The La-La-Land Fairy Tale of a “Soft Landing”
When everyone finally leaves the La-La-Land casino and abandons the fairy tale, household wealth held in stocks is a fraction of what it was in the heady days of hot hands rotating into the next hot sector.
The reason why a “soft landing” is a fairy tale straight out of La-La-Land is all bubbles pop, and a “soft landing” is based on bubbles remaining unpopped. In the “soft landing” scenarios, mind-boggling bubbles remain at “permanently high plateaus” as gamblers rotate out of one soaring sector into another soaring sector, in an endless rotation that keeps the entire speculative bubble fully inflated forever–or close to forever, which in today’s world is a few years.
In the fairy tale, the economy is “strong” for all the right reasons: people are investing in new companies, spending lots of money, hiring more employees, and so on. In this fairy tale version of economics, the occasional spot of bother– a “weakening economy”–is deftly resolved by the central bank lowering interest rates, which magically encourage
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LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.