Monty Pelerin's World

We are living through the death throes of an empire. For those citizens who understand what is occurring, the process is akin to being trapped in a taxicab where the meter is on and running at an infinite pace. We cannot get out; nor will we be able to pay when the bill is submitted.

Government Duplicity

The duplicity and outright lies of government are becoming more apparent. There are too many to list here. Here are a few:

• Favorable forecasts regarding the economy are cruel jokes to everyone, but especially to those unemployed and underemployed. The country is told that the economy is out of the woods and on its way, recovering from the worst recession since the 1930s. No one with an IQ higher than room temperature or the ability to see should believe that.
• The Obama Administration stumbled badly with their first major promise. We were told that if the stimulus package was passed, unemployment would not exceed 7%. It was passed and unemployment soared over 10%. The package had no promised shovel-ready jobs and turned out to be the biggest pork bill ever. Virtually nothing went to Main Street to help individuals. Unions, government employees and other Democrat constituents were the primary beneficiaries along with the banking industry. President Reagan, like President Obama, inherited a difficult situation when he entered office. To the right is a comparison of what happened under Reagan and under Obama. The chart compares unemployment rates. Changes in the manner in which unemployment is currently measured favorably distort the unmitigated disaster that is Obama’s economic policy. Adjusting data to the same basis, would make the comparison even worse.
• To issue such an unemployment forecast, the Obama Administration had to be either desperate, economically illiterate, lying or just stupid. Feel free to pick from multiple categories is making your judgment. If that one forecast were all that was involved, there would be little need to harp. Yet every subsequent pronouncement or projection has similarly been wrong, often in similar magnitude. I have not checked all the statements, projections and claims, but I do not recall a single major economic promise or projection being correct. Many have resulted in additional outright lies to cover the impotency of this administration.
• The projections of Federal Reserve Chairman Ben Bernanke are no better.  He is the only one who might be able to compete with Administration economists for worst forecaster of all time. Again, without checking every major item, I think he is batting 1,000 in terms of incorrect projections. YouTube and other websites provide ample evidence, mocking his dismal forecasting record.

Despite record stimulus, both fiscal and monetary, the economy has not improved. The declaration of the end of the recession was reminiscent of George W. Bush’s premature claims of victory in Iraq but was a necessary part of  of the pretend and extend game that government must play. There is no escape from an economic apocalypse, hence much of the duplicity.

An Economic Collapse Is Unavoidable

It would not be too late to avoid this collapse if this were a corporation operating in a free market. In that case, a hard-nosed, savvy turnaround specialist could come in and save the company by slashing spending mercilessly. But we are dealing with a political entity run by political animals who are neither very smart nor very brave. In such a situation and especially today where leadership is absent in either political party, there will be no solution. Competing interests and entitlements are too entrenched. Politicians behave only to get re-elected and no one has ever run for office successfully by promising to cut programs. Imagine the slogan: “Vote for me and this is a list of things I will take away from you.” Thus, it is impossible to avoid the coming disaster.

The economy continues to worsen because we have squandered and continue to squander valuable resources in an attempt to avoid doing the right things. The political class has chosen to protect their positions by pretending that matters are getting better. The economic system is now so burdened with debt, price distortions and asset mis-allocations that we are on the verge of an economic collapse. When this happens or what of the many incidents that might trigger it is anyone’s guess.

The best efforts of both government and their media cronies are devoted to covering up Continue reading »

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