- The government seized Fannie and Freddie, thereby effectively nationalizing a large portion of the entire US housing market
- The Fed nationalized AIG
- The treasury secretary told everybody that he needed $700 billion pronto to patch up the financial sector or the world would end; the treasury secretary then proceeded to partially nationalize the US financial sector
- The federal government took over two of the Big Three car companies and threw traditional creditor rights out the window
- The Fed more than doubled the monetary base in six months' time
- The new Obama administration borrowed almost $800 billion to spend on "stimulus"
- The federal government has taken a giant leap forward to socialized medicine
- The federal government also banned offshore drilling (though the rules are yet again undergoing revision)
- The $8000 tax credit and other subsidies designed to encourage greater spending on houses
- The "Cash For Clunkers" program designed to encourage greater spending on cars
- The push for "Cap and Trade" and other legislation designed to address the imaginary hobgoblin that was originally known as "Global Warning" and is now known as "Climate Change"
- The altering of accounting rules that miraculously transformed insolvent, loss-making banks into highly profitable enterprises
And that's the part you take on faith - assuming you don't understand Austrian economics or economic history. Consider (from the Economic Collapse Blog):
- Over 42 million Americans were on food stamps during the month of August, an all-time record and 17% higher than August, 2009.
- The "official" unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
- In the past 60 days alone, the price of cotton is up 54%, the price of corn is up 29%, the price of soybeans is up 22%, the price of orange juice is up 17%, and the price of sugar is up 51%.
- The American Bankruptcy Institute says that there will be about 1.6 million consumer bankruptcies in 2010. That would represent a huge increase over 2009.
- U.S. states are mostly flat broke. The biggest ones are.
- With a "fiscal gap" of $202 trillion (by one economist's calculations), the U.S. government is completely broke.
- Major U.S. trading partners are seeking ways to protect themselves against the Fed's latest round of monetary inflation, euphemistically labeled quantitative easing.
David Stockman, who was briefly Reagan's budget director before he resigned, recently wrote an article on the gargantuan size of the Federal deficit. He made an important but neglected observation. Ever since the third quarter of 2008, the nation's nominal GDP has increased by a tiny $100 billion, but the Federal debt has increased by 25 times the GDP increase.And Howard Katz gives us a little background on GDP:
It has taken $25 of Federal deficits to produce $1 of GDP growth.
Members of the paper aristocracy measure the nation’s economy by a statistic called Gross Domestic Product. Gross Domestic Product was invented in the 1930s by a Russian national who worked his way into the New Deal and devised the formula for GDP. He presented this without proof that it actually worked and measured the real economy. Hardly any American can pronounce his name.Keep in mind that the price of gold, the canary in the coal mine, keeps inching up, too, along with silver and other precious metals. And we have not yet reached critical mass, when the public suddenly realizes the Fed's paper dollar is a means of looting them, by design, and they panic to buy anything of value in an effort to preserve what wealth they have left.
For example, if a man invents a thermometer, he is obliged to show that it actually does measure the real temperature. If he takes it outside in January and it measures hot and in July measures cold, then his thermometer does not work, and he is a failure.
This is the case with GDP. For example, a very poor period in the American economy was the early 1940s. This should not be a surprise because the world was at war, and everyone was engaged in the destruction of goods. One could not buy a new house in the early 1940s because none were being built. One could not buy a car for the same reason. Gasoline was rationed to 3 gallons a week. Butter and many food items were also rationed. You would walk into a store and find that it did not have the item you wanted to buy. But real GDP rose sharply during this time. This is the thermometer which reads hot in January.