Excerpted from the February 14 edition of Notes From the Rabbit Hole (NFTRH20).
If only we hadn’t had those [Bush] tax cuts, we would be in better shape for dealing with the crisis now. But the trouble with tax cuts, just forgetting about value judgments is that a dollar of tax cuts may translate into quite a lot less than a dollar of additional spending. We have an economy that’s suffering from insufficient demand, ah, tax cuts are not… they don’t give good bang for the buck in dealing with this kind of crisis whereas if the government goes out there and hires people to repair a bridge that’s about to fall down, that not only fixes the bridge but it also contributes directly to the economy.
– Paul Krugman (per Bloomberg video)
Paul Krugman and Robert Reich are getting a lot of air time as the public looks to these economic experts for their views from on high in its time of need. The public is looking to the learned opinions of people whose entire economic orientation (fiat money creation and associated spending) has resulted in total failure. It is the perfect illustration of the metaphor of trying to save an overdosed junkie with a mainline of pure heroin.
Government is getting bigger, the money supply is increasing and while intentions are somewhat benevolent right now, projecting a few years down the road, we can see very dark possibilities; we can see individual saving (and prudence) having been discouraged in the interest of spending our way out of this mess (at the cost of our children's future), people dependent on big government and one grand, and global, inflation problem.
The jobs the American people care about most -- their own -- will be dramatically safer the day that President Obama signs this plan into law.
– Nancy Pelosi
The stimulus plan provides a half-trillion dollars for jobless benefits, renewable energy projects, highway construction, food stamps, broadband, Pell college tuition grants, high-speed rail projects and scores of other programs. It raises the nation’s debt limit to about $12 trillion.
This is a new New Deal gone steroidal and it is designed to save some jobs in the short term, not to mention enrich those highly connected with government. Raising the already unpayable debt limit is no doubt an inside joke, and it seems we are doing everything that hubris choked, late stage societies would be expected to do in their moment of maximum denial. The result is going to be a delay in reckoning with the final meltdown as a bankrupt system lurches forward killing itself with ever more of its own failed policy.
I think everyone in this chamber on both sides of the aisle understands we need to act,” said House Minority Leader John Boehner, an Ohio Republican. “But a bill that’s supposed to be about jobs, jobs, jobs has turned into a bill that’s all about spending, spending and spending.
Where were these kind of Republicans when we needed them to stand up to the Bush administration? If not for Republican failure to act Republican at crucial times, we would not have Democrats in control and simply doing what Democrats do.
Meanwhile, the G7 weighs in:
"We reaffirm our commitment to act together using the full range of policy tools to support growth and employment and strengthen the financial sector,” said the draft statement, which was obtained by Bloomberg News. “The stabilization of the global economy and financial markets remains our highest priority.”
And Goldman sums it up:
"More is better,” said Jim O’Neill, chief economist at Goldman Sachs Group Inc. “People have had their confidence shattered.”
Well Jim, perhaps in the long run shattered confidence is exactly what ‘people’ need. Do they really need to be compelled to have confidence in your company, your industry and what has been proved to be an illegitimate way of redistributing wealth? Eh, Jim? More is not better. More is gluttonous. Saving is better. Cleansing is better. But of course it is too late for that.
Honestly dear subscribers, I feel as though we have been stuck in the same cartoon for far too long as we watch these people try to rebuild a failed construct. It is like watching the Coyote suspended in air, holding a heavy hunk of iron and a deeply embedded philosophy "Fail again, only next time, fail better."
NFTRH20 goes on to outline the current technical state of global markets and hone the outlook for the near term and 'big picture' in the all important precious metals and gold mining stocks. Meanwhile, the VIX and Gold-Silver ratio are well aligned in painting a clear picture for coming events. Current portfolio status is also reviewed.