That Cart Is A Tumbril

I thought this was a particularly apt summary of the economic situation.

Putting The Cart On Top Of The Horse:

For a human lifetime, since the 1930s in the US and across the developed world, the health and “growth” of an economy has been “measured” by how much has been consumed. Part of this consumption, it is true, is the natural result of prior production. But over the decades, an increasing proportion of it has been done by means of borrowed money. Worse still, the calculations of economic “growth” have included consumption by government. Government, by its nature, produces NOTHING. Any government, even one which is limited to protecting life and property and issues no debt whatsoever, is a cost on the economy. The fact that this cost is necessary does not negate the fact that it is a cost.

It is one thing to measure this cost in terms of money. It is another thing entirely to measure it in terms of the real wealth which has been consumed by government. The ONLY way to increase the wealth of an individual or a nation of individuals is to produce MORE than is consumed. The difference – which is SAVINGS – can then be used to produce more real wealth with more efficient means and thus less real effort. This is the only way that an economy can genuinely “grow”. This is what transformed the US from an all but untouched potential into a continent-girdling economic powerhouse. It was not done by means of currency manipulation. It was not done by means of government borrowing. It was not done by all encompassing rules and regulations. It was done by means of political AND economic freedom.

It cannot be done in any other way. Increasing the units of the medium of exchange will NOT do it. Increasing the debt burden on generations to come will not do it. These things will do the opposite. They will and have inexorably led to capital consumption. The results of capital consumption are visible all over the world today – but in few places is the evidence more stark and obvious than it is in the US.

The century-long experiment of putting the cart on top of the horse has all but killed the horse. There is no way that the genuine productive capacity of the US economy can keep up with the government’s stampede into unrepayable debt. In reality, the US government has destroyed the productive capacity of its people. If they refuse to realise it – the economy and the markets will do it for them.

That process began on August 4 when US stock markets had their worst tumble since February 2009.

In the meantime, King Obama The Unred is apparently preparing yet another “stimulus” program. The coffin needs some more nails, I guess. So long as he listens to the likes of Krugman, he is toast. It still makes me angry that Krugman would claim that war spending ended the Great Depression. Talk about ignoring the facts to cling to your conclusion – totally unprofessional and unscientific. Just makes a total joke, if it wasn’t already, of the fake Nobel prize that economists award one another. Dear King Obama, let me just leave you with one thought:

“America could be much more competitive, balance the budget and reduce the national debt if we brought our military expenditures in line with our global competitors. This would result in hundreds of billions of dollars in annual savings. For some odd reason the Chamber of Commerce prefers to insist that social entitlements are the sole cause of the federal deficit. Let me just suggest to the Chamber, “It’s the military, stupid.” I’d urge the Chamber to take a more global view based on the data. It might rethink its insistence on lower taxes and slashing entitlements to be globally competitive.

Both comments and trackbacks are currently closed.
%d bloggers like this: