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Economic Insanity
By jbcobb | October 7, 2008
Much is made every election cycle about American voters basing their decisions on a political party’s economic plan. Knowledgeable and reasonable individuals know that is only partially true. In reality, the overwhelming majority of American voters have very little understanding of the economic data, proposed financial manipulation, monetary policy, and debt financing information thrown at them by the mainstream media and political candidates. Now, you must also know that the vast majority of mainstream media presenters and analysts and political candidates also have little to no understanding of the things they report and suggest. This explains the full employment level of economists. They are the little men behind the curtain of these political hacks and talking heads.
People, by and large, make their political decisions based on a simplistic perception of our country’s economic well-being, and the preached voodoo of the major parties. The voodoo of the Socialist Democrats is one of class warfare. The voodoo of the NeoCon Republicans is one of corporatism. Neither promotes the long-term well being of the republic and its citizens.
Today’s market crash, the precipitous fall of the US dollar, and the collapse of large financial institutions were not unexpected by those with any serious grounding in economics. Now, I am not talking about the Keynesians, the socialists, or the pseudo-”free market” predators. People with a critical understanding of money and credit manipulation by the central bank of the US could see the “perfect storm” brewing. Unfortunately, newsy talking heads, political propagandists, and stock market churners are a little light in the loafers when it comes to any sort of serious analysis of loose money and loose credit. Unfortunately, they are probably more enlightened than the present presidential candidates.
The present economic chaos, which is only beginning my friends, was rooted in the economic ”boom” of the 1990s and early 2000s. While many saw this as “good times”, it was much like the Roaring Twenties in that it was all a house of cards. More correctly, it was a house built of fiat cash and loose credit. Our present economic response to any kind of “slowdown”, “recession”, or “downturn” is to print more cash….billions of dollars more cash. This is primarily achieved through artificial lowering of interest rates. What people must realize is that much of the mortgage crisis mania was created by a push from the US government to give loans to EVERYBODY with a heartbeat. This was achieved through dicey financial instruments, much of it sponsored by the government itself. Commerical and financial banks moved to get onboard, as Big Brother was creeping into their playground, and made moves to gather some of that loose credit for houses. It was a terrible mistake by all, as none of these were sound decisions.
Anyway, the loose credit, new government-sponsored lending devices, and a Federal Reserve printing press which went into hyperdrive to pump out more and more worthless US dollars primed an increase in economic production which was doomed to balloon into something nasty. Nothing was real. Nothing was on solid ground. Nothing was based on sound economic principles. And you bought into everything they threw your way. You took the hook. Now, they are reeling you in. Homes, land, businesses, capital goods, financial institutions are all being swallowed by the central government in the greatest centralization of power since FDR. Socialism was once our greatest enemy…now it is us. Most of you aren’t aware of this, or simply don’t care. THey have thrown you a couple of duds who couldn’t tell you the difference between a moral hazard and a water hazard.
In a very real sense, this year’s election means nothing. The American people have once again chosen NOT to make a choice on the issues of the day. Present economic chaos, which has been cycling for many decades now, determines that we need somebody to get the government OUT of the markets. This needs to be done to get our markets off the boom and bust cycles created by central bank injection of fiat money. We need a leader who understands that we are addicted to loose credit, and that the tightening by the banks is a necessary reparation which needs to be made in the present situation in order to undo the problems of the past couple of decades of false growth. To inject more money and to protect bad institutions and to continue bad credit practices, supported by both moronic presidential candidates, is a prescription for disaster. We could probably endure a one to two year economic slowdown, as the markets readjust to the absence of the narcotic of loose credit and free money, but it would be fairly painless. However, our present course, one of absolute economic lunacy fashioned by the short-bus economists of the two parties, will lead us to a prolonged production slump, which could lead to more “proactive” bad moves by the government and central bank which would send the dollar to absolute worthlessness and bring our country to the verge of economic collapse.
We need sound monetary policy now. We need to realize that the Federal Reserve is nothing but a central bank, which acts on its own at times, or in concert with a spending-addicted Congress with little regard for our economic well-being as a nation. We need elected leaders who understand this problem. The short-term Keynesian political economics of the two parties is killing our economy, taking away our liberty, and could ultimately doom our nation. Will we wake up in time to save it?
JB
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