It is a hallmark of the triumph of image over substance in modern society that an administration which has submitted to Congress budgets with the biggest deficits in American history should propose as a cure-all a constitutional amendment mandating a balanced budget.

Not only is there confusion about whether or not a recession is imminent, but some economists think that we’re already in one (1988). Thus, Richard W. Rahn, chief economist for the U.S. Chamber of Commerce, recently declared: “The economic slowdown is not coming: it’s here, and soon it will be gone.” Not knowing whether or not we’re in a recession is not as silly as it sounds. It takes a while for data to come in, and then to figure out if a decline is a mere glitch or if it constitutes a new trend.

I am by no means a complete “contrarian,” but I have one contrarian index to offer as a sound “leading indicator” of recession: every time Establishment economists and financial writers trumpet the existence of a brave new world of permanent boom with no more recessions, I know that a big recession is just around the corner.

Few occurrences have been more dreaded and reviled in the history of economic thought than deflation. Even as perceptive a hard-money theorist as Ricardo was unduly leery of deflation, and a positive phobia about falling prices has been central to both Keynesian and monetarist thought.

Unfortunately, John Maynard Keynes, the disastrous and discredited spokesman and inspiration for the macroeconomics of virtually the entire world since the 1930s (and that includes the Western World, the Third World, the Gorbachev era, as well as the Nazi economic system), still lives. President Bush’s reaction to this grim recession has been Keynesian through and through not surprising, since his economic advisers are Keynesian to the core.

It’s official! Long after everyone in America knew that we were in a severe recession, the private but semi-official and incredibly venerated National Bureau of Economic Research has finally made its long-awaited pronouncement: we’ve been in a recession ever since last summer. Well! Here is an instructive example of the reason why the economics profession, once revered as a seer and scientific guide to wealth prosperity, has been sinking rapidly in the esteem of the American public. It couldn’t have happened to a more deserving group.

“Itold you so!” may not be considered polite among Recession friends or acquaintances, but in ideological clashes it is important to remind one and all of your successes, since neither the indifferent nor your enemies are likely to do the job for you.

Money is a crucial command post of any economy, and therefore of any society. Society rests upon a network of voluntary exchanges, also known as the “free-market economy”; these exchanges imply a division of labor in society, in which producers of eggs, nails, horses, lumber, and immaterial services such as teaching, medical care, and concerts, exchange their goods for the goods of others.