Obama's economic dilemma: Spend or save?

What everyone seems to be praying for is: "Dear Lord, please give me just one more artificially-FED-induced, debt-based, consumption-driven, binge-spending, BUBBLE, and I promise You that I won't throw away its 'blessings' this time!" IMO a credit implosion caused by a collapsing Debt Mountain cannot be FIXED with MORE Debt. Debt-based discretionary consumer spending is the road to economic (and social) hell, especially when it is only facilitated by FED-injected, helicopter-dropped, Ben Bernanke-blessed, modern-invention-called-the-printing-press-created 'money'. We should know better by now. History has many lessons that show that such money injections can ultimately only lead to misery. Our Central Banks (most especially The Federal Reserve) have been creating artificial bubbles for so long, that this is all they seem to be able to do. They create the booms and the busts and then come back to us and tell us that they will save us from the busts. What temerity! What arrogance! What fraud! Our Central Banks do a disservice to savers. But most importantly they fail to recognize that by favoring debt-based spending over saving for such consumption (that is, we should save before we buy) our Central Banks undermine our economies in the long-run. Their actions cause a failure of the needed slow accumulation of savings and capital that are required to move our economies forward. Such muddled Central Bank thinking and actions (making money far too 'easy' for borrowing) does usually 'stimulate' in the short run. But such money-printing only brings growth forward in time, at the expense of future growth. It is always so, even if the inevitable slowdowns are temporarily forestalled. The Austrian School of Economics has been teaching this principle for more than a hundred years. No amount of printed money (“created from thin air”), or lent money from banks, or borrowed money of corporations, which is NOT backed up by REAL savings of people and companies in society, can in actuality lead to real sustained growth with real jobs. Printed money is really only indirect taxation of those who have cash balances in savings. It only causes a redirection of resources that would have gone somewhere else. Personal choice has been abrogated by the actions of these undemocratic institutions. There is no ‘outside’ when it comes to the economies of the world --- all such ‘stimulation’ comes purely at the cost of stealing resources from somewhere else in the economies of the world. It is a shell game played by charlatans and sadly it manages to fool most of the rest of us most of the time. Even now as Ben Bernanke's easy-money actions in America may succeed in creating some growth, it will be at the inevitable cost of future growth. That future growth will necessarily be inhibited. IMO it won’t work this time, because too much such past stimulation has already exhausted that future-growth source-well. Too many bad investments have been made, and too many ‘future’ houses and automobiles have been purchased. Too much Entropy has been created in the Economic and Financial System. It is payback time IMO. Beyond this, there is the moral question of why we are making Debt-Slaves of the generations that will follow us. How can they ever forgive us? Imagine if a time traveler could go back to 2001 and warn Greenspan not to spin more of the green stuff by dropping rates and making money 'easy'. What pain we could have avoided. Now we are going to do the same in spades? We cannot steal such growth from the future with some magic plan to then boost our current real future growth. It cannot happen. The past and the future will NET out. It may even be worse. The future growth may suffer more than a simple netting-out calculation might suggest. Our future time-traveller is yelling to us from the year 2015 "please desist from what you are now doing!". How can you delay SAVING to 'save' the Economy now, and then auto-magically start SAVING at some undetermined future date? This is witchcraft and muddled wishful thinking. The President is correct to want saving. But there is no advantage in waiting. Besides it is infeasible to spend now and save later. There will be no economic or social tomorrow without SAVING now. At least not one that is to be envied. We may be creating the conditions for war and other misfortune, as history so many times has witnessed through the well-meaning actions of those who say “we need more money in the system NOW”. Do we really think that the Paradox of Saving can be avoided to save the Economy? The only way to avoid this Paradox in the future is to make sure overall saving in the Economy never again drops to negative levels. That would lessen these severe busts and booms. We’d get a sustainable, but slower, growth rate. In the first place the FED should NEVER have engaged in Social Engineering to induce people to spend money they didn’t have. The FED has to start focusing on maintaining the value of money. As it is now, we will both debase our currencies and lose out on economic growth. This is medieval thinking --- no, I will take that back --- the medieval thinkers were not that stupid. Maybe John Law was, or maybe he was ‘forced’ into it. You can read up on him and decide for yourselves. The FED created the conditions we have today. They created the conditions where we (and the writer, in her article) even HAVE TO WORRY about the Savings Paradox. The Federal Reserve has been doing this since 1913. It created the Great Depression and then made it worse. It is doing the same now. It has always done the same. It is not independent. It is even more harmful in its actions than the short-term thinking of its political masters might indicate. http://en.wikipedia.org/wiki/Paradox_of_thrift http://en.wikipedia.org/wiki/John_Law_(economist) We cannot fix the unfixable. Let's just resolve not to get into this hole again (assuming we get out). By the way, IMO the current depression is unavoidable, since our individual and collective Balance Sheets have gone into such FED-induced disrepair. It will take a long time for those entropically-challenged Balance Sheets to be repaired. The current FED (and other Central Banks) and Federal Governments are prolonging this recovery process. Instead of a 2-year depression we are likely to have a 10-year depression, with some periods when things look rosier but are in reality not. Beware of those who promise paradise through more “Quantitative Easing”. That is only a euphemism for melting away the value of your money.