It is easy to get caught up in all the hype of the media pundits, Ben Bernanke, Joe Biden and Barack Obama that the economy is slowly but surely recovering from the worst recession since the 1930s. It’s not. And what is even worse is that we are deeper in debt with nothing good to show for it.
In September of 2007, just months before the current crisis began, our national debt was a little over $9 trillion give or take a few billion. As of late last week, our national debt was quickly approaching $12 trillion. That is an increase in debt of $3 trillion in just two years! Of course, most of the new debt is a result of stimulus spending, other government handouts to stimulate the economy, and war – things Keynesians have always historically believed would turn any economy around. That theory has been disproved previously and this current economic crisis is just the most recent repudiation of it.
So, with all this spending what do we have to show for it. This week the Bureau of Labor Statistics announced that unemployment is at a 26 year high in the United States at 9.8 percent. Payroll employment has fallen for 21 consecutive months, with total jobs lost equaling 7.2 million. This is only the phony government number. It doesn’t count workers who have been unemployed so long they have given up on finding a job and those working part time who prefer full time. The total unemployed number, meaning the number the government has always used up until the Clinton years, is actually 17 percent! This is a Great Depression number. So it is interesting when Fed chairman Ben Bernanke says his monetary policies have kept us from an economic calamity.
In addition to higher unemployment, with the new debt we also have lower consumer confidence. The 2nd Quarter real gross domestic product number down at an annual rate of .7 percent. And lastly, Americans continue to lose their homes to foreclosures. They increased by 17 percent in the 2nd quarter in spite of a government spending program meant to help borrowers save their homes. Taking all these facts together, only a fool would believe the economy is recovering, Keynesian economics works, and Ben Bernanke has saved us from an economic abyss.
However, there is one sector of the economy that is doing pretty well as a result of all this new debt — big banks. As a group their stock prices are up. They are receiving a good rate of return on their bailout money being held in their Fed reserve accounts. Bonuses are being paid. And they are enjoying the privileges that come with Fed membership — anonymity when given our money and protection against failure. Perhaps when Bernanke, Biden, and Obama talk of recovery they have the big banks in mind.
One thing is clear. Most of America is not experiencing an economic recovery. $3 trillion more in debt and the economy is still in the dumper. The so-called jobless recovery policymakers speak of is an insult. It doesn’t give much comfort to the 7.2 million folks who have lost their jobs since December 2007. The only jobless recovery that is acceptable is the one that will result when the scoundrels who caused this mess lose their jobs. Americans will have this opportunity starting next year. Hopefully, they will take full advantage of it.