Guest Post: The Great American False Dilemma: Austerity vs. Stimulus

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 10/27/2011 - 12:21 | 1817561 Ruffcut
Ruffcut's picture

Real simple, austerity for main street and stimulus for wall street. Know your place in life, already.

Thu, 10/27/2011 - 12:27 | 1817586 Sheriff Douchen...
Sheriff Douchenik from AZ's picture

Also known simply as QE1, QE2, QE666. etc

Thu, 10/27/2011 - 12:59 | 1817728 redpill
redpill's picture

The talk of "targeted transition" is unfortunately just too arrogant.  Even if you could get such a thing through Congress, which you couldn't without it becoming a bloated nightmare, it assumes that from a centralized standpoint you can properly guide the economy.  It's a fundamentally flawed assumption, and the harder you try the more distortions are made.

The win-win is cutting out portions of the government that are not aiding the private sector anyway.  Cutting need not equal austerity.  Coupled with a clearer, more certain, and lighter tax burden and a friendlier small business environment, it is the only way toward sustainable growth.

I know Martenson is big on the peak oil stuff, but the increase in energy expenditures is not the weight on our backs at this point.  It may be 3-5 years from now, but for the time being it is the dismal labor market and murky business conditions.

Thu, 10/27/2011 - 13:12 | 1817786 Leopold B. Scotch
Leopold B. Scotch's picture

Why constantly dream up ways to recreate (ineffectively) what the market does naturally when allowed to be free of power / intervention collectivized in Big Government?  Each of these dreams creates a whole host of untoward problems which must then be solved, leading to more and more and more and more, etc.

A truly free market ain't perfect (nothing is), but it sure beats the interventionistas being in charge, and will bring more wealth to more people most rapidly vs. any alternative.  We continue to bankrupt ourselves believing interventionistas can fast forward that gaining of wealth.

Thu, 10/27/2011 - 13:39 | 1817853 Dr. Acula
Dr. Acula's picture

>Why constantly dream up ways to recreate (ineffectively) what the market does naturally

Because these enlightened individuals are smarter and more moral and warm-hearted than the greedy, callous entrepeneurs who compete and forecast and calculate and risk their fortunes every day to please their customers.

Most of us grasping cretins must adapt to market conditions, but these humble saviors of humanity are different. They are entitled to execute their well thought-out plans using other people's money and without having to face market disciplines.


Thu, 10/27/2011 - 14:03 | 1818021 dlmaniac
dlmaniac's picture

If people overspend in the past then they'd have to either overproduce or underspend now to make it up. Austerity is simply Darwinism at work and mother nature enforcing common sense.

Stimulus is a foolish Keynesian attempt to mess with the law of nature. But what's your chance of survival when you go against Darwinism? It'd piss mother nature off so bad that she eventually comes in crushing that phony FIAT into zero. Austerity via hyperinflation, BITCHEZ!!!

Bought your physical gold and silver yet?

Thu, 10/27/2011 - 12:53 | 1817697 pemdas
pemdas's picture

This is america.  We don't do austerity.  Before this is over we will make the Greeks look as stoic as North Koreans.

Thu, 10/27/2011 - 13:00 | 1817736 redpill
redpill's picture

We don't need to do austerity.  We have plenty of shit to cut before we'd ever need to be taking a bite out of granny's ss check.


Thu, 10/27/2011 - 13:28 | 1817851 Nigh Eve
Nigh Eve's picture

Sounds like wisdom from the Faux News Network.


Thu, 10/27/2011 - 12:21 | 1817563 LawsofPhysics
LawsofPhysics's picture

"The US is a monopoly issuer of its own currency,"

I stopped right there.  Wrong.  The U.S. pays a private banking cartel to issue it's own currency.  Can't read past that lie, sorry.

Thu, 10/27/2011 - 12:42 | 1817652 CapitalistRock
CapitalistRock's picture

2/3 of US dollar creation happens in private banks through our fractional reserve banking system. The federal reserve does the rest. The US federal government does not manage any money creation.

