Delusions Abound (updated)

Our leadership is celebrating a “slow but steady recovery” while working men and women still despair of finding jobs and the food stamp rolls continue to grow daily. The 236,000 new jobs supposedly created last month sounds wonderful, if true, but it hardly represents progress when compared to the 271,000 jobs created in February of last year or the 311,000 jobs created in January of 2012. It doesn’t sound quite as good when one points out that unemployment worsened in 25 states last month and improved in only 7 states.

So everyone will go out and buy new cars and houses, paid for with debt of course, because no one has any cash to spend. It’s not like we don’t have enough debt in this country already, but no one talks aboutit and it is not admitted to be debt which is either unsecured or secured with “assets” the value of which is entirely bogus. By the magic of “mark to market” it is valued at what the holder would like it to be worth instead of what it actually is worth, otherwise the holders of that debt would be bankrupt and shut down by federal regulators.

Instead of admitting the depth of the nation’s “leverage,” a word which we use to avoid admitting a level of debt that reaches our national eyeballs, we rejoice over record numbers in a stock market glutted with phony money which the Fed is creating out of thin air at the rate of $85 billion per month.

The government continues to operate on borrowed money, which Paul Krugman assures us is just fine because governments never need to repay debt, they just allow that debt to shrink to infinity in the ambience of an ever growing economy. He calls that “Keynesian theory,” but John Maynard Keynes certainly never advocated anything of the sort. He said that government should incur debt in bad times and repay that debt in economic good times.

Krugman’s “vanishing debt” theory requires that there be no limit to economic growth which is absurd on the face of it. Of course there is an ultimate limit to growth, and there are increasing indications that a planet with a population of 7 billion people has already reached that limit.

Not to mention that Krugman’s assurances consists of telling us that we are fine as long as government debt grows more slowly that the economy; an assurance which rather pales considering that government debt is presently growing at a rate some five times faster than the economy.

There is no area in which we cannot bury our collective head in the sand clear up to our collective shoulder blades. We blissfully assume that notwithstanding the global climate crisis we can continue to build an unlimited number of new automobiles, and all we need to do is tinker around with the gas mileage that those automobiles get. It never occurs to anyone that for the sake of our planet maybe we out to set a limit on the number of cars we produce, let alone that maybe that limit should be zero, and that perhaps we should be working on finding some other, better way of moving around in our communities.

We are idiots, led by morons, discussing delusions.

Update: Wed, 3/20/13, 9:20am

Mish's Global Economics points out today that the total amount of monay existing in today's American economy amounts to $15.7 trillion, while the amount of debt and credit issued amounts to $56.3 trillion. We laughingly call that a "balance sheet" in financial terms, despite the fact that it clearly illustrates debt that cannot possibly be paid back. More delusion.