Steel Yourself

This article, by Reagan’s OMB Director, David Stockman, clearly explains the pathology of the collapsing Chinese iron and steel industry, and its implications for the rest of the world.

Namely, the two-decade-long economic boom fueled by the money printing rampage of the world’s central banks is beginning to cool rapidly. What the old-time Austrians called “malinvestment” and what Warren Buffet once referred to as the “naked swimmers” exposed by a receding tide is now becoming all too apparent.

This cooling phase is graphically evident in the cliff-diving movement of most industrial commodities. But it is important to recognize that these are not indicative of some timeless and repetitive cycle—–or an example merely of the old adage that high prices are their own best cure.

Instead, today’s plunging commodity prices represent something new under the sun. That is, they are the product of a fracturing monetary supernova that was a unique and never before experienced aberration caused by the 1990s rise, and then the subsequent lunatic expansion after the 2008 crisis, of a cancerous regime of Keynesian central banking.

These falling prices are not cyclical or “transitory,” they are reflective of the failure of what should properly be called neo-Keynesian economics, or perhaps Krugmanesque economics.

Read the article and steel yourself for a bumpy ride as reality intrudes on the happy talk fantasies purveyed by the propaganda media.

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