Great Depression Online Archive Issue:

The Depression of the 2010's

Great Depression Online
Long Beach, CA
December 11, 2009

Inside This Issue You Will Discover…

*** Stimulus Redux
*** The Village Idiot Correlation
*** The Depression of the 2010’s
*** And More

Stimulus Redux

During more tempered days the idea of the government borrowing money from foreigners to stimulate the economy with make-work jobs would have been met with disdain and derision.  But that was long before cattle ranchers had to comply with cow fart emission cap regulations to keep the polar ice caps from melting.

How things have changed.  

The foundation for modern day government stimulus was laid down by Keynes during the early part of the 20th century.  It was really quite simple: In a period of economic stagnation the government should not save money…it should spend it.

His method for stimulating a depressed economy was equally simple…

“If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal mines which are then filled up with town rubbish, and leave them to private enterprise on the well-tried principles of laissez faire to dig them up again… there need be no more unemployment and, with the help of the repercussions, the real income of the community and its capital wealth also would probably become a great deal greater than it actually is…”

~~~~~~What’s Coming Next?~~~~~~

The shocking 1990 collapse of the Japanese Market.  The extraordinary U.S. economic boom of the ‘90s and early 2000s.  The devastating global recession that began in 2008.  These impacted everyone’s lives, investments, and fortunes.  The signs of their arrival were visible years and years in advance.  And yet…Almost No One Predicted Them.

The mainstream media didn’t.  The top economists didn’t.  The great financial advisers didn’t.  But One Man Did.

What’s coming Next?  When will it happen?  What should you do to Prepare for it?

Click Here for the Answers

~~~~~~~~~~~~~~~~~~~~~~~~~

Where the bank notes would come from was just a pesky technicality.  To Keynes credit, he did add that during times of economic prosperity, the government should reduce spending.  But no one seemed to hear that part.

As we all know, the idea was absurd.  For even with record stimulus, and record deficits, we have record unemployment.

The Village Idiot Correlation

To an economy, stimulus doled out by the government is a fraud.  It masquerades as real money and impersonates real growth and real jobs in government statistics.  But that’s not all… 

Most notably, it’s a fraud because it doesn’t do the primary thing it’s purported to do…stimulate the economy.  The experience of the United States in the 1930’s and Japan in the 1990’s and 2000’s shows that government stimulus does the exact opposite.  It retards the economy.

Here’s why…

For every dollar of stimulus injected into the economy, a dollar – or perhaps more – is subtracted from the future.  For every make-work job fabricated by stimulus, several useful and productive jobs are deferred.  It’s just how the world works.

For example, for every village there’s an idiot.  So, too, for every idiot there’s a village.  It’s a symbiotic – even poetic – immutable law of nature…and it expresses itself through countless correlations.

Where stimulus is concerned, for every Keynes there’s an Obama.  In other words, for every bad idea there’s a government buffoon intent on taking it and transmitting it upon the world at large.

The Depression of the 2010’s

“President Barack Obama called for a major new burst of federal spending Tuesday,” reported AP, “perhaps $150 billion or more, aiming to jolt the wobbly economy into a stronger recovery and reduce painfully persistent double-digit unemployment.”

Remember that this would be on top of the $787 billion stimulus package passed less than a year ago.  At the time, Vice President Biden called it “a landmark achievement.”  We’re not exactly sure what the stimulus package achieved for the economy, outside of squandering the future earnings of the unborn, but, apparently, it was such a success Obama wants more.   

“Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient.  He said he wanted to extend economic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance.  He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters.”

“Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year.  His proposal for new tax breaks for energy-efficient retrofits in homes is modeled on the now-expired Cash for Clunkers rebates for trading in used vehicles for more fuel-efficient vehicles.  Some administration officials have dubbed the proposed new program ‘Cash for Caulkers.”’

Aside from small business tax breaks this proposal doesn’t appear to do anything to stimulate the economy.  It does appear, however, to do plenty to hurt it. 

Through encouraging more debt and consumption, and promoting speculation by keeping interest rates at practically zero, the government is promoting the destruction of wealth.  Creating real wealth, of course, requires saving more than you spend; it requires discipline.

By advancing the destruction of wealth the government is delaying recovery.  What’s more, they’re ensuring a decade long depression: The Depression of the 2010’s.

Alas, it has only just begun.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  More than 130 banks will have failed by the end of 2009.  What if your bank fails?  Did you know you could be left in the lurch for days, weeks, or even months before you get your money back from the FDIC?  What happens if the FDIC can’t cover your funds?  How do you find a safe bank to protect your deposits right now?

What if your bank fails?

 

FREE 7-Day Course and Three Bonus Reports When You Subscribe to the Great Depression Online E-Newsletter Today Simply Enter You E-mail Address Below...
Email:

We Respect Your Privacy
We Will Not Share Your Email
With Anyone Else