It’s Booming, Alright

It’s Booming, Alright

By |2018-12-03T16:59:59+00:00December 3rd, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In most cases, it all seems so far away. I write about the shrunken global economy all the time. The evidence is all around, and yet still somehow it seems like some remote dreamscape. Human evolution hasn’t prepared us to be able to accept something so big and unconscionable. Most people’s initial response is, “what do you mean the economy has never recovered from 2008?”

When French officials put together the country’s budget for 2018 last year they therefore added an enormous gasoline tax. I’m not at all interested in debating the rationales and justifications for it; only the lack of appreciation for what it might do to the French people.

What was done? In the summer of 2017, a 7.6 cents per liter levy was approved so that gasoline and diesel fuel prices will converge. It’s supposed to be the first step toward an eventual 2040 ban on vehicles driven by internal combustion engines and was to take effect this year. If you’ve scanned the news of late, you know it has.

French President Emmanuel Macron held talks with several ministers after angry demonstrations a day earlier turned into the worst unrest in the capital, Paris, since 1968. Interior Minister Christophe Castaner has been asked to prepare security forces for future protests and Prime Minister Edouard Philippe to hold talks with political party leaders and protest representatives.

It didn’t seem controversial when introduced in 2017 because everyone said the European economy was booming. Not only was it booming, policymakers boasted, this was only the beginning. The ECB had done its job perhaps a little too well. A booming economy is opportunity for the taxman, too.

Pure balderdash. But nobody argues with Economists and central bankers. So, the French government thought nothing of enacting an enormous burden on the working folks of France and those who as elsewhere around the world have absorbed the costs of one lost economic decade facing downward again toward a second.

It’s booming, alright. There are very real consequences to a world without economic growth. People won’t, can’t, put up with it forever. The whole world isn’t Japan.

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