Monday, July 11, 2011

Unemployment goes up again and the media is surprised?

Unemployment has hit 9.2% again revealing once more that we are on the wrong track and the economy is not improving. What is baffling is that this is a surprise to the media. Why should it be? It was this way in the 1940s as well. The government was spending like crazy, raising taxes, introducing new and unconstitutional entitlement packages paid for off the backs of the working class… They even went so far as to implement price controls and they buried the market in the chains of regulation, and what should have been a two year recession became the great depression.
Let’s take a moment to have somewhat of a rude awakening… If the New Deal worked it should have ended the recession, it didn’t. Instead there was a double dip which became a ten year long agonizing period of no economic growth. That is the reality of Keynesian Economics. We should have learned in the Great Depression that government micromanagement of the market, higher taxes, and higher spending only make the problem worse. Yet here we are again.

To me it’s incredible that the media continues to be surprised by any of this, the argument between Keynesian and Hayekian economic models has been going on forever, and time and time again history shows us when we follow John Maynard Keynes the economy suffers from near total collapse followed by stagflation, when we follow the route proposed by FA Hayek and other contemporary Conservative or Libertarian economists (Ludwig Von Mises, Hans Herman Hoppe, Milton Freidman, etc) things get better. The lesson we should have been able to take from the experience of the Great Depression is that you cannot spend your way into prosperity.

Look, the more they spend the less value our money has, the less value the less goods and services we can buy and the less people can invest, and the that means lost jobs. Solving the problem of high unemployment is actually really simple, and if you want to skip past the logic right to the end result take a gander at how unemployment is in the Red States, especially Texas and even Utah, versus the Blue States, especially California and New York. Over all the Republican controlled States have less debt and less unemployment. There are some exceptions of course but this is a general fact which proves the superiority of our handling of the economy over the jackasses (pun intended) who are great at demagoging and flushing the economy down the toilet and not much else.

So what are the solutions? Simple, follow the path of Calvin Coolidge, the most successful president of the last 100+ years. He slashed spending by more than half, and slashed spending again, in half. It’s a three part formula that when implemented in full always works. Deregulate, cut spending, cut taxes. Now doing this will cause what some would call a “deflationary cycle,” but really what that is the market correcting itself and getting rid of the artificial inflation regulation and spending and high taxes tends to create, so prices will fall to their actual value, and as prices deflate the value of your dollar increases meaning you can literally get more done for fewer dollars.

The federal reserve then needs to scoop up superfluous monies and destroy them which will increase scarcity and therefore the value of the dollar. As the value of the dollar goes up the price of oil, food and other basic necessities go down.

Now you of course will say, “yeah but my wages will go down too,” a simple fact of the matter is that wages have been either stagnate or falling anyway. Many people are loosing high paying jobs to end up at McDonalds, so no, it won’t happen that way by virtue of the fact that your wages are not keeping up with inflation. If the inflation we have been experiencing hasn’t moved our wages upward a Market Correction won’t move them downward. Odds are our wages stay the same, but the cost of living gets cheaper. Would that really be so bad?

With the cost of living cheaper people will have more money to deal with their bills, once their debts are paid they can start spending and the 21st Century can experience a roaring twenties of its own. With the increase in spending jobs will start to come back and the problems we are facing will all but evaporate. That’s all there is to it. Calvin Coolidge and to a lesser degree Ronald Reagan have already proven this formula works, it should therefore be a surprise to no one that when you’re going in the opposite direction things are getting worse.

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