Are Bernanke and Geitner trying to solve the GDP Problem Instead of the Economic Problem?

Are Bernanke and Geitner trying to solve the GDP Problem Instead of the Economic Problem?

We are in a horrific economic mess that is the result of a collapse of Three Bubbles:

1. Stock overvaluation.
2. Real Estate Overvaluation
3. Credit Overvaluation and ensuing Debt excess.

Having three major collapses like that in the space of a few months was a terrific shock to our economy. Fixing it will not be easy. Yet, the Central Bank Fed) and the government have countered the effects of the three negative shocks by means of monetary and fiscal stimulus policies.

The monetary and fiscal stimulus is aimed at boosting overall expenditure in the economy, which (it appears to be believed) is the magic ingredient for economic growth. There is some logic to this because the spending of one individual is income to another. A service sector economy works in this manner. Unfortunately, this does not appear to be helping Industrial Production, which keeps on falling and falling. The United States is the leading Industrial Production country in the world, well over two times bigger than Red China.

To really come out of this Depression we have got to come out of this Industrial Production Depression.
The Initial Stimulus Package was largely directed at picking up State, County and City projects that had fallen by the wayside might place many orders for Industrial Products. Yet my fear is that it is not enough, as these were projects that were originally scheduled to be done on the local level. So all we are actually doing is saving a few local and expensive projects, but not addressing the real problem. We need to get America’s industry humming again. We are not really working towards that right now.

What I see Bernanke and Geitner doing is trying to solve the negative GDP numbers. They are ballyhooing the fact that GDP is down to negative one. That might be good, but millions of people are still losing their jobs every month. Don’t believe the federal government unemployment numbers. Believe the state Unemployment Insurance claim numbers. The three million people a month who are filling out those forms know that they are unemployed even if the government claims that only one fifth of them really lost their jobs. Are we to believe that the rest of those people are all liars or delusional?

As Josef Goebbles said when he was in power in Nazi Germany, “If you tell a lie, tell it big enough, tell it loud enough and tell it often enough and it will be believed. I do not believe the lies of the Federal Government. I do believe the state claim forms that the people take the time to fill out. I have written to Congress about the tremendous disparity between the real numbers of people filling out those claims and the outrageously LOW numbers reported by the federal government. As usual, nothing is ever done about the tremendous dishonesty in the federal numbers.

To address that issue of unemployment, Bernanke and Geitner have endorsed a policy of loose money to help the Big Banks and to get the people spending again. The spending might help the service sector economy, but it will not place industrial orders. The half dozen Big Banks are getting richer off of the zero interest loans the Fed is giving them. Meanwhile the small banks are collapsing and failing by the dozens every month.

It is obvious that the Government policy is not directed at saving the economy. It appears to be directed at improving an index. Once the index is improved we can declare victory over the enemy and say the recession is dead, even though the local banks are failing (an estimated 1000 are in serious trouble), the factories are failing and more and more people are losing their jobs every day.

It is time to fire Geitner and Bernanke because they are charlatans. Fixing an index does not fix the problem.