Guest Post: Let's Have A Depression Now

Tyler Durden's picture

Originally posted at Monty Pelerin's World,

The United States is more than four years into its form of economic purgatory. The government pronounced the recession over in June of 2009. That announcement does not conform with reality or even subsequent government suspect data. Even the Administration-friendly New York Times knows better:

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

To believe the recession ended requires a bizarro interpretation of economics where bad is actually good and good is actually bad.

21st Century politics sees no need for truth. When government believes itself to be responsible for the economy and convinces the people of that, it has put itself into a box. In a world where government claims credit for good things, bad things ultimately become their responsibility as well. Recessions are bad things which government should not have allowed to happen or should fix quickly.

The reality is that government does not create wealth or economic abundance. (They can create poverty, however.) When recessions occur, they threaten the myth of all powerful government. The first reaction of government is to do something regardless of whether something makes sense or not. The second phase is to declare the problem solved (in this case, claim the recession ended).

This kind of politics is dangerous on two counts. First, government risks what little credibility it has left (which I might say is not necessarily a bad thing). Second, it causes government to pursue policies which reinforce its lies. It is these policies which created the current economic crisis in the first place.

The country’s economic problems began decades ago. In trying to cover them up with economic interventions (stimuli), government actions prevented the economy from correcting the imbalances that caused slow growth. From a political standpoint, economic policies encouraged institutions and people to use debt to live beyond their means. The massive debt buildup in both the economy and the government hid the underlying problems and allowed them to grow ever larger and more malignant out of sight.

After decades of such interventions, the economy no longer is able to function efficiently. In order to remedy the problems, massive liquidations of debt and misallocated assets are necessary. There is no other way to achieve an economic cleansing. It may be possible to continue this economic charade with additional interventions, but there is a limit to how far it can be continued. Japan has achieved zombie existence for over two decades by refusing to face up to the imbalances in their economy. Our government has chosen the same course of “extend and pretend.” There is no hope for a recovery until something like another Great Depression liquidates the built-up imbalances.

No politician wants to be in office when that event occurs. Thus, they make matters worse for the country by continuing to spend money we don’t have to prop up an economy that cannot and should not be saved. Their goal is not to repair the economy but to ensure the most favorable terms for their own re-election. As a result they continue to savage the future of the country in order to protect their own present.

People will eventually regain control of their government. They always do. Unfortunately the process of history is slow and sometimes ugly. Multiple generations around the world have never known freedom. China and the Soviet Union are two examples that are just now transitioning toward freedom. Are we to enter some institutional dark ages where our grandchildren and their grandchildren do not experience freedom? It is possible because all governments prefer more power for themselves and less liberty for their citizens.

The required change is so great as to be analogous to an addict trying to break his habit. Most addicts have to hit rock-bottom before reality intrudes. In the case of the US, we are going to hit rock-bottom when the economy collapses. That is likely to be within the next ten years and could be at the front end of that estimate. This world-changing event may (at least temporarily) drive a stake through the heart of big, oppressive welfare-state governments.

There is no guarantee that government will shrink when this happens. Civil unrest is a likely outcome. Statists may attempt to use the crisis to further expand government. Martial law and other restraints are likely. Hitler used a similar situation to rise to power. Parts of the Constitution were emasculated under New Deal policies that “had to be done” to pull us out of the Depression. Of course, we never got out of the Depression until after the end of WWII.

Economic pain and suffering will be great. Yet the economic calamity is unavoidable. It was pre-ordained by years of government interventions. Mathematical and economic laws will not be avoided. As stated by Ludwig von Mises:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

We are coming off the biggest boom in the history of the world. If Mises was correct, and I believe he was, then Keynes was wrong (and I believe he was). Thus far all the Keynesian dollars expended have had little effect other than to make this country poorer. We are set up to have a Depression greater than the one in the 1930s.

A Depression is not a good thing. Yet in this case, it may be the one event that can prevent a chapter in future history books entitled “The Demise of the Great American Empire.” Unless citizens and politicians return to their senses, we will be both impoverished and living under tyranny.

