9. Neoliberalism and the Futility of Monetarism

I believe I have established in the above the correct method with which we may address the problems of the world economy today. I am, however, quite aware that my proposal flies in the face of the present state of the profession. I, therefore, wish to stress once again that all the so-called tools of monetary policy, as usually popularized in mainstream textbooks, are without exception “asymmetrical” in the sense that, even though they are perfectly effective in restraining an already overheated inflationary economy, they are completely powerless in reactivating one that has already been trapped in the doldrums for some time. This fact was not unknown in the past as indicated by the famous and venerable metaphor that we can move a thing towards us by “pulling a string”, but we cannot move it away from us by “pushing a string”. Yet, more recently, with the eclipse of Keynes’ prestige, it has been falsely claimed that, in the present condition of the economy, Keynesian fiscal policy has entirely lost its effectiveness, and that we have no choice under the circumstances but to creatively adapt the tools of monetary policy in dealing with the current, worldwide impasse of persistent deflation and economic slowdown, macroeconomically. However, the so-called monetary policy of Quantitative Easing (QE) recently invented and enforced has proven to be a complete failure with a view to relaunching or reactivating today’s sluggish world economy, which, since the “subprime” crisis of 2008 that terminated the “housing bubble”, has remained completely powerless in making a dent in the persistent stagnation. In order for the world economy to retrieve health and stability, it will be necessary to stop deflation first, and, above all, in the so-called advanced countries, by holding back the uncontrolled activities of “casino capital” decisively.