Note: Cash For Clunkers Graph
The large-scale government intervention in the economy is going to end badly.
Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.
A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.
Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions.
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What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years.
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GOVERNMENT GDP NUMBERS ARE BOGUS
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How much money can our Gov print before they run out of paper? It sounds like one large shell game. Will the U.S.A. become a 3rd world country? I once was told a joke. How can I be broke? I still have blank checks?
ReplyDeleteI think we are all sheep.
Baaaa, I agree it's done, they got us, "what does people who cant take care of themselves and their families?, they beg their government to step in and do something....heh, I bet they have the solution for them! A job waiting in the NWO! We will end up 3rd world, it has begun. Start stocking up.
ReplyDeleteThe monetary systems of the world have been run by the corrupt for hundreds of years. We are just unlucky to be right at the point where they have decided that clandestine slavery is not enough for us.
ReplyDelete