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7 Steps to Lift Yourself Out of the Recession: Series Introduction

By: Steve Johnson

1/21/2010 - 79 Comments

In the last year the government has bailed out industry after industry to resist the much needed credit contraction to correct the imbalances from the last decade of credit expansion.

In this article series I’m going to look at how you can begin lifting yourself out of the recession, despite the facts that we are headed for a deeper and longer recession. 

The result of the bailouts have created an economy that is phonier then the phony economy created from the low interest rates and the housing bubble. 

I'm going to call this new phony economy 'phony economy 2.0'.  Phony economy 2.0 is going to end very badly as the new money holding everything together begins to unravel.

As soon as the sugar high burns off, the Fed is going to have a very difficult time stopping the inflation wave that is going to hit the economy like a ton of bricks. Interest rates are going to spike and prices are going to increase everywhere. 

The government bailouts haven’t solved anything. In fact each time a company has been bailed out it only created a larger need to bailout more companies.  The entire economy is in reverse and the Fed has only succeeded in creating a much, much better problem.

The government would have served the economy much better if it would have just gotten out of the way and let the failed business fail.

The low interest rates are going to prove to be the most destructive because they continue to destroy savings, which destroy the availability of capital for new businesses to create new jobs and new wealth.

Adding new money into the economy does much more damage than good, adding new money;

  • Reduces the pooling of capital which is vital for creating new wealth.
  • Removes the ability of the free market to create jobs. 
  • Does not allow the contraction of the money supply that has expanded in the last decade of inflation.

Low interest rates cannot fix the damage created by low interest rates, just as more inflation cannot fix the damage created by inflation

Yet no politician wants to stop the money pumping.  They know they are creating a disaster, yet they refuse to stop the madness for the sake of one more election.

To make matters worse, the longer they pursue this monetary policy that leads to hyperinflation, the more people believe they are doing the right thing and the greater the number that are going to suffer financial damage from the fallout. 

The repeated behavior of our nation’s leaders has created a bailout mentality in this country, but someday soon the bailouts are going to have to stop. 

And when they do, the monetary policies are also going to reverse.  There is no other way around it.

We are going to have to pay back the money that the government continues to spend, through much higher taxes and even more inflation.

Here are the titles of the articles in this article series that aim to help you lift yourself out of the deepening recession despite the path that the nation is on.

I'm going to write about these seven steps and they will serve as a guide to personal economic freedom and financial independences - even as we face a deepening recession. Please join the discussion as I tackle this subject.

In Part 1, I’m going to talk about how important it is not to panic or to become paralyzed by the deepening recession.

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How Capitalism Saved America

This book is an excellent presentation on the problems of government 'regulations' into free market mechanisms. This book illustrates simply and clearly how many chaotic economic problems were caused by interference from government regulations and how capitalism has overcome them. Master this book and you have overcome most of the bad economic thinking of our time. Government is the cause of capitalism failure.

U.S. Manufacturing: The Engine for Growth in a Global Economy

This volume provides a comprehensive analysis of the essential role of the manufacturing sector of the US economy. The increase in the relative importance of the service sector and the globalization of manufacturing has tended to dull the image of US manufacturing....This volume contains much useful data that has been condensed into tables and charts to provide support to the reader without interrupting the flow of the text.

Nemesis: The Last Days of the American Republic

Like ancient Rome, America is saddled with an empire that is fatally undermining its republican government. Johnson surveys the trappings of empire: the brutal war of choice in Iraq and other foreign interventions going back decades; the militarization of space; the hundreds of overseas U.S. military bases. Retribution looms, the author warns, as the American economy, dependent on a bloated military-industrial complex and foreign borrowing, staggers toward bankruptcy.

Day of Reckoning

In Day of Reckoning, Pat Buchanan reveals the true existential crisis of the nation and shows how President Bush's post-9/11 conversion to an ideology of 'democratism' led us to the precipice of strategic disaster abroad and savage division at home. Ideology, writes Buchanan, is a false god that seeks vainly to create a paradise on earth. While free enterprise is good, the worship of a 'free trade' that is destroying the dollar, de-industrializing America, and ending our economic independence, is cult madness.