A reaction opposite that of the 1930s is a hopeful outcome. Despite the recent election, government is increasingly seen to be the problem. It is no longer viewed reliable, trustworthy or as a solution. Freedom is deeply ingrained in the American culture and most of us recognize how much we have already lost. The resurgence of books such as “The Road to Serfdom,” “Atlas Shrugged” and others similar indicate the public is interested. Historically low poll numbers for all politicians and the rise of the Tea Party movement are further indicators. The economic trauma may provide the catalyst to return to the founders’ concept of government.

Totalitarianism needs the military. More than any other segment of society, the military respects and supports the Constitution. If push comes to shove, they are likely to defend the Constitution rather than the government.

Government has reduced itself to little more than an insolvent zombie, staggering around awaiting the coup de grace that will end its misery. The coming economic collapse is that executioner. When collapse happens, efforts to increase government are will occur. They must be resisted strongly. The love of freedom and the experience with big government should overcome decades-long madness. No matter how things evolve, in the history books of the far future, there can be no better title to describe our current situation than “The Myth of Government.”

If we must have a Depression, let it begin today. It will be hard and dangerous, but it may be the last chance to get our country back. When it happens, we must all think and behave like Founding Fathers. To paraphrase Rahm Emanuel, this crisis will be too important to waste.

The “greatest generation” handed us a gift and we fumbled it away by allowing government to run wild. We cannot turn this mess over to future generations. We must take our country back and remedy the problems.

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Thecomingcollapse's picture

Me too!! Let's get on with this thing all ready!

iDealMeat's picture

Then just cut your consumption in half..   That will vaporize TBTF..

crusty curmudgeon's picture

Totalitarianism needs the military. More than any other segment of society, the military respects and supports the Constitution. If push comes to shove, they are likely to defend the Constitution rather than the government.

 

Hitler had the Gestapo.  Big O is amassing his own private Gestapo and furnishing them with billions of rounds of ammunition that various agencies supposedly purchased for themselves but couldn't possibly need.  This is something we need to watch.

New England Patriot's picture

The individuals in the military may respect and support the Constitution. Individuals in the military may even have taken an oath to defend the Constitution. At the end of the day, however, the military serves the Commander-in-Chief.

saturn's picture

Hey Indians, it is time to kick the once-european bison murderers and gold diggers descendants' assssss! Take america back! Yay!

Supernova Born's picture

We already are in a depression.

History will mock the morons who thought otherwise.

icanhasbailout's picture

Agreed, back out the government debt - which is an out and out fraud as it will never be paid back and was never intended to be paid back when it was borrowed - and the economy is more than 10% off peak and getting worse, not better.

 

For lulz check out the DNS registration date for recovery.gov.

TruthInSunshine's picture

Focus on this, if you do now or in the future find yourself believe it to be true (or more "truer" than not, at least):

 

No government agency or business association spokesperson is ever going to speak of the truth of how bad things are in the present, unless they have no choice because incontrovertible proof has already been released to the masses that would otherwise and obviously demonstrate their insincerity.

As long as "official datum" as published by the various governmental and quasi-governmental agencies/bodies allow governmental and business association spokespeople to understate the severity of our real economic crisis, they will, whether Democrats, Republicans or the chief economist for The National Association of Realtors.

No governmental employee (and especially no politician) will voluntarily relay how dire things may be (again, given a backdrop of "official" statistical datum that is inaccurate and relatively misleading they can fall back on) because they wouldn't want to upset the apple cart, cause further distress or even panic amongst the populace or within the "markets," and no business association spokesperson, whose very jobs entail, at least in significant part, a public confidence building role, will do anything to further dampen the confidence that their industry hope remains amongst potential consumers of their products (e.g. would a spokesperson for the NAR really come out and say that existing homes are selling quickly because inventory is being artificially constrained by GSEs and federal reserve policy and also due to federal reserve monetary policy that has a huge % of listed homes being purchase by investors for cash in an attempt to produce yields in a yield-starved economy - BECAUSE of federal reserve monetary policy? What impact would that have on the confidence of conventional, prospective existing home purchasers, who might then realize there is no true present price discovery and that another leg down is more than possible?).

