History suggests that inflation may be the only way out
“The Thing is a peerless masterpiece of relentless suspense, retina-wrecking visual excess and outright, nihilistic terror, placing 12 men at an Antarctic station while a shapeshifter takes them over one by one. The slimy effects stand up to this day, Ennio Morricone’s score is fantastic and the ensemble acting is played entirely straight as suspicion and paranoia overwhelm the characters.”
Of all of John Carpenters’ films, his 1982 offering The Thing may still be his most under-rated. A remake of 1951’s The Thing from Another World, by way of a treatment from Bill Lancaster (son of Burt), the film pits the team of a US research station in Antarctica against a shape-shifting alien recently thawed out from the permafrost, able to replicate anything it takes over perfectly. Its special effects, courtesy of Rob Bottin, have lost none of their power to shock over the ensuing four decades. Had it not been released at the same time as a more uplifting alien narrative – Steven Spielberg’s family-friendly blockbuster E.T. – The Thing might have enjoyed the box office reception it deserved. In the years following its release, it has amassed a cult reputation amongst cineastes with a penchant for ghoulish cold war paranoia. In this respect it is the perfect metaphor for the world environment in 2020.
One of our more recent discoveries within the digital box of delights that is Twitter is the account ‘r.j. macready’ (the name of the helicopter pilot in the film, played by Kurt Russell), a bot which publishes quotes from the character from time to time under the handle @thething_txt. Here, then, are a few highlights from the MacReady oeuvre, given a 2020 Coronavirus makeover.
This is one of MacReady’s first lines in the film, his riposte to the Chess Wizard computer that has just handily beaten him. MacReady studiedly responds by pouring a glassful of J&B scotch and ice into its electronic innards.
In 2020, the line works even better when applied to China. In a recent exchange, Ben Weingarten interviewed the US hedge fund manager Kyle Bass:
Ben Weingarten: What would be the best case that you would make to your colleagues in the financial services industry for why they should decouple from China, given that their economic self-interest relies on maintaining the status quo?
Kyle Bass: Yeah, this is the hard part, right? What China does so well? Again, they lie, they cheat, they steal, they bribe, they do everything they can do to further their own interests as a nation-state in our world, and they use our weaknesses against us. And one of our weaknesses is a desperate need to pad our own pockets. If you think about what they do, they dangle that carrot, they dangle the carrot of the path to riches and the path to wealth through China and China’s 1.4 billion people and selling things to all of them. And then what they do is they’re brilliant in granting special market access to few. They invest $5 or $6 billion in Ray Dalio’s Bridgewater, and they invite him into the PBOC [People’s Bank of China] meetings, he becomes evangelical about the greatness of China because he’s making billions of dollars off the Chinese. And then you have Steve Schwarzman and they grant him special access in the 1.4 billion potential of financial services and asset raising in China, and he becomes the chief Chinese spokesperson for President Trump. And again, becomes evangelical from the financial side.
I can go person by person, and tell you, Sheldon Adelson and Steve Wynn were granted casino licenses there. They do the bidding of Xi Jinping with President Trump. None of them are tasked with safeguarding the national security of our country. They’re tasked with trying to make as much money as humanly possible for their shareholders and for themselves, and as far as U.S. national security is concerned, they don’t care.
And so I think this is…what’s required here is for someone in the National Security Council to realize that there’s a schism, and the schism is primarily between the presidential cabinet, the National Security Complex, an edifice of the United States and that of Wall Street.
And if you think about it, China’s neutered the Woke, let’s just say the Woke people in Hollywood because Hollywood…when was the last time you saw a Hollywood film where the villain was a Chinese…government actor or a spy? They won’t make those movies because they can’t sell them in Southeast Asia or in China. And as you know, the Chinese Government through its SOEs [state-owned enterprises] and its others methods of madness, have bought into many of the Hollywood production companies, and they actually control the content.
