The Song Remains the Same | John Michael Greer

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May 8, 2013 (Archdruid Report) -- If you always do what you’ve always done, a popular saying nowadays has it, you’ll always get what you’ve always gotten.

Most people accept that readily enough in the abstract. It’s when they attempt to apply this logic to their own lives and thinking that they get tripped up, because self-defeating patterns very often arise from a mismatch between basic presuppositions about the world and the world as it’s actually experienced, and confronting that mismatch is not an easy thing. It’s usually much simpler to insist that it’s different this time, and repeat the same failed strategy yet again.

The logic of speculative bubbles is a case in point. The next time you read some online pundit insisting that a new era has dawned, that the old rules of economics have been stood on their head, and that some asset class or other that’s been rising steadily for a while now is certain to keep on zooming upwards for the foreseeable future, he’s wrong. It really is that simple. Any of my readers who haven’t been hiding under a rock for the last 15 years or so saw that same rhetoric deployed to promote the tech stock bubble, the housing bubble, and an assortment of commodity bubbles, not least the recent and now rapidly deflating bubble in gold; those who know their way around economic history can find the same rhetoric being waved around every bubble since the Dutch tulip mania of the 17th century.

If human beings were in fact rational actors, as one of the more popular schools of economics these days likes to insist, investors would react to the next appearance of that well-worn rhetoric by pulling out every dollar they can’t afford to lose. In the real world, of course, things don’t work that way. When the Federal Reserve’s current orgy of quantitative easing finally does what it’s supposed to do and kicks off a gargantuan speculative bubble -- yes, that’s what it’s supposed to do; Greenspan’s easy-money policy a decade ago succeeded in blowing a bubble big enough to cushion the downside of the tech-stock crash, and Bernanke’s pretty clearly working off the same playbook -- it’s a safe bet that investors will stampede into the bubble, “it’s different this time” will once again become the mantra du jour, and the same cycle of boom and bust will repeat itself with mathematical precision.

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