly $8-trillion in less than two years, putting ordinary Americans’ retirement wealth at risk. Home values plummeted and unemployment hit a peak of 10% as interest rates slumped close to an unprecedented 0%.

The trillions of dollars of quantitative easing (QE) that was poured into the financial system guaranteed a recovery in house prices and the longest equity bull run in US history. There were undoubted benefits for millions of middle-class Americans. But not everyone scored. Low-income borrowers remained left behind. Of course, the real beneficiaries were the asset-rich American elite and the big banks. JPMorgan Chase went into the global financial crisis with assets of $1.5-trillion and emerged a few years later with $2.3-trillion.

Academic research into the impact of QE in Britain, which started in 2009, concludes: “It probably helped stabilise markets and contributed to preventing a recession becoming a depression.” However, all that money failed to rescue Britain (and any other major economy) from stagnation, say the academics.

As with the US, it seems the biggest benefactor was the financial sector. “It has been of practically no help to the wider community or individuals and families struggling against inflation and unemployment,” the University of Bath researchers say.

The rest of the EU, or more specifically the eurozone, which was dominated by the fiscally disciplined Germans and Dutch, was slow to embrace QE. Euroland’s first programme began in early 2015 soon after Mario Draghi, president of the European Central Bank, said the bank would do “what it takes” to save the euro. Within no time at all, interest rates headed down to zero.

There’s no doubt that QE helped to prevent something considerably worse happening in the wake of the global financial crisis, but at what longterm cost? Essentially, the major Western economies have run out of tactics they can use to deal with the post-Covid crises, such as spiralling inflation and sluggish or no economic growth. Governments have no more capacity to pump money into their economies and have less desire to do so, given the evident impact on inflation.

From this perspective it looks as if they’re struggling with the financial equivalent of overuse of antibiotics and vaccines that are so temptingly easy to use to avoid an

immediate crisis. This is particularly the case in wealthy Western economies, where citizens have had less chance

to build up natural immunity to adversity.

Instead, cans are kicked down the road on a

disintegrating planet as we load up with QE, vaccines and antibiotics.