So you don’t have Hollywood speaking out against the Human Rights, the vicious Human Rights abuses that the Chinese are currently undertaking in Xinjiang, and with the Falun Gong, and with the Tibetans, and the Christians, and everyone they’re persecuting for their religious or political affiliations. So you don’t have Hollywood coming after them, you don’t have Wall Street turning a blind eye or holding them accountable for their crimes against humanity, because Wall Street can’t wait to get their paycheck at the end of the year and start all over again.
So I think there’s this schism that exists that must be brought to light by people like you, by people like me, by people like anyone willing to talk about the facts, right? The Victims of Communism Foundation, which is set up by the U.S. Congress and housed in the Senate building. They do a decent job of raising the alarm. Can you imagine that after the Holocaust, and we all swore “never again,” that this would ever, ever happen again? That people would be persecuted for their religious beliefs, and killed, and organ-harvested, and mass-murdered? And here, it’s happening in Xinjiang..
At the height of the Coronavirus panic, fuelled in no small part by Professor Cockdown’s imaginary forecasts of the looming death toll, egged on by high profile rodents from an increasingly ghoulish mainstream media, it was a comparatively easy decision for government to take in locking down the economy by quarantining the healthy. Now, it appears that if you put the fear of God into a trusting electorate and simultaneously pay them for doing literally nothing, sooner or later they get a taste for it. That, over time, becomes a big economic problem.
And then there is Sweden. Sweden’s comparatively light touch response to Covid-19 lies in stark contrast with the lockdowns implemented elsewhere in the developed world. It may still be too early to make a definitive assessment, but as Daniel Hannan writes here, if Sweden succeeds, lockdowns will all have been for nothing. Politically, that would be, for want of a better phrase, awkward. But it would not come as much of a surprise to those of a libertarian bent who believe that the only form of government intervention can ever be damaging intervention, replete with scads of unintended (though often highly predictable) consequences.
Not least tired of grandstanding show ponies in the mainstream media outcompeting each other to scare a population still under house arrest into full-blown existential despair. The only consolation is that said show ponies are also successfully destroying their own market. So there’s that.
Sooner or later, the lockdown simply must be lifted, even if it must be done so gradually and proportionately. So what will be left of the economy when we emerge, blinking, into the daylight ? In this piece for the Financial Times, former Morgan Stanley economist Stephen Roach makes a convincing case for the return of stagflation:
..the anti-China weaponisation of supply chains promises to riddle global production systems with bottlenecks. Inflation will not return while the recession deepens. But as recovery takes hold, a new world of fragmented, more expensive supply chains may tell a different story.
Soaring deficits and debt could compound the problem. For now, no one is worried about them because of a conviction that interest rates will stay at zero forever. But with fractured supplies set to push inflation higher, that assumption will be tested.
For the indebted US economy, an inflation-driven rise in interest rates would slow growth. Public debt is headed to about 120 per cent of gross domestic product by 2025, up from 79 per cent in 2019 and well above the post-second world war record of 106 per cent.
History suggests that inflation may be the only way out. After the second world war, the US escaped from its public debts by reflation. Public debt fell by 0.9 percentage points a year from 1947 to 1957, while nominal gross domestic product, helped by accelerating inflation, rose 7 per cent annually. The ratio of debt to GDP soon plunged to 47 per cent. Today, a comparable debt shrinkage would occur if inflation moved back to 5 per cent.
With rock-bottom interest rates, open-ended quantitative easing and a massive debt overhang, inflation may be the only way forward for the US and other indebted western economies. Even so, equity and bond markets will probably tremble in response.
Both the Howard Hawks original and the John Carpenter remake of The Thing are steeped in the paranoia and mutual distrust of the Cold War. We may yet be lucky to escape a hot war with China once the dust settles. And as Kyle Bass has already pointed out, the distinction may be purely semantic, inasmuch as in three out of four contexts, the West is already at war with the Chinese. As he tweeted on 22nd April:
See also this, by Maajid Nawaz.
MacReady gets all the best lines in the film, so it’s only fair that he gets the last one here:
Trust’s a tough thing to come by these days. Tell you what. Why don’t you just trust in the Lord ?
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