Noah denkt™ - The Power of Balanced Reasoning
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Paul Singer’s Reality Check
Dialogue with the Alter Ego on Mr. Singer’s “fake growth, fake money, fake jobs”- comment, drafted and
published on Nov. 6, 2014
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Question by Alter Ego of Noah denkt™ (AE): As you know, Paul Singer of Elliott Management Corp. became
famous for
successfully challenging the Argentina debt restructuring deal of 2005 and 2010. He is now in the
news again for railing against the positive numbers which the US economic recovery is apparently producing at
this time.. In his third-quarter letter to investors he argues that loose monetary politics won’t create lasting
growth, that the official inflation number is understating the actual inflation and that the 5.6% employment rate
inspires little satisfaction because of a low labor participation rate and stagnant wage increases. His
assessment culminates in the following assertion : “Nobody can predict how long governments can get away
with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth”
(…) . “We do not think this optimism is warranted, and we think a lot of the data is cooked or misleading,” (…)
“A good deal of the economic and jobs growth since the crisis has been fake growth, with very little chance of
being self-reinforcing and sustainable.”
(see: Bloomberg-Link) What does Noah denkt™ make of Mr. Singer’s
assessment?

Answer by Noah denkt™ (Nd): Well, we obviously don’t share Mr. Singer’s belief that a lot of data is actively
“cooked” by the government to look good. But we do agree with his general view that said numbers are quite
misleading due to the enormous infusion of cheap central bank money which has happened ever since the
financial crisis broke. Just think about the fact that this year alone the Federal Reserve apparently bought ¾ of
all treasuries issued by the US government.
(see: http://news.sky.com/video/1362953/is-end-of-qe-a-force-for-good) That
doesn't sound like a balanced economy at all, does it?

AE: Probably not. But nobody is seriously disputing
the need for at times even massive state intervention in
order to balance substantial distortions in the market place?

Nd: No, nobody is disputing that. It is equally important though to not lose sight of the fact that the current re-
balancing of the market place is still due to outside government intervention and not due to the flow of
indigenous free market forces. And that is what Mr. Singer has alluded to.

AE: Does it seem to Noah denkt™ as if too many market players were losing sight of this fact?

Nd: At the very least, it appears as if public opinion isn't sufficiently worried about that.

AE: How can you say that when Tuesday’s mid-term elections just made the discontent very plain which the US
public seems to harbor towards the current state of the economy? Would you not have thought that recent
economic numbers would have helped
President Obama to avoid the terrible defeat which he actually received
at the polls?

Nd: Well, the mere fact that people are surprised by the magnitude of his defeat shows that they weren't
bracing themselves enough for the possibility of a dramatic surprise. In other words, they would have been less
surprised if they had had a better sense of the fragility of the overall situation.

AE: So you yourself were not surprised then about the magnitude of President Obama’s defeat on Tuesday?

Nd: The truth is that we couldn't even focus on this election to begin with since the general state of things is so
mind-numbing that it makes it impossible for us to continue with business as usual.

AE: And you think that you are mentally paralyzed or awash with indifference because of
the Keynesian
attempts at Quantitative Easing?

Nd: That may, in no small amount, be true.
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Keywords:

misleading economic figures, the malaise of quantitative easing, the effects of
Keynesian politics, slow growth due to government intervention, quantitative
easing and public discontent, Paul Singer of Elliott Management rejects
Keynesian politics