Tuesday, August 20th, 2019

Irreversible Damage – The U.S. Economy Cannot Be Repaired

Published on February 4, 2017 by   ·   No Comments

Brandon Smith

As I outlined in my article ‘The False Economic Narrative Will Die In 2017’, the mainstream media has been carefully crafting the propaganda meme that the Trump administration is inheriting a global economy in “ascension,” when in fact, the opposite is true. Trump enters office at a time of longstanding decline and will likely witness severe and accelerated decline over the course of the next year. The signs are already present, and this fits exactly with the basis for my prediction of the Trump election win — conservative movements are indeed being set up as scapegoats for a global economic crisis that international financiers actually created.

Plus, it doesn’t help that Trump keeps boasting about the farcical Dow hitting record highs after his entry into the White House. Talk about the perfect setup…

With the speed at which Trump is issuing executive orders, my concern is that people’s heads will be spinning so fast they will start to assume an appearance of economic progress. Here is the issue — some problems simply cannot be fixed, at least not in a top down fashion. Some disasters cannot be prevented. Sometimes, a crisis has to run its course before a nation or society or economy can return to stability. This is invariably true of the underlying crisis within the U.S. economy.

It is imperative that liberty activists and conservatives avoid false hope in fiscal recovery and remain vigilant and prepared for a breakdown within the system. Despite the sudden political sea change with Trump and the Republican party in majority control of the D.C. apparatus, there is nothing that can be done through government to ease fiscal tensions at this time. Here are some of the primary reasons why:

Government Does Not Create Wealth

Government is a wealth-devouring machine. The bigger the government, the more adept it is at snatching capital and misallocating it. Such a system is inherently unequipped to repair an economy in a stagflationary spiral.

I’m hearing a whole lot of talk lately on all the jobs that will be created through Trump’s infrastructure spending plans, which reminds me of the desperation at the onset of the Great Depression and the efforts by Herbert Hoover to reignite the U.S. economy through a series of public works programs. Reality does not support a successful outcome for this endeavor.

First off, Trump’s ideas for infrastructure spending to kick start a U.S. recovery are not new. The Obama administration and Congress passed the largest transportation spending bill in more than a decade in 2015 and pushed for a similar strategy to what is now being suggested by Trump. I should point out though that like Herbert Hoover, Obama’s efforts in this area were essentially fruitless. Obama was the first president since Hoover to see “official” annual U.S. GDP growth drop below 3 percent for the entirety of his presidency, with GDP in 2016 dropping to a dismal 1.6 percent.

Though projects like the Hoover Dam were epic in scope and electrifying to the public imagination during the Depression, they did little to fuel the overall long-term prospects of the American economy. This is because government is incapable of creating wealth; it can only steal wealth from the citizenry through taxation to pay debts conjured out of thin air, or, it can strike a devil’s bargain with central banks to print its way to fake prosperity.

Some might argue that Trump is more likely to redirect funds from poorly conceived Obama-era programs instead of increasing taxes or printing, but this does not change the bigger picture. Redirected funds are still taxpayer funds, and those funds would be far better spent if they were returned to taxpayers rather than wasted in a vain effort to increase GDP by a percentage point. Beyond this, the number of jobs generated through the process will be a drop in the bucket compared to the 100 million plus people no longer employed within the U.S. at this time.

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