For those who thought the days of stimulus, bailouts and quantitative easing were behind us, think again:
[The] typical error most countries make coming out of a financial crisis is they shift too quickly to premature restraint. You saw that in the United States in the 30s, you saw that in Japan in the 90s. It is very important for us to avoid that mistake. If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth.
-Timothy Geithner on risks to the U.S. economy (source)
And to think that this entire time, since the financial crisis began, we were under the impression that you, Mr. Geithner, along with your colleagues at The Fed, The White House and in Congress, were acting with restraint.
Though the White House administration has spent the last several weeks telling the American people that there will be no more stimulus spending and that a recovery is slow but developing, what is one to think of Mr. Geithner’s comments?
Our assessment is that the economy is in complete shambles, and Mr. Geithner as well as the White House know it, otherwise we wouldn’t be bringing up the Great Depression again would we? If they stop spending now we can expect a repeat of 2007/2008. In fact, our view is that regardless of the spending we can expect not only a repeat of the financial and economic crisis of a couple years ago, but something a whole lot worse. The idea that we can somehow spend our way to prosperity is ludicrous, but that is not likely to stop the current trend in economic policies. The depression Mr. Geithner is trying to scare us into believing we can avoid is already taking place and the policies of the administration for which he works have not only failed to mitigate the problem, they have made it worse.
And though Mr. Geithner hints that we’ll likely be spending billions, if not trillions, more in coming months and years, we find the following statement curious:
We don’t have unlimited resources. We just don’t think it would be responsible for this country, given the size of our future deficits, and given the substantial burden the middle class has been bearing over the past decade in particular, to go out and borrow $700 billion from our children so we can sustain those Bush tax cuts that only go to the wealthiest 2% of Americans.
We definitely wouldn’t want to go out and “borrow” the $700 billion. Why would we do that instead of, say, cutting spending on superficial government projects. But, cutting spending is not something our economic policies are capable of accommodating. In the mind of Mr. Geithner, the President and most of our elected officials, it’s a much better idea to seize that money by way of force from the American people – regardless of how much money they make or whether they are considered the middle class or upper class.
Are we really supposed to take Mr. Geithner and President Obama seriously? They, along with former Secretary of Treasury Henry Paulson and President Bush, just committed in excess of $20 Trillion to our already $150 trillion in outstanding long-term liabilities and we’re to believe they are worried about borrowing money from our children and grandchildren?
Note to the Treasury Secretary: We’re now down to borrowing from our great-grandchildren.
At some point in the near future, our creditors are going to realize that the chance of our children, grandchildren and great-grandchildren ever paying back our consistently increasing deficits are nil. And then, folks, you’ll see the real economic collapse – the bursting of the so-called “Bailout Bubble” (i.e. the government credit bubble).
For the time being, we should probably get ready for more talk of the Great Depression and the possibility of tanks on the streets of America if we don’t let our elected and appointed officials continue to rape and pillage the hardworking citizens of this country:
(Video Dated October 2, 2008)
It Took 22 Years to Get to This Point
The head of the Canadian province of Ontario, Doug Ford, has warned that it will retaliate against...
The Israeli military is preparing to strike nuclear missile sites in Iran. Israel claims that the...
This article was originally published by Michael Snyder at The Economic Collapse Blog. What in...
Commenting Policy:
Some comments on this web site are automatically moderated through our Spam protection systems. Please be patient if your comment isn’t immediately available. We’re not trying to censor you, the system just wants to make sure you’re not a robot posting random spam.
This website thrives because of its community. While we support lively debates and understand that people get excited, frustrated or angry at times, we ask that the conversation remain civil. Racism, to include any religious affiliation, will not be tolerated on this site, including the disparagement of people in the comments section.
Without a doubt, if there is a solution to this nation’s problems, it will entail both spending cuts and taxes for all of us. For the last 35 or so years, we’ve been living with debt and the printing press, keeping up only because we shifted from one wage earner to Mom working also.
One the spending side, without nipping the pentagon and starting with elimination of 500-600 Generals who retire to become consultants for the media, we’ll never get there.  Buying every weapon system our military-industrial complex creates and trying to maintain our world empire will definately put us in the poorhouse! SS and Medicare need some over-hall and both need to be means tested.