In other words, they lie because our economy is dependent, in quite a large degree, on an illusion that is often referred to as the "confidence fairy."

If those people who still have the means to purchase a particular service or good feel confident about the security of their own jobs and the current & likely future state of the economy, they're more apt to go ahead and dig themselves into more debt or pay cash to purchase that service or good, regardless of the accuracy (and realism) of their "confidence level."

Conversely, if they don't feel confident about the security of their own employment situation and/or the current and likely future state of the economy, they're more apt to refrain from purchasing that good or service, and save instead, in preparation for what may lay ahead.

And this is why, without exception, throughout history, the masses do not understand there is a crisis until well after it has already begun, and they've already committed to many purchases, indebtedness and other forms of dis-saving, that they wouldn't have committed to had they known accurate information sooner.

Hence, the "confidence fairy," which governmental employees, politicians and business spokespeople all actively perpetuate in their own methods and by various tactices, is a serial and mass killer of efficient markets and rational economic behavior (as it severely distorts essential economic information that is relied upon by economic and market participants).

TBT or not TBT's picture

But, but, buy...productivity could surge again, like it always did before, making the confidence justified, as it always has been in the past, so there.   All will be noit just well, it will be great, like the Jetsuns, with a Costco on every corner, every woman beautiful with three big boobs not just two, perfect health eating miracle ice cream all day, and so on.

Kobe Beef's picture

Rule of propanganda: The more people being employed to tell you something, the greater the likelihood that something is false.

derekiz's picture

The friggin' Greatest Generation. My Ass! When do you think the great socialist experiment started.

It was during FDRs administration and then follow that up with the Great Society Social programs of LBJ. Baby Booomers as entitled and self absorbed as you think they are weren't born or were just beginning to vote when these disasters we perpetrated by the "Greatest Generation". The gifts they are leaving us are the gigantic medicare bills they run up for any little thing that bothers them in their remaining years.  I have three sets of "Greatest Generation parents still alive and their ability to look the other way and pull money out of the generational till is unbelievable. Then add social Security and the smallish amounts they invested in comparison to the vast amount they took out. The Greatest Generation is a fairytale. They are leaving everyone else after them holding the bag. Some gift! Some Generation!

P.S. Talk to them about it and watch them rationalize, prevaricate, ignore, and attack.

TBT or not TBT's picture

Wilson came before FDR, and was a huge fan of The State .  He was an academic and wrote a book praising the state and excoriating the constitution.   Standard issue central planner philosopher king that one, peddling utopia.   He experimented with some pretty fascist stuff domestically, and world government too (League of Nations, 14 points etc).

SamAdams's picture

history will be written by the winners.

we are out of the recession.  this is the new normal until the next leg down.

a failed economy cannot exist without a police state.

those who joined the army are not aware of reality, and so will gladly protect their president from the domestic terror.

an act of congress to instill sound money requires years of infiltration by persons of integrity.  we do not have the luxury of time and any political dissent will be addressed through increasing authoritarian measures.

how much longer do we have?  i don't have that answer, but the can will be kicked so long as the current benefactors believe they can squeeze the populus further.

 

Widowmaker's picture

There is no integrity in banking. Never was, never will be.

As soon as that actually sinks in, one can realize that fiat is simply fraud by another name.  So is leverage (all of it).

Ashes.

TBT or not TBT's picture

You mean banking with fractional reserve lending.   Fixed it for you.

FreedomGuy's picture

There is a thing in the military which is called an "improper order". You are never required to obey one. Essentially, it is meant to prevent anyone in the military from participating in massacre's and the like.

It is unlikely the military would fire on civilians, particularly the Federal/National military. I doubt National Guard would either as they come from and work in their own communities.