Thu, 10/27/2011 - 12:52 | 1817690 LawsofPhysics
LawsofPhysics's picture

To the sheep reading this article on zerohedge or elsewhere, the context of the statement in the article gave the impression that as a taxpayer you have some control over whether or not those banks or the fed print or not.  Total bullshit, you do not.  The printing is a fucking shell game that enriches fewer and fewer to the demise of everyone else, period.  So you essentially agree that the fractional reserve banking system is out of control.

Thu, 10/27/2011 - 13:15 | 1817807 Leopold B. Scotch
Leopold B. Scotch's picture

Yep.  And the Congress the People elect is lead around by their wankers by the bankers, the majority of them bedfellows.  Without the Cartel, there is farrrrr lesssss power on the Potomac.

Thu, 10/27/2011 - 13:51 | 1817965 Dr. Acula
Dr. Acula's picture

But I thought the government is supposed to protect us defenseless consumers from evil monopolies and cartels taking our money.

For example, the DoJ is the one service provider to go to when you need help shutting down a monopoly that's competing unfairly with your business.

Now you're telling me the government actually helps form monopolies and cartels?

I'm shocked! SHOCKED!!!


Thu, 10/27/2011 - 13:02 | 1817726 Dr. Acula
Dr. Acula's picture

>The US federal government does not manage any money creation.

US Bureau of engraving & printing:

Federal reserve system:

 "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the short title of this Act shall be the "Federal Reserve Act.""


Thu, 10/27/2011 - 13:10 | 1817776 LawsofPhysics
LawsofPhysics's picture

Exactly, our grandparents and great grandparents gave up the right to print our own currency a long time ago.  Expect the world to look like pakistan in the not so distant future.

Thu, 10/27/2011 - 13:20 | 1817824 Leopold B. Scotch
Leopold B. Scotch's picture

That, ladies and gentlemen, is called Abdication of power... Although many in Congress gladly voted for it originally and allow it to continue so they may fund Government without having to directly raise taxes at the ballot box.   Inflation (aka classic money printing and credit from thin air) is a, among many things, a tax benefiting both big government and the oligarchy... It is a tax which not one man in a million is able to diagnose.

Thu, 10/27/2011 - 18:41 | 1818944 BigJim
BigJim's picture

I was going to write:

      True. But to be fair, he's talking about the US's ability to avoid outright default via debt monetisation

...when I remembered that all new money is issued as debt. D'oh!

Thu, 10/27/2011 - 12:23 | 1817569 bob_dabolina
bob_dabolina's picture

Anyone looking at 3m libor?

Thu, 10/27/2011 - 13:32 | 1817869 Lower Class Elite
Lower Class Elite's picture

No, but I am looking at 7.62mm FMJ...

Thu, 10/27/2011 - 12:24 | 1817573 mainuh1
mainuh1's picture

We've been warned since the early '70s that population growth versus resources would come to a head early in the 21st century. We ignored the warnings and stood by impotently watching economies collapse. Maybe we should have paid more attention in college instead of getting high.

Thu, 10/27/2011 - 12:27 | 1817585 SheepDog-One
SheepDog-One's picture

Nah, I vote for getting high. Doubles for me please.

Thu, 10/27/2011 - 12:38 | 1817630 Little John
Little John's picture

me too

Thu, 10/27/2011 - 13:25 | 1817830 Leopold B. Scotch
Leopold B. Scotch's picture

The dip-wads among my college professors generally provided me with nothing but useless "in the box" material, turning out brainwashed automatons.  In hindsight I should have smoked a whole hell of a lot more.

What I learned about the shit going down the last decade I taught myself through my own efforts, and with the contribution of sites like this.

Thu, 10/27/2011 - 12:42 | 1817653 JR
JR's picture


What high school or college teacher would have told us that the coming open borders concept would over shadow all of the population control adherence and magnify U.S. unemployment, prison and crime expenses, education costs,  welfare and subsidized and subprime housing?

