Back in the 1980's I read that the Soviet Union had the highest rate of capital investment in the world and on the whole (or rather, "hole"), that investment produced a negative return -- requiring more investment. I read that and thought, "Gee, that can't be good." I had the picture of being on a treadmill and running to stay in place but the treadmill speeds up so, in the end, you're running so you'll fall behind slower. In such a scenario, collapsing from exhaustion seems the logical outcome.
In "The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities," Mancur Olson didn't discuss the credit markets so much as the "credit to" markets. In his view, the growth of self-dealing special interest groups in an otherwise growing economy produces economic sclerosis that leads to failure. The CCP is a collection of self-dealing special interest groups. Its near collapse during Mao's Cultural Revolution allowed a multi-decade spurt in economic development. Its reemergence as society's "guiding force" will likely herald its decline.
We face a similar danger in the good ol' USA. It's not the dealings of the Fed that will determine our economic future so much as the self-dealing of a web of special interests and influence peddlers I call "The Crony Class." Are they anti-climate change or pro their control of the nation's resources -- and do they see a difference? Crony class interests require a lot of lying-and-believing at the same time. ESG, anyone?
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