Some thoughts on the current economic situation:
The latest round of economic news continues to signal what most people already know, the United States economy is in a recession. Despite Ben
Bernanke's optimistic appraisal of the economy's prospects for growth toward the end of the year, average Americans are feeling the pinch of the rising cost of fuel, food, and the growing tide of unemployment. Government stimulus checks (i.e. delay the debt) are not enough to cure these ills, as they are primarily a result of poor financial habits, and hideous government policies.
How did we get into this situation? It should not come as a surprise to the astute observer of economics and the business cycle. When you have a central bank manipulating the money supply through interest rates and open market operations, there are bound to be booms and busts. Couple this with the uncontrollable elements of market demand, then you are going to encounter what the Central Bankers can't control, low growth and thus high unemployment. The decline of the purchasing power of the dollar and the influx of high gas prices have sparked inflation. While no one is ready to admit that stagflation is upon us, the threat is certainly on the horizon.
Naturally, many Americans are shuddering under the burden. After all it is the American birth right to have cheap oil.
With all of the talk of government stimulus checks, revoking oil subsidies, gas prices, and the weakened dollar, no one seems to ask how we got ourselves into this mess. The Federal Reserve is busy doing its interest rate magic show in an attempt to put some life into the beast, which may be to docile to
manipulate. The real problems center around a fiat currency, massive government spending and economic intervention, as well as the poor habits of Americans. None of these ills are easily cured, but a good economic downturn may be just the medicine the economy needs.