We have a generic cure for bottlenecks no matter what the history of the situation. This can be summarised as follows:
DO THE OPPOSITE OF WHAT NICK GRUEN IS ABOUT TO ADVISE HIS READERS IN HIS COLUMNS AT THE FINANCIAL REVIEW.
Nick will no doubt be blaming inflation on “bottlenecks”. Not on massive monetary growth by central banks but by “bottlenecks” since there is a new ex-socialist neoclassical consensus that seems to be getting about in this area.
I’m supposing that after attempting to fake some outer sheen of small-government cred he’ll work his way into a lather of thieving in reccomending an avalaunce of public goods spending, on borrowed money, with everyone with an economics degree who tows this thief-economics line winning great consultancy fees.
This is the opposite of how to deal with bottlenecks. The first step to dealing with any bottlenecks is firing all these Nick Gruens in the public service and forcing them to become bricklayers assistants and the like. Or at least do useful, voluntarily paid work that is not in their field of speciality. Since in their field of specialty these people can only do immense harm.
Sadly an idea that always had short legs is making a comeback. And thats the concept of cost-push-inflation. Even somewhat sensible people are starting to talk about this cost-push inflation. And in some ways its hard to blame them. Since the Reserve Bank and the banking system got away with expanding the money supply at outrageous speeds for so long and only had fairly low consumer-price-inflation, yet just lately they have been bludgeoning us into the ground with monetary collapse. And consumer prices have really taken off. So even the only half-ignorant economists, have been beginning to bring this cost-push-inflation furfie up to the front of the queue again. Which as I said is somewhat understandeable. But we will need to look at the way inflation rolls out all over again. So people can understand whats been going on.
I’ve never really talked about “bottlenecks” all that much in the past. I’m not really sure to what extent there is a good theory of “bottlenecks” in economic theory. But nonetheless I’ll be viewing matters with special attention to these alleged “bottlenecks” in order to pre-empt the sort of nonsense you will be getting by these fellows at Club Troppo.
To some extent Gerry Jackson has already looked at this rather unfortunate new excuse for massive thieving on borrowed money. I’m thinking of this article here:
But I think we will have to look at things in greater detail. Good enough detail for people to see in their minds eye what is so self-defeating about this new borrow, steal and splurge on public goods gyp that the barely reformed communists, like Gruen, Leigh and others, will be trying to sell on you.
This idea that you borrow shitloads and splurge on this infrastructure is about as wrong as you can get. About 160 degrees wrong rather than 180 degrees wrong. But still wrong, wrong, wrong and it will make matter far worse.
So we will look at an old problem through a different prism. We will look at the old problem of consumer price inflation through the new prism of BOTTLENECKS. This will be no balanced survey of the process of how new money winds its way through the system. Rather it will be a discussion with these alleged BOTTLENECKS front and centre.