The Destruction of The US Economy is Assured

Tuesday, February 28, 2012
By Paul Martin
Feb 28 2012

The slide toward sovereign bankruptcy and economic collapse continues. The best efforts of politicians and their sycophants in the media to convince you otherwise are being contradicted routinely by the the harsh facts of the marketplace. Their propaganda appears increasingly incredible.

The private economy has shown virtually no improvement despite stimuli in magnitudes never before imagined. After trillions of dollars of deficit spending and similar amounts of Fed monetary chicanery no recovery has occurred. No recovery can occur until massive amounts of debt are liquidated. Current debt levels are unsustainable for many. For others, the debt requires spending reductions in order to reduce it. Others will just have to default in one fashion or another.

Much of the debt will never be repaid and will have to be defaulted upon. Government is trying to prevent this necessary liquidation from taking place. All that does is lock the economy into sub-standard performance, making a normal recovery impossible. In the process, government is adding massive new amounts of debt to their own over-leveraged situation.

Government strategy is misguided. It contradicts both common and economic sense. It will make the inevitable adjustment more painful. Instead of admitting their mistakes, government insists on compounding them. What we are seeing is good politics in the short-run and terrible economics, both short and long-term. The political class will not take responsibility for this economic tragedy. Instead, they pretend that they are improving matters. Despite all the propaganda suggesting a recovery, cracks in the system are widening and about to burst. There is no way to avoid what is coming:

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