This week’s standard refrain was one of pessimism. The quick return to economic health mantra that was popular not long ago has disappeared faster than you can say lickety-split. But there was one notable outlier this week. In fact, one leading economist stepped forward with assurances that renewed prosperity lays just ahead.
On Wednesday, Nobel prize economist Paul Krugman looked up from his liquidity trap graphs long enough to tell Noah Smith at Bloomberg that the 1979-82 economic slump “would suggest fast recovery once the virus is contained. I don’t see the case for a multiyear depression.”
This sounds great and all. A fast recovery would end a lot of financial pain and suffering. Still, we seem to think the damage that’s been done by the government lockdown will have long-term consequences.
The glorious ascent of the concave parabola of government spending and debt won’t go away. The budget deficit has grown by leaps and bounds – nearly $3 trillion – over the last four months. The national debt – currently over $25.6 trillion – has overtaken the economy.
What’s more, the deficit spending’s being financed by Fed credit that’s created out of thin air. Again, there will be lasting consequences for this type of depravity.
Presently, the economy and financial system is in grave trouble. This is not a cyclical depression, despite what Krugman says. This is a full societal breakdown. And the authorities can’t stop it.
Not since Nero clipped coins in 64 A.D. and fiddled as Rome burned has there been such an intolerable collection of lowlifes in imperial office. No plans are off limit: Mass surveillance. Permanent wars. Market intervention. Trade wars. Greater government control. You name it.
Yet these tired solutions are the source of the problems…
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