For thousands of years the study of geometry needed no qualification. Geometry was self-evident, owing to Euclid’s illustrations of what were axioms. It was true because it was true, a tautology without need of further explanation.
Einstein, among so many other things, proved that geometry was just as relative as everything else. We theorize that Euclid’s system and axioms apply as such because we inhabit a low gravity environment, and thus without any experience of any other environment we cannot directly conceive of alternatives. But relativity surmises and allows for mathematical proofs that Euclid’s geometry is a special case, and that the universe is a bit more complex. One need only use GPS technology to verify it.
Speaking on several topics, including the growing struggles of being a fixed income trader, Goldman Sachs President Gary Cohn told Bloomberg TV’s Stephanie Ruhle last week that,
“If you look at where we are economically, versus where we were a year ago, we’re virtually in the exact same place…So if quantitative easing made sense a year ago, it probably still makes sense today.”
In Cohn’s estimation, the economy has done nothing in the year since QE was first announced in September 2012, so it makes sense to continue it? The only way to obtain any logic from such a declaration is to get into a “saved or created” situation, where we are down to arguing that without QE it would have been worse. Or to believe that relativity has come to “economics”, the previous understanding of logic and axioms no longer apply.
That such a statement was so casually used to, in Cohn’s mind, bolster his case is troubling. The axiom is not the incongruity of the statement in the mind of the modern economist, it is in the totality to which it assumed first and without qualification. QE obviously works, so if the economy didn’t improve we obviously need more. Times four.
There are certainly other possibilities here, including that QE is much more favorable to Goldman Sach’s fixed income book, and therefore the statement falls inline of other agendas. It wouldn’t be the first time. But the lack of clarification by anyone on that statement, the ease to which it is simply accepted as true, is contrary to all established observation. For some reason this recovery period has been the worst on record, a fact that is inarguable by even the most ardent supporters of ongoing intervention and distortion, can we at least entertain the idea that causation may lay in monetary measures?
“We’re virtually in the exact same place, so if QE made sense a year ago it probably doesn’t now.”
There has been a decades-long struggle to relate monetary expectations to the real world anyway, but there clearly is something amiss which even the Gary Cohn’s of the world admit – before offering their own illogical qualifications. It seems the economy does not conform to Newton’s third law; the economy no longer plucks. That would make economics in its current manifestation more of an ideology, or religion, than a science.
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