Don’t Believe the (Economic) Hype
Recently, as the stock market soars, there has been a large amount of news about how well the economy is doing. They say that the housing market has hit bottom, and that the economy is recovering. However, this article by the Associated Press is about how unemployment is rising.
Regardless of what the newspapers say, it is important to look at the fundamentals that drive the economy. The government has created massive band-aids to prevent a depression, and they seem to have worked. But it is important to understand the difference between a recovery and a temporary band-aid.
What effect will the band-aid have?
The unprecedented levels of spending by the government have had a significant impact on the economy. Houses are selling faster because of the first time buyer’s tax credit. Cars sold because of the Cash for Clunkers program. But the positive effect of these quick fixes are temporary. Consider a doctor who prescribes medication for someone who has bad health habits. The medication may take care of the problem that bothers the patient, but it will only handle the symptom and ignores the cause.
Indeed, the government spending has had a positive short term effect. The problem is that it may also have a powerful long term consequence. America did not have the trillions of dollars required for the bailouts, so we borrowed. Yet the question of repayment is ignored. Who is going to pay back that money? Where is it going to come from? The increased debt load may have a massive and pivotal effect on the economy in the next 5 years, as America’s financial domination diminishes and the dollar weakens.
The point of this post is not predict what will happen in the future. It is to encourage people to think for themselves and look below the surface. The colorful USA Today and CNN sound bite media makes big news out of small changes. But to really understand what is happening in the economy or the world we need to look deeper. If we merely accept the watered-down information that the media provides, we will be fooled into believing what the masses believe. If we fail to think for ourselves, we would be led to conclusions drawn by others. We would lose our ability to decide what is best, and become a herd of mindless sheep.
Related posts:
- More Conflicting News about the Economy
- Are the Country’s Economic Problems too Big?
- Is the Economic Crisis Over?
- US Economic Problems on the Horizon
- Housing Market Continues Decline
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