economic recovery

Some say we’re already recovering, others that it will take years. Who has an opinion on this?

Our answer:


Whether or not – and when – the world economy “recovers” is a question of definitions. Every single Western economy is flooded with unfunded debt which is constantly “softly defaulted” on with ever-inflating fiat money.

To explain this, if I owe you $100 in year 1 and am supposed to pay you back $110 in year 2, if I counterfeit money and pay it back to you, will you say that we’re square? Or will you have a problem with that?

Another example, more visual: if you give me 10 beautiful red apples and I promise to return them next month, will you be happy if I return 10 scrawny, hard, green apples? Especially if I INSIST that it’s the same thing? So how about pips? Would you accept 10 pips?

This is precisely what is happening with our money. Dollars, Pounds, Euros, Yen, Yuan. All of ’em are going down the drain while debt is growing and spending is skyrocketing. Places like the European Union even stopped doing audits. They haven’t had one for more than a dozen years – and won’t have one any time soon.

For the past 100 years, the US dollar has lost close to 99% of its value. And it hasn’t stopped yet. It’s really speeding up now. This situation is directly due to the fact that when the government needs money to pay for the promises it makes to get re-elected and continue living the high life, it can only take a small fraction from your taxes – there’s not enough there, because its promises (for which you always fall hook line and sinker) are far too grand for that. So, it resorts to “printing” money, i.e. it requests that the central bank (The Fed in the US, ECB in Europe, etc) makes the given amount available, which they do by heroically typing a few numbers into a computer. More typically, the government “borrows” the required amount – from banks, from other countries, etc – and when the time comes to repay it, it requests that the centeral bank does its magic once again…

All of this results in the increase of money in circulation (though only a tiny fraction circulates as the paper or metal money that we all know and love – about 3% or so). The increase of money in the economy, if it’s not backed by something tangible, causes the money to lose value – and we all wind up with “inflation”. Most state-sponsored economists (e.g. Paul Krugman and others like him) HEATEDLY DENY that this process is inflationary, but if that’s indeed so, then you go ahead an explain why the dollar has lost 99% of its value over the last 100 years and why we’re in the situation we’re in today!

They’re not idiots to be denying the obvious like that. But they hope and pray that YOU are.

So when asking about “economic recovery”, you need to be more precise. Do you just want the books to be balanced? Do you want the individual standard of living to get back to at least where it used to be? Or do you want the economy as a whole to become vibrant and productive once again?

If it was just a question of getting the numbers to balance, our brilliant Keynesian economists could accomplish that very easily. The only problem is that nobody would be fooled by that in the face of the increasingly worthless money and stagnating economy. So, if it’s a question of getting the economy going again, then we’re looking at basic principles which would have to stop being violated FIRST – before any kind of REAL recovery can even be hoped for.

Principles like honest money, living within the economy’s means, being honest in economical reporting, introducing full accountability for high-rolling political opportunists, teaching people not to keep demanding things for which there is no money, reducing or eliminating regulations which stifle business and productivity – and so on.

  1. Since none of these things are about to happen, the government will have to come up with some other ideas. And there is no shortage of those – the only trouble is, you ain’t gonna like either of them. So – before they decide what to do, they’re building up the security state, to keep you in line when sh*t hits the fan. Not just in the US, mind you, but elsewhere as well. Once the police state is well and truly introduced, “economic recovery” will finally begin. Because you will be happy to accept whatever that recovery is, rather than get your ass thrown in jail – or worse – for protesting.
  2. The solutions that your government will offer to you will range from further and much bigger devaluation of your currency, to getting everyone to get behind some very nasty wars, to artificially created “bubbles” which will create temporary booms which will, hopefully, last long enough for the current elites to be able to leave the problem to the next generation of “leaders”.
  3. Simple arithmetic tells us that short of some MIRACLE – e.g. some new technology which would revolutionize the cost of running of the ENTIRE planet (e.g. finally revealing some of those “near-free” energy sources, which most researchers agree are already available, or something on that scale), it is mathematically impossible to pay off the debt at the current level of spending, and – even if it gets written off – to return the economy to the same place it was, say, 10 years ago.

So, what does my crystal ball say will happen?

Firstly, they will keep trying every trick in the book, starting with further diluting the value of money, and growing the state bureaucracy in order to “create jobs” and the illusion that things are getting better. These jobs are non-productive and will thus further undermine the private economy which is, of course, paying for the whole system. This will go on for another 1-5 years. I don’t think they can sustain this for more than that.

Secondly, once they see people aren’t buying the false economic data anymore, they WILL have to come up with a major war. Nothing as minor as an incursion into a third world country. Something much bigger. Something which will wipe out a whole lot of people. Because if they don’t do it – those very people will turn on them in a BIG way.

The LAST thing they’ll do is ADMIT that their policies are WRONG.

I wish I could paint a rosier picture. In fact, when I started writing this reply, I WANTED to find some RATIONAL reasons for optimism, but I failed. A crash is inevitable. The only way we could turn that crash into a crash-landing where at least there would be SOME chance of survival, is through an intellectual revolution on part of the population.

If it’s possible to achieve real accountability from the governments, then at least steps could be taken to fix the problems from further growing. This process is well on the way now, but people with enough knowledge about these relatively simple economical, historical and political facts are still but a tiny minority.

Partial References:
The Fall of the United Kingdom – Coming Catastrophes in the UK Economy, by Stefan Molyneux

The Will Be No Economic Recovery, by Stefan Molyneux

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