The only way it could be done on a wholesale level is to "fool" the military or do it by degrees. I do think there are bad apples and political loyalists in the military but not enough to have a wholesale suppression of the public.

I would guess it is easier to get government police forces, local and federal to do the bulk of the oppression. The challenge would be to keep the U.S. Military on the sidelines and out of the picture.

Dick Fitz's picture

I agree. The US military guys would be shocked if they were ordered to fire on US soil, at US citizens. Most would refuse.

The cops...most would relish it.

Supernova Born's picture

Love those who serve, but sorry.

Plenty under orders would be rocking away on a .50 cal into the "insurrectionists" yelling "GET SOME!".

Don't doubt it.

mkhs's picture

Nothing happened at Kent State.  Move along.  Nothing to see.

FreedomGuy's picture

Don't make Kent State something it was not. It was a confused and unfortunate situation. It was not a wholesale gunning down of the public or a roundup of the civilian population for deporation to work camps or reeducation camps.

Offthebeach's picture

Kent St
Waco, TX

Besides, the Sargents and Captains in the Police are the domestic standing army. Don't get between them and their pensions.

TBT or not TBT's picture

Don't forget the public school teachers' unions.   There are a lot more of those.

EINSILVERGUY's picture

Kent St was not clear cut. the National Guardsmen firing on the protesters was a confused situation and will always be in dispute The guard should never have been asked to do police action at the university. Personally I never had a lot of sympathy for the "protesters" at Kent St.

Waco on the other hand was a clear cut case of Police state suppression, murder and coverup.  Watch "Rules of Engagement". 

I was living in Austin at the time and that event is what changed my view of the government. Janet Reno is a criminal as are the ATF and FBI officers in charge of the operation.

In my lifetime that was when I decided that the government was becoming Fascist.  911 gave them the excuse to carry it forward.

mkhs's picture

Well, that is the point.  It is always confusing. Always an excuse.

National guard, locals, fired on protesters.  It is wishful thinking to suppose US soldiers will not fire on civilians.  There is always smoke, noise, confusion.  Plan accordingly.

mofreedom's picture

My fear is the local police force that worships the union rank and politicians that sign their paychecks.

NoClueSneaker's picture

JSOC already mutated to SS. No such a thing like "constitution". JSOCs + Blackwater/DynaCorp/TrippleCanopy & offsprings have more men then US armed forces who r sworn to a former "constitution", wich died AFAIK on December, 31th 2011. Burried by Barry bin GoldmanSux . Amen !

Nadaclue's picture

Hitler had the Gestapo.  Big O is amassing his own private Gestapo and furnishing them with billions of rounds of ammunition that various agencies supposedly purchased for themselves but couldn't possibly need.  This is something we need to watch.  

 

This is true BUT, Germany did not have 117 million (11/6/2012) of gun owners who, no matter what stroke of any pen, are not going to give up their guns no matter the purported penalties. That number has gone hockey stick since then.

Black Friday was a record day for gun background checks. Something in the 160,000 range. Anyone who gets as far as a BG Check is not a looker but a buyer. When someone drops several Benjamins for guns and ammo, they are not going to freely relinquish them, laws be damned. The very reason for the increased purchases are because peeps are afraid those very laws will be implemented.

The only thing the form 4473 reveals to uncle sugar is who the buyer is and how many of either rifle, shotguns or pistols wanted to be purchased at a particular FFL dealer. Sure, they know you applied but nothing else. Now, there being about 130,000 FFL dealers who hold the actual paperwork on a purchase, the numbers are too overwhelming for the Feds to check each owners papers for the last 7 years.

As for Barky O's Gestapo, there ain't enough of them. When folks start getting shot up for owning guns, folks is gonna start shooting back. No matter the propaganda press, word will get out. Military is only about 2 million, another 3-4 million LEO's ain't no match for 150+ Million gun owners who see their local LEO forces decimated daily. They know they need the guns for protection against the criminal types and they'll keep em. Lots of LEO's will say "screw this, I ain't dying because some idjit says his version of the Constitution is the right version and want me to confiscate guns from otherwise law abiding citizens." There will be the odd man out with a small dick and big ego that may try but, those numbers will rapidly decline, imho. It ain't going to get any better either for the .gov types. I don't think Barky's Gestapo will mean much.

