When the world’s economy began collapsing four years ago in a mountain of malinvested private debt—debt built on a pile of counterfeit capital—Presidents Bush and Obama rolled the dice and plumped for government debt to take up the slack. They plumped for “stimulus” to “kick-start” activity, and for corporate welfare to prop up those whose props had just collapsed.
The end result of the pile of govt cash was to only make things worse. The crash was a sign that too many malinvestments has been made—the “stimulus” only served to prop up the bad investments, and ensure those bad positions would continue as zombies for many years to come, sucking the life out of any green shots that might have appeared in their absence. And the creation of new government debt only served to suck out real resources from where they were needed—creating profitable new businesses—and to make the world’s govts, and this U.S. government in particular, among the most indebted in history.
And now, as American govt debt heads towards the abyss, the only surprise that the likes of Standard & Poor’s has called the debt “horrendous” is that anyone, anyone at all, is surprised—let alone that this long-overdue recognition of economic reality would cause commodities and stock markets to tumble, gold to rise, and headless chickens to squawk.
And as govt power grows with each crisis and each call to “do something,” it becomes increasingly difficult to see the difference between the fact of America today and the fiction of Atlas Shrugged. See what I mean [hat tip Objective Standard]:
No wonder that Atlas Shrugged, first published in 1957, is now at number four on Amazon’s list of best-sellers…
UPDATE: Some audience reactions after Atlas Shrugged: Part 1 screened in Colorado:
UPDATE 2: And Peter Schiff points out that Standard & Poor’s are always too late to the Party!
But then Standard & Poor’s is one of only three with government-granted monopolies on their “ratings.”