Los Angeles County, California: Population 9,818,605. California population, 37,253,956.

Persons of Hispanic or Latino origin in Los Angeles County, 2010: 47.7%

White persons in Los Angeles County not Hispanic: 27.8%.

Foreign born persons Los Angeles County 2005-2009: 35.4%.

Language other than English spoken at home in Los Angeles County, pct age 5+, 2005-2009: 56.1%. In California: 42.2%.

Information from U.S. Census Bureau.


Thu, 10/27/2011 - 13:56 | 1817998 moneymutt
moneymutt's picture

our cities, our factories, our houses are designed for cheap energy, transitioning will be expensive, but we can live a decent life-style consuming far far less energy and far less difficult to grow, water intensive food, livestock, so even if new, cheaper alternatives are not found, while something like meat might be expensive and Cali may not be able to afford to grow rice in a desert, we could still do quite well. Most of our problems will be solvable, but likely will not be solved well because short sightedness of our politics and our markets

Thu, 10/27/2011 - 14:45 | 1818170 blunderdog
blunderdog's picture

Energy-wise, cities tend to be significantly more efficient than suburban/rural population distributions, but come on.  You really think you're going to get 150,000,000 people who hate each other to move to the same neighborhoods?


Thu, 10/27/2011 - 12:25 | 1817576 TheSilverJournal
TheSilverJournal's picture

The clearing of the malinvestments is imminent. Either QE is stopped, exposing the malinvestments and depositors are allowed to lose their money, leaving physical cash to maintain some value, or QE is continually increased, keeping the malinvestments from becoming exposed, until hyperinflation hits. Hyperinflation is completely economically devastating and Americans will become much poorer. With hyperinflation, the US will no longer be able to benefit from the printing press and will no longer be able to support housing through cheap credit. All in all, housing will crash 70%-80%. On the other hand, gold will hit min. $10,000 in real terms and the silver to gold ratio will hit min. 10 to 1, meaning silver will hit $1,000 which is a near 3,000% gain..SO..Sell your house and buy silver before everyone else does.

Thu, 10/27/2011 - 12:36 | 1817621 Ruffcut
Ruffcut's picture

If I sell my house, where do I store my silver?  I can't live in silver, nor eat it. I took a bite and broke a tooth.

Thu, 10/27/2011 - 12:41 | 1817647 TheSilverJournal
TheSilverJournal's picture

Rent. It's cheaper than a mortgage, you don't own a depreciating asset, and you don't have to be bothered with maintanance / repairs. Buy silver with what you save.

Thu, 10/27/2011 - 13:30 | 1817862 Cruel Aid
Cruel Aid's picture

You lose homeowner rights though.

As in, Someone else has a key and the right to enter.

Thu, 10/27/2011 - 14:56 | 1818217 TheSilverJournal
TheSilverJournal's picture

Absolutely. And you also can't paint whatever color you want. If you have the luxury to spend the money on those things, then by all means, spend on. But don't confuse real estate as an's not. Real estate is consumption. It's like owning a boat, but worse, because a house is immobile.

Thu, 10/27/2011 - 12:56 | 1817716 GeezerGeek
GeezerGeek's picture

I took a bite of my son's iPhone and broke my dentures. You can bury you silver in my back yard, next to mine. For a small monthly fee, of course.

Thu, 10/27/2011 - 18:44 | 1818952 BigJim
BigJim's picture

I took a bite of some FRNs and caught halitosis.

Thu, 10/27/2011 - 19:16 | 1819070 StychoKiller
StychoKiller's picture

Given the amount of miniature livestock on an FRN, consider yourself lucky! :>D

Thu, 10/27/2011 - 20:26 | 1819278 BigJim
BigJim's picture

I took some anti-FRNs (silver in colloidal form) and it went away :-)

Thu, 10/27/2011 - 12:38 | 1817577 Mercury
Mercury's picture

Of course, austerity always seems to be heavily weighted toward the private and not the public sector.  When push comes to shove it's always the firemen and the teachers that are hanging by a thread because *trust us* all other possible fat has already been cut from the public fisc.

