I recently spoke with a few doctor friends of mine about a theoretical patient who was diagnosed with a critical illness, however, with the proper combination of drugs this patient should be able to be cured.
It was right out of a second-year medical student’s textbook and I had a few questions.
First, I asked, “What would you do after the first round of treatment if the patient responded positively, then regressed?”
All three doctors unanimously agreed that the drug dosage was obviously insufficient to achieve the desired results.
Thus, another round of medication at higher levels would be productive.
“OK, that makes sense,” I said.
Then, I asked “What if round two of medication resulted in the same action, namely temporary recovery followed by regression? What would you do next?”
The first doctor said it was obvious; the patient needed a stronger dosage.
Yet, doctor #2 wasn’t so sure. He thought that either a stronger dosage of drugs was needed, or perhaps a totally different procedure altogether.
Doctor #3 was quite adamant: stop the drugs and formulate a totally different approach, explaining that even though it goes against the textbook, that’s the way that she would do it.
So, that’s three doctors with three different opinions.
My final question resulted in a response that I had not expected. I queried, “What if you increase the dosage and the patient started to recover, then the patient suddenly took a turn for the worse and died.”
The first doctor was very adamant about more, more, and more, but was visually unnerved.
“I think there could be some issues,” he said.
The “different direction” doctor said the attending physician better have good malpractice insurance because he’s certainly going to need it.
All three doctors agreed with that comment as the discussion quickly turned to malpractice premiums.
Yet, later that same day, I couldn’t avoid relating my discussion with the doctors to our current economic situation.
And speaking of upping the dosage, Dr. Ben Bernanke and Dr. Mario Draghi have continued to juice the patient (economy) with more and more drugs (monetization).
Gradually, we’ve seen shorter and shorter recovery periods, only to slip into relapse.
Unlike the doctors in my discussion group, Keynesians do not allow for alternative paths to save their patient, they just inflict stronger and stronger doses.
The unfortunate part is that unlike medical insurance (a debate for another time) there is nothing to make the citizens of the world whole if the current attending physicians, Dr. Bernanke and Dr. Draghi, are unsuccessful in their diagnosis and cure, resulting in the death of the economic patient.