Mainstream economists just like laymen believe in the imaginary incentive to serve. Nature only provides one universal incentive, self interest. Like the naive public, PhD Smith, PhD Jones and all of the others believe in the imaginary incentive to serve. The imaginary incentive to serve is not written into text books. It is just assumed to exist. In the minds of PhD Smith, PhD Jones, everyone in government is acting on their strong imaginary incentive to serve. If something goes wrong, it is because of a failure of the reasoning process and certainly not because the imaginary incentive to serve is missing. What motivates members of the Federal Reserve Open Market Committee? Why certainly, they are motivated by the imaginary incentive to serve. Except that they are in reality guided by self interest.
Why would highly intelligent sentient beings will such a silly idea into being? They view the world and everything in it through the prisms of fantasy and euphemisms. They also fail to override their instinctive impulses which direct them to exalt the individual, group and species. Each individual is so special in his own mind that it is unfathomable that a leader or representative would not have an incentive to serve him. To those folks, I regret to say, but beyond your close network of friends and family, you are seen only as a resource, source of income or a vote.
The imaginary incentive to serve is only one of the erroneous beliefs indulged in by mainstream economists. It is of critical importance right now so it is getting extra attention here.
The nation has a new president. Some hate him. Others love him. I see him as just the president. No love of hate is called for. Donald Trump is simply acting out of self interest as are all members of Congress, Federal Reserve, Supreme Court and persons in all government agencies. Trump lovers and haters alike are being fleeced by the trade war and the new ballooning federal deficit. Trump lovers believe he is serving them. Trump haters believe that Trump is serving his supporters and not him. So who is Trump serving? Donald Trump is serving himself. Barrack Obama served himself. If Hillary Clinton had been elected, she would be serving herself.
Certain things are silently understood but never spoken about. Some things are so bad ordinary people just won’t think about them.
One of those things is that the Federal debt is so high relative to GDP that even a modest increase of interest rates will make it serviceable. That is unless the rate of inflation picks up. With inflation the burden of the debt can be placed squarely on the backs of everyday Americans. Tariffs will create the inflation. That is the reason for the Trade War.
Secondly, since the economic recovery has been built on elevating stock prices and other assets. Falling stock prices will destroy the economy. No effort will be spared to save the stock market including having the central banks of the world, buy stocks with newly created money.
Thirdly, a new balloon of deficit spending will create the typical corporate feeding frenzy on federal money. This will protect the corporate sector from the negative effects of the inflation tax. It will also make more funds available for corporate buybacks which are an essential ingredient for causing stock prices to rise.
These initiatives are definitely good for Donald Trump. The president does not want to be known as the president who caused the stock market to fall. He doesn’t want to be known as the president who caused the economy to sink into a depression. He will try everything possible to move the inevitable past the 2020 presidential election. Will the public snap to the fact that they are being fleeced and manipulated into carrying the burden of the federal on their backs? Probably not. They will probably buy into the notion of blaming it on China or Russia.
Americans believe in the imaginary incentive to serve so don’t expect anyone to focus on a president’s motives beyond a superficial level.
The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.
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