The "fundamentals" of the economy have been and remain awful, because the government and Federal Reserve are consistently doing the wrong things. The apparent recovery, fueled by Bernanke's sheer money creation, has been bogus all along.
Now that the debt "crisis" is over, we can explore two of the wackier proposals that emerged during the panic.
After three-plus years of floundering around, a consensus has finally arrived that we are back in recession. Growth is not happening. The meager statistical growth of the past few years — no one dared claim it amounted to full recovery — was probably illusory.
Recorded at Mises University 2011. Includes an introduction by Mark Thornton.
Any student of money and banking recognizes the sophistry in saying that "the Fed does not pay with paper money."
There was no "irrational exuberance"; the exuberance was completely rational given the price signals at the time.
So, isn't it time to demythologize all of this? Treasuries are bonds just like any other bonds. There's nothing magic, mythical, or sacred about them. A default on US government debt is no more or less radical than a default on any other kind of debt.
A credit default is not unprecedented. One occurred as early as 1777 and another as late as 1979.
Joseph Salerno is interviewed by the Daily Bell.