As for me, I know longer own any guns myself. Bought one with a 4473 last year but the thought of that vile, evil piece of plastic and steel in my house made me ill at times. I sold it to some fellow over yonder, around the mountain. lol

By  the way, for ya'll down Houston, TX way, There's a new store open and having a Grand opening on Dec 8 in yer neck of the woods. with door prizes, drawings and such. I'm told their reloads are most excellent but never having shot one, as I sold my gun a few months after getting her, are quite reliable and occasionally priced most excellently. Freedom Munitions.

VisualCSharp's picture

I wish what you predict were true, but I see it as unlikely. Most military and LEOs will obey the ones who cut their checks. All the government must do is threaten them with being fired or courtmartialed and they'll fall right in line.

EINSILVERGUY's picture

There is some truth to this but we have a great deal of honorable men serving in the military.  The political class might follow the CIC but I believe that many of the officer corp (especially those from the South )  would not turn arms against their brothers and sisters.  More likely you would have many in the military refusing to follow orders. I can' believe that men from the Citadel, VTech Texas A&M (more military commissions outside of the service academies) would turn their weapons on their family and friends. Maybe Im naive but there is still a great deal of southern honor in our men and women who stand the wall.

Parrotile's picture

Why do you expect TPTB to even consider getting involved with a localised, but heavily-armed population? All they need to do is "arrange" a "catastrophic" chemical tanker "accident" - road or rail - and ther problem will be conveniently solved without a shot being fired.

The advantage of this strategy is that the dumbed-down will be fully on-board when the "Safety Review" (costing a few hunhdred million $$s) implements further restrictions on what you can and cannot do, which will (surprise, surprise) include posession of "hazardous materials" in the home - things like fuel supplies, ammunition, LPG, - all the things you will NEED in order to have any degree of preparedness. If you are regarded by the masses as a "dangerous hoarder of flammable / explosive materials", which will of course be illegal post-catastrophe, the strategy will be social isolation and reliance on "informers".

Worked just fine in Russia and in Germany. Don't suppose for an instant that it'll NOT work just as well in the USSA, especially if the informers are "adequately compensated".

 

Nadaclue's picture

Why do you expect TPTB to even consider getting involved with a localised, but heavily-armed population? All they need to do is "arrange" a "catastrophic" chemical tanker "accident" - road or rail - and ther problem will be conveniently solved without a shot being fired.

The advantage of this strategy is that the dumbed-down will be fully on-board when the "Safety Review" (costing a few hunhdred million $$s) implements further restrictions on what you can and cannot do, which will (surprise, surprise) include posession of "hazardous materials" in the home - things like fuel supplies, ammunition, LPG, - all the things you will NEED in order to have any degree of preparedness. If you are regarded by the masses as a "dangerous hoarder of flammable / explosive materials", which will of course be illegal post-catastrophe, the strategy will be social isolation and reliance on "informers".

Worked just fine in Russia and in Germany. Don't suppose for an instant that it'll NOT work just as well in the USSA, especially if the informers are "adequately compensated".

Geography buddy, the only way to stifle gun ownership is to kill everyone in the fuckin place. They could go there but doubtful.

FreedomGuy's picture

I think the better way to look at Hitler and similar situations is to realize that large parts of the population supported Hitler, especially the sociopathic elitist "intellectuals". He was man of the year for Time magazine. Hitler started with just the Jews and worked outward from there. Oppressing the Jews was pitched as good for Germans and Germany. This is the proper way to do it. Take power to oppress a smaller unpopular group. Once the legal basis for authoritarianism is set you can then apply those rules to anyone else who gets in your way. Then the establishment, especially police forces end up working for the dictator...legally. A population trained in civil obedience and order will follow along rather willingly. They will go along with their own imprisonment.

