Double-Dip Recession Could Be Best For America?

Written by TheDailyBell.com

Thursday, 24 September 2009 05:46

It sounds like a terrible thing to say. At first glance, a recession of any kind, especially a double-whammy recession, doesn't seem like the best thing for America. America needs jobs, entrepreneurship, and recovery. The last thing we need is another recession. But if history serves us correctly, it could be the best thing to ever happen to the United States. Let's face it, America has gone wild. Spending is out of control, government is out of control, and people across the country are furious. That's why people across the country are going to tea parties, town hall meetings, and events like Glenn Beck's 912 Project rally. People are hopping mad, and for good reason. - NewsMax, Dan Mangru

Dominant Social Theme: Harsh medicine?

Free-Market Analysis: The thrust of this analysis, which appears on NewsMax, is that a second recession will achieve two goals: It will bring Republicans back into office and it will purge the economy of bad investments by major entities including large corporations and banks.

The first point is fairly incredible to us in the sense that there seem to be few who want Republicans back in office. In fact the number may be growing only because of the ineptness of the current Democratic regime. But one can see the lack of enthusiasm when examining the current labels. The party's major spokesmen say they are "conservatives" - whatever that means - and a good many other Republicans likely define themselves with hyphenations - Libertarian-Republicans, for instance.

The second point is that a double dip recession might help purge mal-investment. But why does it take two recessions (double the pain) to do what one brief, thorough depression used to do, especially prior to the War Between the States (Civil War) when America's economy began to move toward its current statist incarnation? Seems like a pretty clumsy way of accomplishing the job. Here's some more from the article:

Once the new-car smell of Obama's policies wears off, America will realize that it is deep in debt. New jobs are nowhere to be found. The U.S. dollar, the currency that the world used to rely on, is becoming a thing of the past. This could be the onset of the double-dip recession which started with the recession of 2007 to 2009, was followed by the short-lived recovery of 2009, and may be subsequently followed with the second recession of 2010. Why is it important if a recession lasts until 2011 or even 2012? The answer is, election time.

In 2012, the United States will have a referendum on its multi-trillion dollar spending spree. If the economy is in bad shape, there is little doubt that the current party in power will not get re-elected. Just look at our last election, when no Republican, not even John McCain, could win the presidency because George W. Bush had led the country into recession. If the double-dip recession is still around by the end of 2011 or 2012, then President Obama could face a similar fate. Some people might say: Dan, this is partisan politics. You just want Obama out of the White House and your guy in. That's a fair response, but the phenomena I hope for goes beyond party lines, it goes to history.

If you remember, there was a man from Texas not too long ago. He was a brilliant man who some people found to be loud and annoying but who everyone found to be highly effective. This man changed the course of the United States, and his name was Ross Perot. Perot probably single-handedly saved the United States. At the time of the 1992 presidential election, the U.S. was reeling from a post-war recession and had seen 20 years of budget deficits. Fiscal responsibility was a word that was lost in the vocabulary of Washington, D.C.

Through his pie charts, infomercials, and relentless campaign to reach Americans, Perot focused Americans on the economy. He pointed out that he was the only candidate who had a real plan for the economy and not just the platitudes and rhetoric that Washington, D.C. has become so full of. While the end result of Perot's crusade was the election of Democratic presidential candidate Bill Clinton, the message that was sent was clear. In the words of James Carville, "It's the economy, stupid."

Because America had wanted more fiscal responsibility, Washington, D.C. responded by producing budget surpluses from 1998 to 2001, bringing America back in terms of financial solvency, and giving us a high point in American wealth. Some critics may say this was just one time.

The arguments that recessions and depressions are good for America seem a bit facile in the modern era of central banking. It is central banks, including the Federal Reserve, that cause much of the monetary havoc that afflicts the world today. Before one begins to hail the purging effects of free-markets, one ought to look at the reality of the system. So long as central banking remains in place another destructive boom and bust is likely guaranteed.

There are many such analyses popping up in the media these days. These analyses remind us of the way that the Republican and Conservative movements have adopted libertarian dialogue post-election. Based on the rhetoric emanating from the radio and certainly from conservative blogs, you would think that Libertarian presidential candidate Ron Paul won the election.

But lost in the fuss over free-markets is the lack of substantive dialogue about the nation's military industrial complex, which remains strong as ever and is now wedded inexorably to the largest and most dangerous intelligence apparatus in the world, America's "Homeland Security" agglomeration of various intel and para-military agencies.

Just as free-markets arguments over purging the economy lack a certain credibility when avoiding the mention of the current central banking apparatus, so libertarian analyses of the modern American system seem a little empty without an accompanying examination of the substantive budgetary and security issues raised by Homeland Security and (to go back a decade) of 9/11. Rhetoric is no substitute for reality.

One also should recall that it was Bill Clinton, a Democrat, who left America with a shrinking federal deficit and George Bush, a Republican, who blew the budget apart with serial wars and reckless spending. In fact, there is probably not much difference when it comes to the two parties and their policies except on the margin.

Conclusion: It is unfortunately, fairly easy to shape a public dialogue so that it becomes ritualistic in nature, paying homage to reflected wisdom while avoiding the difficult issues. This latest NewsMax analysis seems to us to run along these lines. It takes a free-market concept - purging mal-investments through economic downturns - but artfully avoids the major issue - central banking monetary inflation. It mentions Obama's financial illiteracy but fails to mention George Bush's abysmal economic performance. Given these omissions it is certainly too much to except a significant discussion of what America and the rest of the world truly need, a market-based gold and silver standard.

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