Good essay about finances and how we got where we are today by Jim Puplava.
financialsense.com
Excerpt:
>>>What we know now is that the miracle productivity and investment boom of the last decade was more fiction than reality. A healthy economy grows on a sound basis with savings, investment, and profits that produce the income. An economy needs to grow in order to create enduring wealth. Just the opposite occurred. Capital was consumed, savings fell, profits were sub par, and income was supplemented by debt. These are all the hallmarks of a bubble economy not a miracle economy. It is one reason that the current economic recovery will be shallow and short lived. In fact, the current recovery could also turn out to be nothing more than a recessionary rally. Just as bear markets have occasional rallies, so do long lasting recessions and depressions. The U.S. economy during the depression years of the 1930’s and Japan in the 1990’s and today are perfect examples of this phenomenon. Contrary to popular opinion, investment and not consumption leads and gives economic recoveries their real strength. It is one reason Mr. Greenspan hedges his speeches about economic recovery by saying “ … growth of activity will be short-lived unless sustained increases in final demand kick in before the positive effects of the swing from inventory liquidation dissipates”.<<<
and.........
>>Everything about the late 90’s was a myth disguised to cover up the greatest monetary and credit expansion in U.S. history. What made the 90’s boom so unique is that government, private households, and businesses embarked on a spending and borrowing spree never before seen in history or in any other nation. Government continued to borrow and spend as never before. The budget surpluses were the figment of imagination of government bureaucrats and a powerful White House spin machine. The government debt ceiling was increased by half a trillion dollars back in 1997. Now, five years later, the U.S. finds itself in a position of having to increase the national debt ceiling by another $750 billion. How can you have a balanced budget with annual surpluses and have the national debt growing by half a trillion dollars? |
