Friday, January 7, 2011
It is all a mirage...
The fact that the official U.S. government unemployment rate has dipped slightly is good news. However, it is not the "economic turning point" that Barack Obama and others are proclaiming it to be. Rather, what we are in right now is "the calm before the storm". The massive amount of government spending that the U.S. government has done over the past few years and the massive quantities of new dollars that the Federal Reserve has been pumping into the system has bought us all just a little bit of time. Instead of using this brief period of economic stability to party, we should all be using it to prepare for the very hard economic times that are coming. Please do not get fooled when the short-term economic numbers go up or down a little bit. When evaluating the state of the U.S. economy, the key is to look at the long-term trends. The truth is that when you take a longer-term view, it becomes undeniable that the United States is in the midst of a long-term economic decline from which there is no escape.
But how are most Americans responding to the "good news" that the U.S. economy has stabilized for the moment? Many Americans are running right back out and are spending like it is 1999. Many Americans are viewing the slight improvement in some of the economic numbers as a sign that "happy times are here again" and they are behaving just as they did right before the financial crisis of 2008.
Many of us have family or friends that are taking expensive trips, making huge purchases and partying as if the good times are never going to end.
But is this wise?