Morgan Reynolds: "When the Bush administration took office in January, 2001, a downturn was already underway. The president and his coterie said so and blamed Clinton, but then hushed up. That was a mistake—a dose of truth about the economy would have worked better—but they learned an early lesson about psychology and confidence in Washington, D.C. Politics is all about (the) confidence (game) and prestige in the nation's capital."
Britain is similar to America in that it is suffering from the same political and economic maladies that have befallen its transatlantic cousin. Indeed, faced with a burgeoning fiscal deficit, fiat money-precipitated economic imbalances and renewed imperialism, albeit at Washington's behest, the U.K.'s own variant of "War, Prosperity and Depression," underscores the sources of America's woes. Grant Nülle explains.
It's easy to be depressed when you look around and see the state of monetary affairs, writes Christopher Mayer. But as many historical vignettes show, we have one great force in our favor. The inability of governments to maintain fixed exchange rates in the face of opposing market forces is proof of the impotency government managers.
As all Austrians should be aware, recessions themselves only come about as a reaction to the unsustainable tempo of the preceding Boom, writes Sean Corrigan. Pursue inflationism, frustrate the market, extend socialism, adopt protectionism, embrace militarism, extirpate thrift, expropriate the Middle Classes, consume capital--and ignore the Austrians!--that is the way to turn a recession into a depression.
Overall economic efficiency does not concern GDP growth per se, writes DW MacKenzie. It concerns the satisfaction of consumer demand. Increased military spending does not directly satisfy consumer demand. Nor do increased deficits and monetary stimulation substitute for market forces. They only set in motion another round of cyclical economic trends.
To most, the strong housing market has "saved" the economy by providing consumers with fresh purchasing power and housing gains have helped cushion many from the withering blows of the stock market’s decline.
But the housing boom is not an unmitigated good.
The NBER says the recession ended 20 months ago, but where is the recovery? The labor market is not responding, and growth is weak and ambiguous. Christopher Westley offers an explanation of why this supposed recovery looks different from previous ones.
You buy a stock and the price goes down. Who accepts the liability for losses? The purchaser of stock, of course, who must always bear in mind that stocks are never foreordained to go up or down. As painful as they are, investment losses are necessary to work off the excesses of a bubble, and to re-allocate capital to more promising business ventures.
Any upturn whether in economic statistics or in the stock market is almost certain to follow the patterns not of economic recovery but rather a mini-boom. There is no way that this particular boom, as pathetic as it is, can be sustained for a long time, unlike the boom of the late 1990s. In fact, the Fed's recent actions can only force more malinvestments which themselves will have to be liquidated in the future.
While one hopes that this current sorry situation does not metastasize into a full-blown calamity reminiscent of the Great Depression, there are some not-so-obvious but important issues that need to be raised if we are to climb out of this economic mess.