What is sad and should not be doubted in any country is how many of your fellow countrymen are willing to oppress their fellow man. Some will do it enthusiastically and others will cop out with "I was just doing my job. What could I do? I had to think about myself and my family." In some ways I hate these milktoast bastards more than anyone else.

In the West, we have pluralistic societies so it takes longer unless there are major crises like depressions, hyperinflation or war. The Left is always in waiting and going through specific steps to achieve their collectivist state. Teh main thing that has to be done is to corrupt the entire society through the tenents of collectivism. It must become tolerable if not morally superior to steal from one group to give to another. It must also become socially desireable to sanction one group to the benefit of another. This is done through the regulatory state and government "investments" which direct money to favored industries, contributors and support groups like Krupps (German), unions, ACORN, etc. Then there is the time of that last little leap to totalitarianism. The night of long knives has to happen in the midst of large public support. People are suckers for this kind of stuff as long as you promise some future utopia or a check.

NoClueSneaker's picture

Srry, Hitler started killing communists, social democrats, unionists, liberals, intellectuals , SA ( brownshirts ), then Jews and Gypsies .... with a little help from Uncle Sam. 

CharlieSDT's picture

I think ironically the best hope for liberty in America may rest with the military; a charismatic patriotic group of generals and mid-level captains might actually uphold the Constitution better than SCOTUS.

cossack55's picture

"Patriotism is the last refuge of a scoundrel"

Dr. Sam Johnson

Osmium's picture

Sold it huh?  I lost 10 of my guns in a boating accident.  Wink, wink. 

Nadaclue's picture

Yup, evil damn plastic/metal gun.

Sorry about your loss. You probably lost some precious metals as well. My sorrows to you.

I found a couple of links to help you with your sorrow/depression from you loss. I thought I might get rid of them by passing them on. There are occasionally some deals.

http://gun-deals.com/ammo.php?caliber=.223%2F5.56

http://ammoseek.com/

http://www.the-armory.com/shopsite_sc/store/html/223_ammunition.html

cossack55's picture

I am afraid you are fighting the last war, my friend.  Drones can/will follow orders from 10,000 feet.  I'd wager 10% of the military is into the whole "love to kill" psycho thing. Plenty of operators, until the drones go autonomous.

flapdoodle's picture

The "right" and practice of owning guns just creates the illusion that the populace has an ace-in-the-hole against a totalitarian government.

That may have been true a hundred years ago but in the age of drones and the NSA watching the blogs for signs of organized opposition, and in the age where Hollywood and the MSM coordinate the perception of reality which most people (even gun owners) operate under, the right to bear arms may actually be keeping people from noticing that the temperature of the boiling pot is rising...

northerngirl's picture

Don't forget about the UN Small Arms Treaty. 

TBT or not TBT's picture

Guns are terrible.   Let's all get on record here for the bots saying so, deploring we ever had any, in the bad evil past,

icanhasbailout's picture

Actually most of that ammo was purchased for running to jihadis so they could overthrow some governments for us and destabilize countries.

hairball48's picture

It's called "Homeland Security"

Dr. Sandi's picture

I have met far too military people who support the flag, not the constitution, and are unclear that there's a difference.

That's where the skin meets the pavement.

theprofromdover's picture

It would be interesting to see who (of the generals) has been retired early, or careers cut short because of scandal ????? * I suspect there is quite a large group of senior people in the military who want to defend the constitution, and bring down the 'complex'.

* or is that good guys bringing down puppets?

TBT or not TBT's picture

Or they support the administrative state and all of its goodies(entitlements) and not the constitution the administrative states makes a laughingstock of.

Joe A's picture

That is right. The Gestapo and more the SS kept the German army at bay and far away from home by having them fight wars. The ancient Romans did the same thing. The armies were spread over Europe and no army was allowed to cross the river Rubicon. An army doing that was considered to revolt against Rome.

Kobe Beef's picture

The more things change, the more they stay the same.