Brittany has one of the most beautiful coastlines I know. Situated on the western flank of France, its storms are spectacular. The broken, rocky and varied coastline makes navigation extremely difficult and dangerous. I went there – years ago – to sail in one of the most prestigious and popular sailing schools in Europe: Les Glenans.

The rocks that barely rise to the surface are marked with signs known as cardinals: they tell you which way to go – north, south, east, west – to avoid shipwreck. Your safety, and in short, your life, depends on the cardinals. For centuries, sailors and navigators populated the inhospitable sea with cardinals to protect the lives of future crews.

Unfortunately, such selflessness, such precision, are rare in other activities of the human species…

In the course of this, the umpteenth economic crisis of the 21st century, the experts disagree about the direction of the wind, they do not know where we are or where we are going and they lost Alpha Ursae Minoris (UMi), better known as the North Star, the one that enabled Columbus to discover a new continent even though he himself died without knowing it. We are still in the Middle Ages, a time when everyone had their own units of weight and measure, as well as their own currency, i.e., their own swindle.

John Mauldin, my favourite financial expert, writes about the USA:

“Years ago, professional economists, perhaps bored with being questioned about it, formed a committee to officially signal the beginning and end of recessions. The NBER (Nation Bureau of Economic Research) committee considers a variety of data, but its final decision is subjective”.

It does not escape your sagacity that such eminent professionals carefully examine all kinds of data – a priori objective – to finally adopt a judgement based on what their little finger tells them. This is why Mauldin points out:

“Many of those who are interested in these things prefer a more objective rule, such as ‘two consecutive quarters of falling GDP’.”

Why? The main argument boils down to another question: why not? John Mauldin is caustic and definitive: “That (indicator) is as good as any other, but, of course, GDP itself is an imperfect statistic.”

Simon Kusnetz himself, inventor of the index known as GDP, warned of its uselessness in measuring the well-being of the population. Simon Kusnetz, a Russian economist who settled in the US in the 1930s, a specialist in statistics, created GDP and – even worse – the curve that bears his name, the Kusnetz curve. The latter suggests that at the beginning (of what?) wealth is concentrated in a few hands, which is useful, since the lucky ones can invest and create jobs, and then distributed generously among the suckers, who get married, have children and live happily ever after.

We had to wait for the second half of the 20th century and Thomas Piketty (Les Hauts Revenus Français au XXème Siècle) to realise that the Kusnetz curve never existed in practice: wealth accumulates in the greedy little hands of the big capitalists per secula.

Incidentally, Simon Kusnetz was born in Pinsk (1901): today he would be Belarusian. When publishing The Master and Margarita by Mikhaïl Bulgakov in 2009, the great French publisher Robert Laffont stated: “he was born in Kiev in Russia, in 1891”. No one pretends that Bulgakov was Ukrainian. If the cardinals had the precision of Western propaganda, or that of economic indices… there would be no sailboats.

Precision and economics are like oil and vinegar. Bruno Le Maire, the French Minister of Economy and Finance, declared a couple of days ago that “pensions were increased by 1.1% at the end of June and will be revalued in the second half of the year by 4.0%, or a total of 5.1% in 2022”. A journalist made the exact calculation: the revaluation is only 3.12%. A member of parliament with a doctorate in mathematics argued: “The best thing for a Minister of Finance would be to learn to count. Advice passed on to our experts at the central bank and the Treasury, who do no better.

I tell you this because in the US, GDP has fallen in two consecutive quarters, indicating that the Empire is in recession, depending on whether or not you believe statistics that nobody respects very much. Centuries of “economic science” have failed to define what a recession is, or to explain how to get into them, let alone how to get out of them.

I have already mentioned that the mission of almost all central banks is limited to fighting inflation, so a recession touches one without moving the other. Since there is not even an irredeemable definition of the phenomenon called recession, experts avoid swimming in such profundities. On the other hand, the central banks, monkey like imitating the FED (US central bank), decided that there is a target inflation rate: 2% per annum. Why 2% per annum? The argument is the same as the one mentioned above: Why not?

As the NBER (Nation Bureau of Economic Research) committee makes about the recession, central banks “consider a variety of data, but their final decision is subjective”.

Despite the fact that central banks bring together “the best economists in the world” (Michel Camdessus, Director of the IMF 1987 – 2000 dixit) to fight inflation day and night, the US and the European Union, who give advice to everyone, are aware of an inflationary phenomenon approaching 10% per year, i.e., five times the target they have so painstakingly defined by observing the flight of birds.

They certainly do not have the slightest idea as to the reasons for this disaster, and cling as usual to the lifeline of the Law of Supply and Demand. Too much supply versus too little supply is a situation that generates inflation. It is a sort of Pavlovian reflex.

Increasing supply, i.e., production, to balance its volume with the volume of demand is not a plan. Have you ever seen a central banker at work? Central banks have only one tool to fight inflation: reducing demand. They do this by ‘reducing the amount of currency available on the markets’ through the familiar expedient of raising interest rates, or in other words by generating inflation in the rental price of money (credit). Such a clever move reduces demand, which thanks, once again, to the wonderful Law of Supply and Demand, reduces prices, ergo inflation. Really?

Raising interest rates is like taking too much acetaminophen, better known as paracetamol: it causes undesirable effects, including deepening recessions. Or even worse, it generates a phenomenon called stagflation: the recession continues, demand shrinks more and more (while unemployment rises), and prices continue to rise.

The Fed, the Empire’s central bank, announces further interest rate hikes, while its counterparts in the European Central Bank follow suit. Ellen Brown in the SheerPost, in an article entitled “Interest rate hikes won’t save us from inflation” asserts: “The Fed’s prescription is to suppress demand (credit and spending) by raising interest rates”.

John Mauldin writes:

“The latest data show that inflation is still here at an 8.5% annual rate. That means we can expect the Fed to continue to tighten, trying to reduce demand to ease pressure on consumer prices.”

“At the same time, we see GDP declining in the last two quarters. … you can say we have stagnant GDP. Its weak numbers do not suggest that there is an urgent need to ‘cool’ the economy. But that’s what the Fed is doing.”

Apparently Fed governors have no intention of stopping in such a good way. The statements of Neel Kashkari, president of the Minneapolis Fed (the US Fed is the meeting of 12 regional FEDs), are very clear:

“The idea that we are going to stop raising rates early next year, when inflation is very likely to be far from our targets, is unrealistic.”

“I think a more likely scenario is that we will continue to raise interest rates up to a certain point and then sit back until we are convinced that inflation is returning to the 2% level, before we think about lowering them.”

Kashkari is very clear when he says that the Fed “is far from claiming victory on inflation, and until I see that prices are going in the right direction, I will not change my view on rates.”

None of this has the precision of a calculation made by the master Povedilla to obtain a right angle of a 90º angle, not one more, not one less. As any bungler does, he uses the Pythagorean theorem (born 580 years before our era…), which states that in every right triangle, the square of the length of the hypotenuse is equal to the sum of the squares of the lengths of the legs.

Economists have not got that far… that is why – among other things – we are where we are. If my memory serves me right, it was John Maynard Keynes who said: “Economists are driving the planetary vehicle, but they should be sitting in the back seat”. Or in the boot, I should say.

Not knowing what has caused inflation, not knowing what caused this recession, not being able to blame Putin… central banks pedal in vain.

For my part, after sailing in the Gulf of Morbihan and the open sea of Brittany, I returned safe and sound to the beautiful port of Vannes: thanks to the cardinals.