On the taxing side, the Reagan supply side farce of growing out of our dilemma by allowing the billionaires to keep a larger portion of their income is more stupid than when it was proposed in the 80’s. There will have to be pain and sacrifice by all…and here is when the rubber will fail to meet the road.Â
The majority of people, including the tea-partiers, can’t stand the truth and wouldn’t support the cuts and taxes necessary to get us on a sustainable path…That’s the real problem and it won’t change until the real ka-poom happens. JMO
Two centuries ago, a somewhat obscure Scotsman named Tytler made this profound observation: “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury.”
And like most discoveries, you can’t put ’em back in the bottle.
Only question is WHO is going to be the dictator to take over when it falls.
That would be fine..but this is a republic..not a democracy
“… Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses”
Juvenal
Comments…..tucker girl; you are good
Yes VRF……we vote for representatives who bring home the most bacon to their district.  Huge distinction, huh ?
That, incidentally, is why polls on CONgress in general give it a very low rating, but people by and large, return THEIR Congresscritter back over and over again. “CONgress is lower than a snake’s belly in a wagon rut….except of OUR guy”
I love bacon. I they bring home the bacon it keeps me from thinking about…
…le guillotine!
The USA Â can solve everything by simply defaulting on all debts.
We are the world’s biggest debtor, by many times over.
You have heard the saying: “If you owe the bank a $100,000, you have a problem, Â but if you owe the bank $100,000,000,000+, the bank has a problem”
That’s where the world today is…. the whole world has a problem, Â called USA debt.
The re-set button has to be pushed, to clear the debt, Â and we all start over. Â Or, Â to the “goldbugs” delight, Â gold and silver prices, have to be pushed to the moon, Â to pay off the debt.
Either way, the choice has to be made….sooner or latter. Â imho.
Our government is so full of crap, and has been for so many years it’s hard to imagine them any other way. Why in Hell’s name would anyone in there right mind ever believe a word those worthless shitbags have to say.  I can’t imagine it lasting much longer. I for one, am tired of it. I know most of the folks that follow what Mac has to say are in the same boat. WTF? This sucks having this crap control our actions and our thoughts so damn much. I want to see these morons declare their martial law. Let the fun begin…… Hold on boys and girls.
Yum! Bacon! Wright Brand!
Martial law will not be pretty. Curfews, no transporting fuel, no guns, no groups, no legal protests, road blocks, loss of travel, lines everywhere, looting, fires, stores/bank holiday & loss of rights. Throw in some pepper spray & tear gas. Water, food, & electricity?  Get some.
Wright brand, taste like meat candy…..Â
Dennis – let me disagree in one way. Nothing will get solved until we stop paying for the services of non-citizens. I don’t care if they are legal immigrants or illegal. Until we stop paying for their health care, education, food stamps, welfare, etc, etc, etc… we will not solve anything!
And as far as tax cuts go, I know several (dozens) of real estate investors that clients that I know intend to retire and sit on their hands versus going out and risking anything if their taxes continue to rise. When you run out of money, you have to cut the crap! And we are out of money as a nation … until they just take it.
But the conversation is a waste of time because our government will never stop spending. Whether on the illegal immigrants or on the welfare class. Or the ridiculous amounts of money we give to foreign governments.
Its okay though, the reset will handle that. Plan up, prep up, and enjoy the ride.
When the reset button is pushed, all paper fiat currencies will instantly be toilet paper. Durable goods and property will still maintain some kind of value. What we will use for money, is up to the imagination.
The reset will be tough and many will die. Sad times, but necessary to rebuilt this Country back into what the Founding Fathers intended.
Mike
Timmah say: “welcome to the recovery” , and you just ruined his
day.
Nice article, AND comments.
To the person who said that this is a “republic, not a democracy”, may I refer you to the Seventeenth Amendment to the Constitution of the United States of America?
Initially this was a republic of independent states, ceding (conditionally) some powers to a central subservient authority. With the passage of the infamous (and carefully ignored) seventeenth, that distinction was legally nullified by deliberately removing State representation at the federal level.