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Wednesday, August 26, 2009

Stealing from the future to spend in the present

Since neither the private sector nor the public sector has any savings from the past, additional demand from either sector must be borrowed from the future. (Setting aside ‘quantitative easing’…or Zimbabwe-style stimulus…an even bigger fraud.)

The purest illustration of how this works is in the popular ‘cash for clunkers’ programs. Instead, of letting the consumer buy a new car when he is ready, the feds give them money to buy now. So, he buys in 2009 and not in 2010. What good is accomplished? It is as if they didn’t expect 2010 to ever arrive…as if they thought they could stop the sun and the seasons…and the Chinese…forever. Like moths in amber, their wings will never tatter…nor will their faith flag. The dollar will always be strong. US bonds will always be in demand. And the future will never arrive.

But the more economists try to stitch up the future; the more it gets away from them. After the 2010 sales have been moved forward to 2009, they will have to reach into 2011…and then 2012…all the way to the end of time.
--from "Stitch in Time" by Bill Bonner

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