`      Jobless recovery, statistical proof that the economy is poised to turn around is the Kum-buh-ya swan song of the Democrats who have been in control of the economy for the past two and a half years.

        Statistics, especially those that predicted the future have often been not only wrong, but very wrong. The two and a half year Democrat controlled government will no doubt try to create the illusion that a recovery is on the way. After all spending more government debt than any other government in history to prop up a deindustrialized economy must show rewards and soon, or Democrats will suffer a political defeat in the next election.

        What the Obama administration propaganda machine is trying to may be best described by quoting Shakespeare. They are  trying “''To gild refined gold, to paint the lily... Is wasteful and ridiculous excess."  The public works approach and bailouts was used by FDR and many economists believe that FDR extended the depression by at least 10 years after the 1929 stock market crash. In fact the stock market did not reassume its pre 1929 level until the early 1950’s.

        The Keynesians, for whom Paul Krugman carries the flag and leads the parade, are blaming savings for the lack of recovery. If only people would start singing Kum-bay-yah and buying commodities that they don’t absolutely need, then the economy would recover tomorrow.

        But what happens when the borrowing by the Federal Government stops and savings run out? Do we expect that an increase in the minimum wage that became effective July 24, 2009 will suffice to support growth? What is more likely is that more minimum wage earners will find themselves making $0/hr and on unemployment. Businesses that are already struggling to survive do not have the savings or ability to pay more money in wages. Businesses have already cut labor costs to the bone.

        Jobs for steelworkers, coalminers, oil riggers, and gas exploration has virtually come to an inauspicious end in America, one of the only high paying jobs is to become a medical doctor, and the Obama administration is working on doing away with that sector of the private economy.

        Will more spending energize this economy that has all but run out of power? Since the fall of 2007 the Fed has lowered interest rates to almost zero. It has increased the money supply from 4% in September of 2007 to 152% by December 2008. Money poured into banks during the first nine months of fiscal year 2009, until the deficit reached $1.086 trillion, as compared to the $285,850 for the previous year. Still the economy failed, so how is more money going to fix what too much money helped to cause?

        Assuming that the Gross Domestic Product, which is the value of all goods and services, is a proper indicator of growth, and assume that if the Fed pumps money into it, that we see an increase, does this mean that we are seeing a recovery of the economy? No, because a true increase in the GDP is seen when production increases, and more people are put to work and have money to spend. Pumping money into the economy didn’t work in Zimbabwe either. Yet Keynesian ideologues will not reject the theory that demand is king.

        Jobs are a wealth generating activity, borrowing, flooding the economy with monetized debt is not a wealth generating activity. In effect government projects weaken wealth generation by substituting national debt for private investment capital. Private industry generates real national wealth, and industry creates high paying jobs for laborers.

        While private industry is needed to supply high paying jobs, banks are now going to have to charge high interest rates. China is unloading U.S. debt faster then a duck sheds water. U.S Treasuries are now a risky investment. Higher interest rates have to be paid out in order to attract investors. This is the perfect storm for a second great depression. High unemployment, increased cost of production, and unavailable financing will stunt growth in the private sector.

        Central control creates problems that it later hast to fix. Consequences are not known until it is too late. The cure takes too long to slow down the pendulum. This type of control can be likened to
“pilot induced oscillation”. The aircraft dips down, the pilot is late to respond, and pulls back on the stick, the aircraft begins to climb rapidly, the pilot pushes forward on the control stick and the plane enters an even deeper dive, the process continues until the plane is oscillating out of control and perhaps breaks apart. Such is the case with central monetary control. Manipulating the money supply begins oscillation the economy, called boom-bust cycles.

         The question is whether the real wealth generators still have the ability to recover. There must be a pool of real savings, and capital expenditures in new and productive industries. Does it exist?  Many experts believe that the worst is over and by the end of this year the economy will begin to improve. Only time will tell, but since nothing has really changed in the market for creating high paying jobs, since unemployment will likely reach 10% before summer’s end, how can the economy survive even higher taxes, and more government programs.

        Conclusion:

        Adding real wealth generation is not accomplished by adding millions to the already overburdened Medicare system. A government taking over healthcare does not add wealth to the economy, and limiting executive salaries creates a disincentive to taking risks and creating jobs. Government spending has not created new jobs, and none of the programs proposed by the Obama administration will are wealth producing, all they do is drain resources away from real wealth producing private enterprise.