Gold News

Why we are Stagnating

Declining marginal utility explains why the economy's in such a funk...

IT'S UNAVOIDABLE. As a society ages its institutions become brittle and inefficient, writes Bill Bonner, founder of the Daily Reckoning.

They are no longer dynamic and productive. And, they become nests for dead-head zombies. The two things go hand in hand. On the one hand, declining marginal utility undermines the productivity of future inputs. And the zombies take over...making it impossible to direct inputs elsewhere. The zombies protect their turf; they make sure they get more resources, not less.

Take education, for example. A little of it goes a long way. When a person learns to read and write, the whole world of ideas and information opens up to him. Whether more inputs of formal education actually pay off or not is open to question. Clearly, beyond some point, they don't. Americans spend twice as much per student as they did 40 years ago. The educational attainment results are about the same. Which suggests that the marginal utility of investment in the education industry declined to zero 4 decades ago.

Most the world's great ideas...great books...and great inventions were produced by people who spent relatively little time in formal school settings. But now, every goofball and half-wit is expected to have a college degree. What do you expect? A college degree isn't really worth very much.

But the zombies want their children to go to college. And the zombies want cushy jobs as 'educators' and educational administrators. (They don't want to teach...that's too hard!) And children are no dopes either; they know it's a lot more fun to spend 4 years at Party U., at someone else's expense, than 4 years out in the real world. Especially now, when it's hard to get a job. That's part of the reason student loans have quadrupled since 2007.

Obama promised to bring 'change' to the nation. But change is the last thing the zombies want. And it's the last thing that Obama would want to give. The voters wouldn't stand for it.

Instead, we have a Great economic deadend...where further inputs into traditional, zombie-controlled institutions no longer pay. More credit? More military spending? More Medicaid? More Social Security? More education? More consumer spending? More hiring? More capital investment? More energy consumption? More programs? More unemployment compensation? More taxes? More laws? More regulations? More lawyers? More educators? More security guards?

Will they pay off?

Not a chance.

Get the safest gold at the lowest prices with BullionVault...

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals