Commentary on Commentaries

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The outcomes of our debt money system seem plain for all to see now, everyday on the news. But there is not too much variation from governments on what to do about it, only what sort of stimulus package there should be. There are plenty of good alternate “commonsense” commentaries if you look, here are a few of my favorites this week on the stimulus / bail out packages offered by governments, these are short simple and to the point:

This from Bill Bonner one of my favorite commentators from the The Daily Reckoning (See full article here)

“Using the collapsing economy as an excuse to waste money, the pols are having the time of their lives. Does your community need a bridge? A new drainage system? A shooting range for blind people? A study of the mating habits of fire ants (how do they get together without getting burnt?) Even in the best of times, politicians have trouble saying 'no.' Now, 'yes' is the answer to every request.

What strange madness is this? Why would anyone think the economy will be made better off by squandering money now on projects that were deemed unworthy or unaffordable only a few months ago? The country got into trouble because people squandered too much money; now they think they will get out of trouble by letting the government squander money. But we'll have to wonder about that later. Now, we're just trying to keep up with the torrent of boondoggles, bailouts and bunkum.”


That made me laugh after seeing the news in New Zealand today with a community buzzing about the new bridge they are to get after years of being turned down.

From NZ I watch the US, what’s happing there we are told will not happen here, and then about 1 month later it does. In-fact what the reserves bank says it’s not worried about is a good indication of what it is. This is the hallmark of keynesian economics, i.e. recession only happens when people lose confidence, while I think confidence may be the trigger that finally reveals the problem, it’s not the problem, and loss of confidence is brought on by the problem in the first place.

Now is a good time to bring in some commentary from another good article this week on this subject:

Steve Saville: (see full article here)

“The famous economist J. M. Keynes didn't understand the link between the boom/bust cycle, fractional reserve banking and the central bank's manipulation of interest rates. He therefore relied on mysterious changes in something he called "animal spirits" to explain how booms would evolve into busts. Many of today's economists operate from within a similar faulty framework, and thus believe a key to turning the economy around is boosting the confidence of consumers and businesses. They don't seem to appreciate that the problems are REAL, as opposed to figments of our collective imagination. A loss of confidence, leading to less spending on current consumption and a consequential increase in saving, is a RATIONAL response to the current economic REALITY. By putting a hallucinogen in the water supply you could probably make people feel more confident and thus cause them to go out and spend freely for a while, but how could this possibly help given that the current predicament involves too much debt, too little savings, and a mismatch between production and consumption? Obviously it wouldn't help; it would just make a bad situation even worse.”

“policies that encourage people to increase their borrowing and spending are, in effect, encouraging people to dig themselves into deeper financial holes, but such policies are now 'all the rage' in the world of economic policymaking"

“In sum, the problems are real. Confidence will naturally return after savings and production have adjusted to the new reality, while policies that convince people to ignore reality and behave less prudently in the short-term will only exacerbate the problems.”

And on Job creation:

“It is commonly believed that the Second World War finally ended the Great Depression, but this is not true -- the Depression didn't finally end until government controls were eventually relaxed after the War. Preparing for and fighting WWII made sure that everyone had a job, but minimal unemployment does not necessarily go hand-in-hand with economic strength. In the former Soviet Union there was very little unemployment, but living standards were "third world". Herein lies the problem with treating job creation as a primary goal of economic policy.”

Well put Steve, you can be busy but that does not necessarily mean you are doing something useful. I encourage all to read this short article linked above.

It seems many people have taken up an old joke line seriously: "If stupidity got us into this mess, why can't it get us out?" -Will Rogers

Economists have laughed at Zimbabwe, personally I think Zimbabwe is a warning to the world, we are in the eye of the hurricane, economists are looking at deflation but the wind will go the other way, the tide has suddenly gone out but they are not running for the hills, instead they are looking at deflation like flapping fish on the sand, while the inflation tsunami is yet to hit.

Thoughts of the day:

Its been proven the world can be totally deluded by the experts on the economy and money, so in what other fields of expertise has the world taken a lie for the truth?

People pay the experts that tell them what they want to hear, but no matter how popular an opinion is, that does not make truth. Absolute truth is independent of the polls it is independent of what people may think, it does not matter if truth gets only 10% of the vote, it is still truth.

Bye for now.

Andrew

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