Wednesday, June 30, 2010

Cold Comfort: No Double Dip Recession

Yesterday's 260 plus point plunge in the Dow was (according to news reports) caused by the fear that economic growth is slowing and that there will be a "double dip" recession. If the recent past is any indication, today's reports will be made with one eye on the stock market, one on the Federal Reserve and the financial system, and one on the politicians and academic economists frantically trying to come up with some rationale to justify more deficit spending.

Yes, we are fully aware that adds up to three eyes. It should, however, be completely obvious by now that those claiming to be in charge of things have got to be from another planet. Their actions and alleged reasons for those actions have little or nothing in common with reality as experienced on the third rock from the Sun.

Fortunately, we can assuage the fears that there will be a "double dip" recession. First, of course, we are not in a recession. This is a depression.

Second, there cannot be a double dip when we haven't gotten out of the single dip. As we saw in today's feature presentation on this blog relating the "South Sea Bubble," people have succumbed to the weird, probably extraterrestrial idea that you can get something for nothing. They have mistaken the partial recovery of the price level in the stock market not as evidence that Ming the Merciless is controlling people by means of a mysterious device emanating from the planet Mongo, but as an actual economic recovery.

Usually we attribute the belief that you can get something for nothing to the socialist doctrine that declares each should contribute according to his ability, and receive according to his needs. Not surprisingly under such an arrangement, no one seems to have the ability to contribute, but all have apparently endless and insatiable needs. Our friend, the inaptly named Little Red Hen (to say nothing of St. Paul), had a few pithy comments about people who think they should get all they need or want without bothering to produce anything.

Like all the other characteristics of its bastard stepchild socialism, however, the idea that you can — and should — get something for nothing is inherited from capitalism, and inscribed in the genetic code of both systems. As Robert Walpole pointed out in the early 18th century (see what you miss when you don't read the feature article?), "stock market jobbing" diverts people away from productive activity, focusing their efforts on gambling and speculation in the hope of getting something for nothing. The financial elite becomes the real and unaccountable ruler of the country.

Third and finally, just as Dr. Harold Moulton pointed out in his 1936 study, The Recovery Problem in the United States (Washington, DC: The Brookings Institution), basic systemic problems are not being addressed. There has been no real recovery, because the only changes introduced into the system (e.g., the full repeal of the Banking Act of 1933 — "Glass-Steagall") have only made matters worse. Semi-effective internal controls in the form of separation of function have been replaced by completely ineffective external controls in the form of increased government regulations and direct State control of money and credit.

What can be done about this surreal situation?

First, immediately rush out and purchase a tin pie plate to tie on your head to counter the effects of Ming's control ray. Send Flash Gordon to shut down the machine or destroy it . . . after arming Our Hero with a quick review of the Evil Overlord of the Universe List so he will know what to expect. After all, had the world's leaders taken Mein Kampf seriously in the 1920s, Hitler might never have come to power.

Second, see what can be done to convince the hordes of brainwashed policymakers, politicians, and academic economists (a.k.a., "The Legions of Terror") that, no, money is not "peculiarly a creation of the State." Rather, money is a private property-based symbol of the present value of existing and future marketable goods and services functioning as the medium of exchange. Money is illegitimate (i.e., "theft") without that essential private property link.

Third and finally, immediately set in motion the steps necessary to implement Capital Homesteading so that ordinary people can,
a) Gain democratic access to the means of acquiring and possessing private property in the means of production,

b) Enjoy the benefits of producing marketable goods and services as the primary source of consumption income instead of relying on increasing unserviceable consumer and government debt to generate effective demand with pointless gambling and speculation seen as the only way out, and

c) Have a basic security that the money supply is both stable and sufficient for the role that money is designed to play without manipulation by the State or any other division of the Legions of Terror.
Or, we can all just sit back and hope somebody else does something — who knows who or what — to straighten things out and bring the system back into closer conformity with reality.

I think I hear the echo of a Supervillain's maniacal laughter.

#30#

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