Download PDF Version August 17, 2019
The kind of Depression the United States is entering is permanent. There will be no free market recovery because the free market system has been replaced with central economic planning. Recessions in a free market system are short and temporary. There is no free market so there will be no recovery. So, once a recession begins an all out depression will ensue. More central economic planning will be initiated on the hope that central economic planning will generate an economic rebound. In a centrally planned economy a natural recovery will not occur.
The cause of the depression is the practice of using political power to determine economic outcomes. All kinds of theories based on fancy statistics and presumed numerical relationships will be tried and retried. What Fantasy Free Economics does is provide the genuine reasons for economic phenomena in terms of what causes the occurrence of the statistics on which sophisticated economics rely. In mainstream economics, one number causes another. One number alone does not cause another. The cause is always explainable in terms of human behavior in just a sentence.
Americans believe government solutions not the free market system is what causes economic growth. This misguided approach is the cause of the severe depression the global economy is entering into. Widespread prosperity or even well being is not possible when the system that completely causes prosperity is eliminated. That is what has happened. The state of being in a depression will be impossible for the economy to recover from given that the only path to recovery is being rejected.
I am not saying an economic recovery is completely impossible. Even economists who call themselves free market economists are offering no free market solutions or good advice. To return to free market influences it is necessary to repeal laws, close and rein in government agencies. The practice of using legislation to rig and control markets would have to be eliminated. These things are not being done, suggested or even considered. When citizens of a country are rejecting the only available path to higher living standards, there is no where for a country to go down.
The western world understands the self correcting nature of the business cycle theory. It is out with the old and in with the new. A recession is a natural resetting when resources have become inefficiently allocated. When recessions are avoided through central economic planning, the reason and causes for the recession continue to worsen. In time, even though an economy grows to new highs in terms of GDP, the income distribution between different income classes widens and continue to widen. This is because political power rather than price, determines who gets what in the economy. It is natural then that the wealthy become more wealthy during central economic planning because they are the ones with most of the political power.
What the United States is experiencing now is similar the situation in place within the Old Soviet Union when it finally collapsed. That is the natural outcome of a system of central economic planning. Without free market influences that type of outcome is normal. Based on our economic policies and the mentality of those who have taken charge, failure is the only possible outcome.