Paul Marks casts a jaundiced eye at real voodoo economics.
The latest crackbrained theory to hit the media is the “Brazil must win for Wall Street” argument.
This argument holds that if Brazil wins the world cup “confidence” in Brazil will improve, an Argentina style collapse will be avoided, the ‘Right’ will win the election – and the money lent to Brazil by various ‘Wall Street’ institutions will be safe.
Of course if the term ‘Right’ means anti-statist the argument is out of touch with reality – as the government of Brazil are a bunch of social democrats and the opposition ‘Workers Party’ are worse.
However. the problem with the argument is rather more basic than this. The argument is really anther example of J.M. Keynes’ theory that a change in ‘confidence’ (‘animal spirits’) creates slumps.
Actually government credit money expansions create the boom-bust cycle.
This may have been explained a long time ago (David Hume stated it in a basic way – and Mises explained it in detail many decades ago), but ‘Wall Street’ and the media do not have a clue.
Everyone reading this blog may be saying to themselves “why is Paul Marks telling us things we already know” – but the problem is that the powers that be in our world do NOT know these things. They are not evil – they are ignorant. Ignorant of the basic principles of political economy.
Of course if Brazil wins the World Cup its economy will still collapse, but will that lead the people of power in our world to do some real thinking? I doubt it.
Paul Marks
