Just more compete lack of understanding of economics. Maybe that’s the course I shall take with the restart? Who knows, but one thing is certain, it would be an easy path to take. Let’s take another look.
(Now, before I start, I was looking for #1, hyperinflation and complete collapse of the currency. Didn’t make the list. So I can already tell how little they understand…)
Most signs point to a slow and steady recovery, but what if the pessimists are right, again? What if the United States isn’t in the slow-lane to recovery, but rather on the precipice of another decline — a double dip?
“Double-Dip”? Really. Take away all the artificially incentivized purchases, the debt laden government spending (C + I + G is as disingenuous as it gets!!), the money printing, and there’s been no recovery of any sorts. Anything remotely suggesting recovery is wishful thinking at best, deceitful agitprop at worst. (Oh, but He’s the ONE. He’s hope, He’s change. He’s here to right the wrongs of our evil capitalist system!!) We’re in a depression, and like those prior (’20 and ’30), they were government induced. The only difference is that in ’20 the government did NOTHING and the economy quickly recovered. Real recovery, built on real investment and real growth in productive capacity.
This time, like in 1930, instead of the model for recovery, 1920, the government went hell-bent on interventionism that only prolonged and deepened the depression, preventing any possible recovery.
1. Housing’s Mini-Bubble Pops
Perhaps nothing poses as a big of a concern to the U.S. economy as its housing market. It’s unclear how the government’s efforts to stabilize the market through a buyer credit, ultra-low mortgage rates, and mortgage modification programs will pan out. Did it just create another mini-bubble that’s beginning to pop now that the support has been withdrawn?
The housing market is NOT a cause, it is a symptom. When you take the causal-realist approach, you fully appreciate that the housing market caused NOTHING. It is the ne plus ultra of malinvestment. But what did the efforts do? They have completely blocked any opportunity for real recovery. As I mentioned recently, the sooner and faster that the housing market adjusts to market conditions the better. If that means houses fall another 20-30 percent, or more, all the better.
2. You Break the Economy
You, the American consumer, are reloading savings after a debt-fueled decade. But as any general will tell you, when an entire squad reloads at once, it leaves everybody vulnerable. It’s the same with the economy.
Do we really need to even address this, I mean, isn’t this so obviously moronic? Guess we do!!
Yes, it’s the fault of the greedy consumer, unwilling to spend it all, borrow and spend some more. Then when they’re up to their necks in debt, run the tab up even higher.
This folks is called the “paradox of thrift” and is one of Keynes’ most disgusting legacies. Along with housing reaching a realistic point, not a policy driven (you know, that’s a phrase I want to coin: the policy driven economy. More on the later.) target, the one thing the economy needs more than ever is MORE savings. Savings is what will fuel the growth through investment. (Please, please, see Hayek!!)
3. Toxic Assets Return
If you closely followed the bank bailout, then you know it wasn’t originally billed as simply throwing money at the banks. Instead, the Treasury intended to purchase the toxic assets from banks, which were the source of investors’ uncertainty concerning bank stability. But the Treasury couldn’t figure out a way to do this quickly enough to make it effective. As a result, the banks were largely stuck with these bad assets. We just don’t know how bad, yet.
They aren’t going to “return”, as they never went anywhere. At the bottom of all this is everything backed by fiduciary media, paper money backed by NOTHING. And the most toxic assets still to come are US Treasuries.
4. Europe Falls Apart
Europe seems to have avoided an all-out collapse of confidence in its ability to pay back its debt. But things can change, and fast fast. Indeed, the Greek debt crisis went from ignorable wire stories to front page news in a matter of days.
Just a preview of things to come folks.
5. Debt Finally Catches Up to Us
Interest rates on U.S. debt are low today for one big reason. Investors trust the United States, at least more than they trust other countries. If the people giving us money suddenly have as little faith in America as Americans, that could change, and quickly.
It will. And when it does, there will not exist words to describe the chaos.
Americans don’t possess little faith in America. They possess absolute contempt for the government, or at least its ability to do anything. One thing is certain, they know that this administration is shifting into high gear on the path to insolvency and bankruptcy.
But this passage reveals the statist mentality more than anything. No, it’s a little disguised, but “faith in America” means faith in government. So, if you’re unhappy with the state, then you’re anti-American. Gee, nice. I thought dissent was the highest form of patriotism. Guess not!! Maybe that’s only partisan thing.
So, you either worship the state, and all that it brings, or you are the problem.
Maybe a little “re-education” camp for you comrade!!
The more I contemplate it, collapse of the currency need not be feared but actually embraced. Once pieces of paper with dead emperor’s pictures on them are as useful as, well, pieces of paper with dead emperor’s pictures on them, then we’ll be on the path to recovery and prosperity. Then, and only then, can we return to a sound currency, backed by something real and tangible, like, what was that thing used for thousands of years??? Ah yes, gold.
I recall I read once that gold was actually used as currency. Strange, but yes, it once was true.
But that will take a little more understanding of economic principles. My work has just begun.