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7 Steps to Lift Yourself Out of the Recession: Part 3: Accept the Truth

By: Steve Johnson

2/2/2010 - 31 Comments

In short, it is impossible for the economy to recover without a long process of deleveraging, whether by a contraction of the money supply or by massive inflation.

This is Part 3 of an article series which takes a look at a 7 steps to lift you out of the recession, no matter how deep it gets.

Let me say that again.  It is impossible for the government to stop the process of deleveraging from taking place. The laws of economics are like gravity, they cannot be broken

At best, the government can delay the process, but the trade-off for delaying the process are much worse than letting the free market take its natural course.

In many ways the nation is only in the beginning stages of coming to grips with the recession.  Many people desperately want it to be over and are simply hoping for the best, clinging to any headline that says the worst is behind us – yet the worst is still to come.

The reality is that we have not even begun to face the giant economic collapse that lies in front of us.  President Obama and Congress refuse to face the recession and before it is over, we will need to cut way back on personal consumption, national debt and government spending.

We need to take the hard road to rebuild our savings so that it can be used to restore our economic production and the sooner we start down this road the sooner we will be able to rebuild a real foundation for economic growth.

We need to cut back until we can once again match our production with our consumption, our exports with our imports.  Then we need to save and produce even more to create a positive trade balance that can be used to pay back our nations debts.

There is no other path to regain the value of the dollar and restore the economy. Here is a list of 25 things to consider cutting back on as a consumer.

As difficult as it will be for consumers to cut back, the government cuts are going to be even harder on society.  Primarily because the government has grown so large and become such a large part of the livelihood of so many. 

Millions of people live completely dependent on the local and federal government social programs, for everything from food to medical services.

Government cuts to social services will put further burden on the working class to provide and care for the millions that once depended on the government. 

At the same time the working class will be burdened with higher taxes and inflation.  The result will be more people working, young and old will join the working class to help pay for their living expenses. 

Facing the Recession Will be a Battle

It will be like fighting a civil war as different groups of people fight for government aid while others will be robbed with higher taxes and inflation. 

Ultimately, we need a free-market President that has the guts to stand up to Congress and stop the special interest groups from pillaging everyone else.  

Peter Schiff says it best in his book, “The Little book of Bull Moves in Bear Markets”;

“Ultimately, we are going to need a free-market president, who understands sound money and Austrian economics and has the toughness, courage, and leadership talent to take the bull by the horns and begin the process of shrinking government, dismantling programs we can’t afford, minimizing regulation and taxation so businesses can operate without competitive disadvantages, and generally taking the steps that will put us on a path to becoming a nation of savers and producers once again.  If suffering though four years of hellishly misguided big government is the price we pay for true reform, it may in the end be worth it. “

We need capitalism more than ever right now and we need to convince the public to stop supporting the failed ideology of socialism and government intervention so that we can elect new leaders to reduce the government spending and the burden of taxes that it punishes the market with.

The truth that the our nation has been avoiding for decades is that we cannot continue living a high standard of living while borrowing and spending from the rest of the world.

The truth is hard to accept and it starts with one person at a time. The burden of our financial sins of the past are not going to be easy to deal with and the longer we avoid them the larger they are becoming. We need to stop the fiscal disaster that is Federal government continues to create. We need a revolution.

Accept the truth, the government cannot restore the economy. Millions of jobs are lost forever. The economy is in big trouble. There is no economic recovery.  Unemployment remains high dispite trillions in new government spending.  Until the bleeding is stopped, the economy cannot begin to recover.

In Part 4, I’m going to talk about making the changes that need to be made and how making those changes rationally now will be much easier than having to make quick decisions later while facing more challenging issues.   

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What You Should Know About Inflation

This book presents the Austrian theory of money in the clearest possible terms, and contrasts it with the fallacies of government management. Hazlitt takes on not only the Keynesians but also the monetarists, as well as anyone who believes that government debt accumulation and manipulation of interest rates are harmless. Hazlitt touches on a wide variety of macroeconomic topics, including budget and trade issues, as well as the economic history of inflation.

The Case Against the Fed

This book, written by Murray Rothbard, an economist and historian of fairly well known repute, is a scathing attack on not only the Federal Reserve, but the interests that created this institution. Rothbard explains how the Federal Reserve is the true source in the destruction of wealth, which has led to the destruction of the middle class and continues to sift money into the hands of the wealthiest.

Crash Proof

Peter Schiff has predicted the economic hardship more accurately then any other economist in the world in this book. Everything from the housing crash to the credit crunch to the stock market. Peter has a plan to help you servive the crash. Peter explains why the Wall Street investment firms are still trying to sell you stocks, and was the house prices are likely to continue to decline for years to come.

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.