For his latest piece over at Financial Times, Roger Altman fires up the economic fallacy machine and throws it into overdrive: The economy needs more stimulus to recover; recessions must be avoided; we’ll solve our debt problem with more debt; and don’t worry, higher prices are temporary.
Let’s begin with this notion that a recession is a bad thing. Yes it’s certainly painful, like rehabilitation after an injury, but necessary in order to heal. A recession is a contraction in the economy due to the closing of failed businesses and the liquidation of bad investments. The process of clearing the market of these impediments is essential to growth. Critical capital tied up in these failed endeavors must be freed before it can be reinvested in more productive areas. It is these new investments that ultimately create new jobs and form the basis for future economic growth.
When government steps in to prevent this from happening, it only prevents the economy from repairing itself. The problems will continue to fester until they become so great that no amount of government interference can prevent the inevitable correction. When confronted with a looming recession, the cries should be not for the government to do something, but rather demands that it do nothing at all.
Stimulus spending is a political tool used to camouflage economic statistics in the short term. Temporary make-work programs do nothing to foster long term economic growth. Nor do they necessarily benefit individuals who have lost their jobs due to a failed business. The more troubling problem results from the fact that government has no wealth of its own. When government engages in artificial stimulus spending, it does so by plundering the private sector. Productive individuals are no longer able to employ the money that they have earned. The net result can only be positive if you believe that the government can allocate capital more efficiently than the free market. History and common sense tells us that this is not the case.
It makes no difference whether the source of this plunder is direct taxation, issuance of debt, or simply money printing. All is paid for in full by the private sector. The latter method is the most insidious as it steals the purchasing power from wages and savings. This is the source of the “temporary” higher gasoline prices Mr. Altman mentions. Does he believe that the 97% loss in the value of the dollar over the last one hundred years is also temporary?
In the end he leaves us in a conundrum where debt is threatening the future economy, yet still we must continue to rack up more, lest we threaten that same economy. In other words, the last stimulus failed to fix our problems, so let’s do it again.
Why on Earth do otherwise intelligent folks keep lobbying for failed policies? The answer is simple: Policies that are harmful to the economy as a whole are extremely beneficial to a select few. Fallacies are the means by which this select few convince the greater population to go against their own self interests.
I’ll leave it to the reader to decide for themselves whether Mr. Altman is one of the select few that benefits from the fallacies that he pushes. Two good places to start would be the GM bailout and the Whitewater scandal.
Update: Further googling reveals that he is also a member of the Council on Foreign Relations and a regular attendee at Bilderberg.
Another scammer involved in government influence and benefiting from the wrongheaded policies we have followed for far too long. The present political system with its special interests continually winning over rightminded decisions and lobbyists over voters’ needs has to be reset as we are quickly falling behind the Chinese and will be back in the pack down the road if the present situation isn’t addressed with less government, lower taxes, less business controls at every level, free market values and plain common sense.
That Guy Gary
Sadly, its really the only option left because its all these Keynesians know how to do. Bernanke will ultimately pull the trigger on QE3 whether they call it that or come up with some other clever name for it.
The media are basically bought off whores for that ‘select few’ that benefit from these policies.
The only way out of this mess is to re-industrialize the US and bring back manufacturing. A service economy + currency devaluation on a massive scale is a recipe for disaster.
Finally, the truth comes to the fore. The last sentence of the article states, “Update: further googling reveals that he (Roger Altman)is also a member of the Council on Foreign Relations and a regular attendee at Bilderberg.” As we are now fully aware, the world is steadily heading into complete chaos on many fronts, economic, social, institutional and moral. The same Keynesian policies have been and continue to be employed in many of the world’s economies. Most, if not all, are failing. Yet the U.S., in the face of this evidence, continues to rely heavily on destructive Keynesian policies. Coincidence or deliberate?