The New York-based Conference Board raised its forecast of future economic activity this week, reversing five months of decline, the AP reported.
The index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.
By any logical standard, this should be good news.
Maybe not the kind of news where everybody puts on silly hats and marches down Main Street, but it is good news. I think. I suppose it could be argued that it isn’t good, or good enough, or stupendous news, but I think it ought to be difficult to argue that an economic uptick is bad news.
In what has become the AP’s “new” style of mixing facts with opinion and presenting what emerges as “news,” the reverse in America’s economic slide is actually not good news at all.
The AP report stressed consumer confidence and how important consumer confidence was to the health of the overall economy. The AP’s report about the economic upturn was headlined, “Economy Sends Signals of More Weakness to Come.”
The American economy is backed only by the confidence of those who invest in it that they will receive a return on their investment. If people believed that the dollar was in free-fall, then they would move their assets into some safer, more stable denomination, forcing it into further decline.
That, in turn, would cause other investors to lose confidence, who would then also convert their dollars into yen, or euros, or whatever, which creates a new cycle of divestiture and devaluation, until eventually, nobody will accept it in exchange for goods or services.
At that point, the dollar becomes as worthless as the paper upon which it is printed. That’s all that keeps our economy going is confidence.
Consider the facts as they exist. America is more than $10 trillion in debt. To put it into perspective, paying the debt off – at one dollar per second – America would be debt-free in 375,000 years!
According to the National Debt Clock, the total national debt works out to roughly $30,978.28 per U.S. citizen. Why is it worked out per U.S. citizen? Because that is how the debt is apportioned. You owe it. All that keeps America’s debtors from foreclosing is the expectation that investing in America will produce the best return available over the long haul.
Think about it from your personal perspective. Where would you invest your money if U.S. investments were collapsing? And this is your country! The majority of U.S. investment comes from overseas, so if you would pull your investments if things went south, why wouldn’t they?
All that forestalls that spiral into financial oblivion is that intangible element of consumer confidence. Seventy percent of U.S. domestic economic activity is spurred by U.S. consumers. If you aren’t confident you will have a job next year, are you going to risk taking on five years of car payments to drive a new Ford this year to keep an American worker on the job? And, if you don’t, somebody else will have to.
Or the spiral will continue. Soon the guy who built the Ford you couldn’t afford to buy will be worried about his job and will decide to put off buying a new fridge. The guy who works for Frigidaire rethinks buying a new big-screen TV until next year, and the guy who works at the TV factory decides he can get through another season on his old lawnmower.
And so it goes. Why? Because of confidence. If confidence in the economy tanks, newspapers won’t be able to sell advertising, because advertisers won’t be able to sell product. TV networks won’t be able to maintain their presence, and politicians will have to rely on some other method of maintaining their visibility and therefore their careers. A total collapse of the U.S. economy would bite deeply across the board, hurting the common and the elite, the rich and the poor, Republican and Democrat, liberal and conservative – no one would be spared.
Moreover, its collapse would leave its creditors holding $10 trillion in worthless paper, which would predicate a worldwide economic collapse unlike any the world has ever seen. All because of plummeting consumer confidence.
So, why is everybody talking down the economy? The baffling answer is politics. I say baffling, because if the strategy works, everybody loses.
The Democrats have been searching for an issue they could hang their campaign on since 2004. They had two choices: the war and the economy.
George Hegel, a 19th century philosopher, developed a three-part dialectic for popular mass manipulation called “The Hegelian Dialectic” divided into the thesis, or premise, the antithesis, or method and the synthesis, or solution.
Once establishing the premise, in this case, that a bad economy will sway voters a particular way, the methodology is to create, by repetition and use of the media, the perception that the economy is in trouble and that they have the solution. Having created the perception, the public then clamors for the “solution,” in this case, vote for the Democrats.
An identical dialectic was in concurrent operation with the antithesis being to talk down the war, America’s chances for success, and to highlight enemy successes until the public began to clamor for the synthesis, which is a vote for the Democrats will end the war before we lose it.
The war dialectic was hard to maintain; American troops are notoriously brave and stubborn, and they kept performing such acts of heart-stopping heroism and making such gains against the enemy that it prompted Democrat James Clyburne blurt out that, “good news about Iraq is bad news for Democrats.”
Since then, the left has pretty much divided itself evenly between talking down the war and talking down the economy, either ignorant or uncaring of the consequences of their actions.
It matters little about the sacrifices made by our forces on the Iraqi battlefields to achieve victory. Those sacrifices will themselves be sacrificed in exchange for political power. It matters nothing that America gave her word to the Iraqi people – promises are made to be broken.
And if the economy takes a little dip, well, it always came back before. “So there is a price to be paid for power, after all.”