7/12/09 Is Stimulus 2 Coming Soon?

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

Ever since Stimulus 1 and all the other bailouts were passed I have been saying these strategies are the exact opposite of what is needed. Every day now it becomes clearer to everyone that Stimulus and the bank bailouts have failed miserably. Here come the excuses. Last week, it was Joe Biden and there will be many others telling us why: unemployment is going much higher as it approaches 10%, foreclosures are literally going through the roof, retail sales are sinking, and the commercial real estate market is just beginning to collapse. It is evident that the administration’s promise of ending the recession soon is not on the horizon yet. Still the government has spent only 6% of the Stimulus money. Wasn’t there a great rush to get this done quickly or we would face Armageddon? The only thing accomplished thus far is that the banksters have been bailed out of their criminal risky ventures. Thus far, none of this money has filtered down to small business or to the consumers themselves. In fact, the reverse has happened. Consumers are beginning to save and businesses are laying employees off to preserve capital. In Seattle alone, ten high end restaurants have had to close their doors recently. High taxation, suffocating regulation and higher costs of doing business are literally choking the small business owner into capitulation. Is there anyone out there who believes taxes are going to be cut in the future, or less regulations or lower costs?
When the gov sees its policies fail, the normal course of action is to deny what is happening, blame the problems on somebody else and spend more taxpayer money. I’m going to predict we will see another Stimulus 2 and several others in the future. This is in spite of the overwhelming opposition by the voting public. If the gov had decided to send the Stimulus money to the consumer, they would have deposited the fiat into the banks anyway. Most would of got caught up with their past due accounts. Instead now the banks have the cash and won’t lend to anybody. This just reinforces the  making of the credit deflation argument.
The important fact however, is the gov doesn’t want anybody to pay off their debts. ..just the opposite. They want you to spend more and go further into debt. Debt is the mechanism that allows them to control you. . It is no accident that the growth of private debt has shown a collapse over the last month or two; bankruptcies, foreclosures, unemployment and defaults all ensure a collapse of the fiat money supply.

An economy built on debt and consumption dies with the default of/on that debt.
As long as failure is allowed to occur, the free market is effective. It is only when government interferes with the cathartic process of creative destruction that the system collapses. Unfortunately, what we see today is the exact opposite environment being promoted, with a huge increase of meddling into the private sector by government. Instead of blaming the market our government should be working to supply a level playing field and provide maximum incentives for the private sector to flourish. Until we re-embrace the idea that markets are the solution not the problem, look for continued erosion in our economy and our freedoms.


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