Does Believing in the "Recovery" Make It Real? (April 28, 2012)
Basing a "virtuous cycle" on lies and propaganda is self-defeating.
Does believing in the "recovery" make it real? The propaganda policies of the Federal Reserve and the Federal government are based on the hope that you'll answer "yes." The entire "recovery" is founded on the idea that if the Fed and Federal agencies can persuade the citizenry that down is up then people will hurry into their friendly "too big to fail" bank and borrow scads of money to bid up housing, buy new vehicles, and generally spend money they don't have in the delusional belief that inflation is low, wages are rising and the economy is growing.
In other words, the "virtuous cycle" of new debt feeding economic growth is based on conning (or brow-beating) the American public into believing that the "recovery" is real. Our "leaders" hope this baseless belief will spark a buying frenzy that then fuels a real recovery.
Perception may seem like everything to our Delusionol(tm)-soaked "leaders," but reality still trumps the con. Real wages are declining and debt loads are still crushing, so the new cycle of borrowing and consumption the Fed and Central State want to create requires trillions of dollars of free money, either guarantees or subsidies from Federal agencies or trillions in monetary printing via "quantitative easing."
Everybody loves free money, but once again reality trumps fantasy, for guaranteeing lenders from loss leads to moral hazard, and distributing free money leads people to gamble it on speculation or other forms of unproductive mal-investment.
So all the free money is squandered or gambled away, but the Federal government is left with the debt it took on to fund the trillions in give-aways. That means the cost of servicing all that new debt rises, which means either government spending on other programs has to be cut or taxes have to rise, reducing disposable income, savings and consumption.
Free money and guarantees incentivize speculation and mal-investment, so the money is squandered, leaving the immense debts behind to be serviced from now until Doomsday (December 21, 2021--the Mayan astronomer/sage was dyslexic.)
Here is precisely how the lies and propaganda are perpetrated. Rick Davis of the Consumer Metrics Institute pulls apart the massaged con-job of "official" GDP growth:
Once again the BEA has used "deflaters" that will strain the credibility of the public, especially if they buy gasoline. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.54%. As a reminder, lower "deflaters" cause the reported "real" growth rates to increase -- and once again very low seasonally adjusted BEA inflation "deflaters" have been the headline number's best friend.
So GDP really didn't grow at all, disposable household income is declining and much of the "growth" was channel-stuffing inventory build. Yet this reality was spun into a headline 2.2% "growth" in GDP, in the hopes that would make us feel warm and fuzzy enough to go borrow a ton of money to blow on something or other (unless we've already borrowed tens of thousands of dollars in student loans, in which case we're now debt-serfs and unable to borrow more.)
Something else happens in the real world when the government massages, mis-states and flat-out lies to twist reality into fantasy: people no longer trust their government or their institutions. This loss of faith is a social-fractal death-spiral, as every strained, frantic attempt to persuade us that "all is well, the economy is growing nicely, unemployment is down," etc., only further strengthens the awareness that our government has lost the ability to report the truth, in matters large and small.
Our government is in effect a pathological liar--not just about wages, GDP and unemployment, but everything. Does any well-informed citizen believe anything the government claims is true, about Afghanistan, the budget, or future Federal liabilities?
Data is now massaged for political
expediency, failure is spun into success, and consequences are shoved remorselessly
onto the future generations. The entire policy of the Federal Reserve and the Federal
government boils down to pushing propaganda in the hopes we'll all swallow the con
and believe that down is now up and our "leadership" is a swell bunch of guys and gals
instead of sociopaths who will say anything to evade the consequences of their actions
and policy choices.
Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)
We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.
If this recession strikes you as different from previous downturns, you might
be interested in my book
An Unconventional Guide to Investing in Troubled Times (print edition)
Kindle ebook format. You can read the ebook on any
computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One.
The solution in one word: Localism.
Of Two Minds Kindle edition: Of Two Minds blog-Kindle
"This guy is THE leading visionary on reality.
He routinely discusses things which no one else has talked about, yet,
turn out to be quite relevant months later."
NOTE: gifts/contributions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Or send him coins, stamps or quatloos via mail--please request P.O. Box address.
Subscribers ($5/mo) and contributors of $50 or more this year will receive a weekly email of exclusive (though not necessarily coherent) musings and amusings.
At readers' request, there is also a $10/month option.
The "unsubscribe" link is for when you find the usual drivel here insufferable.
All content, HTML coding, format design, design elements and images copyright © 2012 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted.
I would be honored if you linked this essay to your site, or printed a copy for your own use.
Terms of Service:
|Survival+||blog fiction/novels articles my hidden history books/films what's for dinner||home email me|