The truth about the economy is starting to sink in (via Instapundit earlier this week):
“If we are having a recession over a decline in govt spending, then the GDP wasn’t real to begin with.
The US govt has a $2 trillion annual budget deficit. That is basically $2 trillion of artificial GDP that is funded by more debt.
Removing $2 trillion of GDP is where the actual economy is.”
Well………removing $2T may get you a bit closer to the “actual economy.” Unfortunately, I suspect a better measure of such a thing can only be found buried under the mountains of economic, monetary, and political mismanagement…and outright intellectual dishonesty…since TARP and the Auto Bailout. (For the record, the linked article in the previous sentence is from 2011 but remains one of the most important non-book-length markers of that history for the common man. You should have a hardcopy in your files too.)
(See also: Get The Government Out Of GDP!)
Eventually, history will identify the many faces of shame who perpetuated this charade…from the woke to the heavily credentialed yet still worthless to the just plain corrupt. But there will be one face that should easily be seen persistently in prominent positions across all of those camps. It is not an easy face to forget…
___ ___ ___
The Worst Economy in Eighty Years – Lords of Finance Vol 2? (April 9, 2023)
Author Liaquat Ahamed started the last paragraph of Lords of Finance – The Bankers Who Broke the World (2009) with:
More than anything else, therefore, the Great Depression was caused by a failure of intellectual will, a lack of understanding about how the economy operated. …
There will be no such excuse this time around. That paragraph in Volume 2 of the series as written at some future date about our current economic downturn will need to reference a lack of intellectual seriousness in our credentialed class and an intentional disregard for how the economy operated. That future tome will record the true beginnings of the Great Biden Recession (or Depression, time will tell) as the necessary results of a decade and a half of unserious central banking in reaction to (or cynically under the cover of) the 2008 housing bubble crisis. (And that, of course, was the economic reckoning made necessary by two decades of intellectual unseriousness from our elected class and an intentional disregard for how the mortgage banking system operated. But I digress.) There will be many main characters to cover and many primary faces on the cover – don’t forget the many faces of TARP, the auto bailout, PPACA, QE 1-4 (and then forever), etc. – but one face must be quite prominent:
It seems it may be about time to start putting some of the details into her chapters:
Scoop: White House mulling potential Yellen departure after midterms
White House officials are quietly preparing for the potential departure of Treasury Secretary Janet Yellen after the midterms, the first and most consequential exit in what could be a broad reorganization of President Biden’s economic team …
The world’s presidents, central bankers and finance ministers are deeply concerned about the state of the global economy, giving it an ominous feeling with parallels to 2007…
One might think that an orchestrated exit is simply a matter of acknowledging the growing impossibility of hiding the poor performance of a hollow-credentialed buffoon. But that would be wrong. It turns out she also doesn’t do overt politics that well:
Yellen, an economist by trade and at heart, has been reluctant to make overly political arguments when they violate her core academic beliefs.
Note that “reluctant to” does not mean she didn’t try…and, in the end, flush those “sterling credentials” down the toilet anyway. As wholly deserved, history will not be kind.
Unfortunately, the source material for the future writing of history is growing darker all the time:
‘WORSE THAN 2008’: ‘BIG SHORT’ GURU SEES HORRIFIC DOWNTURN
Famed investor Michael Burry delivered arguably his most dire warning about the current US economy to date late Thursday – suggesting he is concerned the ongoing downturn could be worse than the Great Recession. …
“Today I wondered aloud if this could be worse than 2008,” Burry said in a now-deleted tweet. “What interest rates are doing, exchange rates globally, central banks seem reactionary and in [cover your a–] mode.” …
Earlier this week, ex-Treasury Secretary Larry Summers, a frequent critic of the Fed’s delayed response to inflation, warned that global economic risk levels are similar to those seen in 2007 ahead of the Great Recession.
Like Burry, Summers noted that there is widespread uncertainty about the policy actions of central banks as they attempt to stabilize economies.
The Bank of England was forced to intervene this week after the value of the British pound crashed to an all-time low. Investors were rattled after the UK government backed sweeping unfunded tax cuts and increased spending — a plan that sparked fears of even worse inflation.
I must repeat a line that I quoted back in April: “…Joe Biden and his team are in total denial about economic reality and have no plans that will address the inflationary wave in any direction except to make it worse.” That is just as true today. Shuffling the deck chairs and rearranging the members of the band are hollow gestures and just part of this larger presidential charade.
Somewhere I have a quote from Orwell about the flattening of history…I will have to find it…but following that thought, the perspective required for the proper writing of the history of our times will force the focus onto the enormity of the coming Biden economic disruption and render the marketing of 2008 as a “Great Recession” to the same level of import we now view the Depression of 1920-1921. Unfortunately, that gives little comfort to those of us about to struggle through it. Hold on tight.
Into the abyss…
the philo t. custis institute 