People act upon their perception of reality, not upon any objective truth. This has always been so, and it makes complete sense when one thinks about it. It says that people act upon the “truth” that they, themselves see and experience, however limited or distorted this perception may be.
A really big distortion of reality is evident in the current political/economic environment. Some questions illustrate this:
1) If the current economy is so miserable, the why did it take 9 months for the National Bureau of Economic Research (official arbiter of recession dates) to state that the current recession started in December of 2007?
2) “Everyone” seems to agree that a stimulus package consisting of record-setting spending by the federal government is needed to “jolt” the country out of this recession. One would think there would be some example, somewhere, of such a program having succeeded. There is none. I, for one, am old enough to remember Lyndon Johnson wailing and whining that the government “wasn’t spending money fast enough” to stimulate the economy.
3) Didn’t this panic really start when Paulson and Bernanke appeared before congress waving the bloody shirt of panic — a credit meltdown was in progress, and $700 Billion would be needed to fix it. Much of the money has been spent — but not for the original purpose of buying distressed assets. So the distressed assets remain, the money is spent instead to pad the equity of banks. But where is the result? Does anyone believe that the effect has been better than had nothing been done at all?
4) The talk of a new “Great Depression” resurrected all the New Deal zombies, those who missed the old Great Depression and are delighted to be able to apply their talents to a new Great Depression. But did the New Deal actually do anything useful to shorten or alleviate the original Depression? The truth is that is didn’t. If this is an economic depression, which it isn’t, why this love of old, failed ideas? Could it be that all this drum beating in support of depression is motivated by the desire to create huge, glorious new bureaucracies?
5) The real estate bubble, which was supposed to be the root of all this panic and chaos has essentially been swept under the carpet as bank nationalization, auto industry nationalization and other “emergency” measures are used to clear the way for other big-government/socialist programs such as national health care and retirement reform. Lies about the source of the perceived crisis are being used to pound the drums for regulation of financial markets, insurance, food, medicine, and everything else. So if real estate was really such a problem, then what has been the consequence of ignoring it in favor of all these other crises?
These questions suggest that reality is a follows:
1) The economy has not been in recession for a year as has been recently claimed.
2) Stimulus packages have never worked, and won’t work this time. A big stimulus will simply create a huge inflation and stagnation of economic socialism.
4) The “Great Depression” talk is a device being used to convince the gullible herd that certain people should implement grandiose federal programs, the result of which will be an immediate loss of freedom and ultimately the bankruptcy of the entire country.
5) The real estate bubble is/was real. The market will, if permitted, cleanse the wounds all by itself, albeit with considerable pain to go around to those responsible. But this is preferable to any and all of the proposed government fixes.