As our phony debt-driven economy crashes and burns around us as a result of a decade of reckless borrowing and spending, our brilliant leaders have determined that the very thing to cure us of what ails us is more borrowing and spending–this time on an unprecedented scale, never before imagined. Although any mentally competent American citizen would know that you don’t cure a man of alcoholism by giving him more to drink, we have now saddled our bankrupt debtor nation with yet another trillion dollars in debt, on the hope and prayer that borrowing that much money will somehow “stimulate” our economy, presumably so we can all get back to reckless borrowing and spending.
This trillion dollar pork-laden bill is one of the most ill-conceived pieces of legislation in the history of the American republic. In case these politicians didn’t notice, we’re broke. The whole country is insolvent, as phony propped up stock and real estate prices have finally collapsed, and are in full retreat toward the sane levels they would have had all along had the government not manipulated interest rates and seemingly every aspect of our economy, in order to create and sustain them.
As American citizens we should all be very very cognizant of an important fact, that sadly escapes 90% of us. The government has no money. The government has nothing of its own. The government is us. It has nothing that it does not first take from the citizens. We obviously don’t have a trillion extra dollars. So for now our government will borrow it. And it is we, the citizens, who will be obligated to repay it. Much of it will be borrowed from foreign governments, primarily the Chinese, until they finally wise up and quit lending it to us. The interest that we must pay on these loans will be tens of billions of dollars per year, in perpetuity. Because our generation recklessly borrowed and spent money we didn’t have, we ruined our economy. Now, in a futile effort to try to mitigate the harm we’ve done to ourselves, we are trying to pass the debt off to our children and grandchildren. It is immoral and unconscionable.
What then should be done?
Sometimes the best thing to do, is to do nothing. Recessions are normal parts of economic cycles, and are particularly necessary after many years of artificially induced “growth.”
We do not need any “stimulus.” That is just double-speak for more borrowing and more spending. Excessive borrowing and spending is what created this mess in the first place. We cannot borrow and spend our way out of it.
We need to save more, not less. We need to consume less, not more. We need much smaller government and much lower taxes, not the opposite. We need higher interest rates, not lower interest rates. We need to have real production in this country, which means allowing dead-weight taxpayer-subsidized businesses to fail. We need to cycle out of the phony dead-end “service” economy. Malinvestment and debt must be liquidated, to free up capital and resources for businesses that are profitable, and that make sense.
We’ve been on a 30 year bender, and now it’s time for the hangover. This recession will be deep, long and painful. Lots of folks are going to lose their jobs. People who bought into the lie that buying stocks or houses was equivalent to savings are going to see their hopes for retirement vanish. Humpty has fallen off the wall and all the king’s horses and all the king’s men won’t be able to put him back together.
If we try to “fix” this with more debt and more government we will almost certainly fail, and we’ll risk our liberty in the effort.
Be we will try. We just don’t have the discipline, the leadership and the character to do otherwise.
This is how it works:
First the frightened public turn to the very people and institutions who caused the problem, begging them to fix it. When their fix inevitably fails, they insist, and the public agrees, that the problem was that they just didn’t have enough money and power to get the job done. So they’re given more power, and as their increasingly more radical fixes keep failing, they keep getting more and more power, and more and more tentacles into the public. Hayek described this process in The Road to Serfdom.
In our case the Bush $168 billion “stimulus” check fiasco was completely ineffective, as free market economists knew it would be. That number was eye-popping at the time. It is now peanuts. No government “stimulus” program can change the fact that we are cycling into a new economy. But no one wanted to admit that. Rather, they insisted, we just didn’t mail out enough money. We didn’t borrow enough. We didn’t regulate enough. More government debt, more tax obligations, more regulation, more government “infrastructure” is the answer. And when the current trillion dollar “stimulus” inevitably fails to accomplish anything other than sinking us deeper into a swamp of debt, we will again be told that it just wasn’t enough money. It should have been more. If only MORE money and power had been authorized, then the problem would have been fixed. So the next “stimulus” plan will be even bigger, and we’ll be even more hopelessly in debt, and it will still be impossible to borrow our way to prosperity.
Somewhere along the way we’ll have to nationalize banks, and give the government control over determining who gets loans, and on what terms.
The debt problem will go away when the government monetizes it. The resulting inflation will be cured by the issuance of a new currency.
But let it not be said that we just sat back and allowed a recession to occur. No way. We DID something.
Heaven help us all.