Every day the news about the economy is shocking for one reason or another. It is enough to make one’s head spin.
Combined with the mixed signals of the data reported by the empiricists are the explanations of the spokespersons of economic statistics. Their interpretations are mostly sterile, but really, it is propaganda most of the time. Anyone who thinks that this information (or misinformation) will be useful in decision-making is either a fool or is part of the political scheme of trying to enrich the political class by thievery. Regardless, the empirical data and the statistics and the analysis are all erroneous.
When does a recession become a depression? I will explain that in this article.
At some point the practice of pumping money into the credit system and the banking system causes a fracturing of the capital structure. All the malinvestment caused by the distortion of the interest rate begins to become evident as the scrambling for resources exceeds what was thought to be available. This is a significant part of the beginning of the recession. Also the over-consumption stimulated by the artificially low interest rates hits consumers in the face as an overburdening debt. Restrained consumer spending and business streamlining causes unemployment.
Monetary policy by the politicians (and their minions) leads to inflationary policies in an attempt to stimulate the economy, but what results is stagflation - high unemployment and high rates of inflation. This is the worst case scenario for what can be described as a recession. But it is not the end of the line!
The ‘perfect storm’ scenario is called a depression. In short a depression is when there are all of these same extreme recession conditions combined with a deflationary spiral. Money, despite massive pumping into the system, disappears!
I describe the depression as a whirlpool where the currents created by the interventionists become so powerful and misaligned that they generate a whirlpool where everything is sucked into the depression. Any actions taken by the interventionists simply add to the currents and intensify the whirlpool. The debasement of the currency manifests itself as hyperinflation and yet there is no credit available since there is no savings. Recovery is nil or strongly suppressed because alert entrepreneurship cannot decipher the mixed up signals. The depression will persist as long as the interventionists continue to feed the spiraling whirlpool with fallacious economic policies.
Are we currently in a depression or are we about to enter a depression? The forces unleashed by the interventionists are very erratic. It could be that one of the next actions taken by the interventionists will trigger the depression whirlpool. Who knows?
What we do know is that a depression is an exponential recession that cannot be stopped if what causes the currents is continually fed by the interventionists. Imagine the unstoppable pull of a whirlpool. What we do know is that the cesspool of interventionists (composed of politicians and their bootlicking economic advisers) are responsible for all economic disruptions, whether the disruption is minor or whether it is a major catastrophe like a depression.
What is the solution? The correct policy is non-intervention which is like getting oneself out of the water before the currents build so much momentum. Then the equilibrium forces that allow resources to become freed up will disrupt the vortex throughout its structure, dissipating the energy, lessening the swirl velocity, causing it to break into smaller eddies, and making the economy safe for entrepreneurs to re-enter, to diagnose, and to set their sails and forge a new direction.
That new direction that is necessary for prosperity and liberty is non-interventionism! In America a restored Constitutional Republic is what can prevent the economic destruction brought about by the ego-driven interventionists that are part of the political cesspool.
For more information go to http://www.divineeconomyconsulting.com .
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