Deflation doesn't have to be all that bad for average individuals.  Certainly not as bad as we're constantly told it is.  It's not so hot if you're in the government growing business though.


Thu, 10/27/2011 - 12:42 | 1817654 Pants McPants
Pants McPants's picture

That's exactly right.  Police, teachers, and fireman are ALWAYS dangled in front of the sheep to justify more spending.  The fat cat administrators behind the scenes, though?  They're the made men and women who get to sleep in the beds......with sheets.


Thu, 10/27/2011 - 13:07 | 1817762 Cpl Hicks
Cpl Hicks's picture

Sleeping in bed with sheets!

Now you're just mocking all of those brave OWSers out there in their sleeping bags!

That's just plain mean and insensitive, as Barry O would say.

Thu, 10/27/2011 - 18:46 | 1818957 BigJim
BigJim's picture

It's MISTER Barry O, to you, boy.

Thu, 10/27/2011 - 12:49 | 1817677 redpill
redpill's picture

Deflation is great for savers.

Thu, 10/27/2011 - 12:53 | 1817698 Dr. Acula
Dr. Acula's picture

>Deflation doesn't have to be all that bad for average individuals.

Why are you assuming that austerity causes deflation?

i.e. why do you think reduced government spending would cause the money supply to shrink?


Thu, 10/27/2011 - 13:49 | 1817966 Mercury
Mercury's picture

Private sector austerity (individuals spending less money on stuff) certainly won't drive prices up.

Reduced government spending would detract from the velocity of money and greater velocity is inflationary.

Thu, 10/27/2011 - 19:17 | 1819073 StychoKiller
StychoKiller's picture

Bring it on!

Thu, 10/27/2011 - 12:26 | 1817580 SheepDog-One
SheepDog-One's picture

Go ahead, start cutting the subsidy checks almost 50% of americans survive on. Sure, 'green' markets are pretty....someones going to have to start paying for it though.

Thu, 10/27/2011 - 12:30 | 1817600 Archimedes
Archimedes's picture

There will be no Austerity. Since everyone is quoting Ray I will too. Ray basically said that fractional Reserve banking system only survives when credit expands. Once deflation (Austerity happens) the entire system implodes. He laid it out clear as crystal. This is why the US and Europe will print, kick can or do whatever they can to keep the ponzi going until it totally collapses on itself.

Today, the Ponzi continues....

Thu, 10/27/2011 - 12:39 | 1817616 SheepDog-One
SheepDog-One's picture

Or maybe you have it all wrong and 'perpetuating the Ponzi' is not the game at all, and instead one day soon we see nukes going off in US cities or something along those lines. No one saw 9-11 coming on 9-10.

Thu, 10/27/2011 - 12:40 | 1817636 Ruffcut
Ruffcut's picture

Maybe that is what PPT really stands for. Ponzi Perpetuating Team.

The prop desks are in tandum. The fed said, pump or jump, bitchezzz.

Thu, 10/27/2011 - 12:53 | 1817695 redpill
redpill's picture

Not all "austerity" is equal.  Ron Paul's proposal doesn't touch social security, instead it goes after federal departments that are largely useless.  So I would argue with Mr. Martenson that he's painting with too broad of a brush.  Cutting government spending does not necessarily mean austerity in the way that Greek pensioners are being impacted in that country.  

Further, bringing troops home from around the world would actually help domestic demand.

This has happened before, following WW2.  The Keynesians were terrified that with massive cutbacks in government spending that the US economy would crash.  Instead it flourished. 

Thu, 10/27/2011 - 18:49 | 1818975 BigJim
BigJim's picture

Nukes and their fallout would kill TPTB too.... so I can't see that happening to any extent (at least in the West).

Do NOT follow this link or you will be banned from the site!