Las Vegas Sun

September 2, 2014

Currently: 88° — Complete forecast | Log in | Create an account

Letter to the editor:

An economic Armageddon

Economic icon and Nobel laureate Friedrich Hayek recently wrote that the U.S. government is no longer able to sustain itself. Tax receipts and government bond sales provide massively insufficient income to feed the federal monster. The Fed sold quantitative easing as a basis for stimulating the economy. While that may have been a consideration, it wasn’t as important as pretending the government wasn’t bankrupt.

Quantitative easing is akin to borrowing against your MasterCard to make minimum payments on your American Express Card. It works for a short period but reflects the death spiral that has overtaken the government.

An economic Armageddon is coming. The ending phase in every possible scenario is a massive depression.

This problem is beyond economics. Mathematics has assumed control, and mathematics is unemotional and relentless. The government is insolvent. The longer it postpones this reckoning, the bigger the defaults and greater the pain.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy

Previous Discussion: 35 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy. Additionally, we now display comments from trusted commenters by default. Those wishing to become a trusted commenter need to verify their identity or sign in with Facebook Connect to tie their Facebook account to their Las Vegas Sun account. For more on this change, read our story about how it works and why we did it.

Only trusted comments are displayed on this page. Untrusted comments have expired from this story.

  1. I second Freeman's motion. And will add that a consensus of economists are predicting that 2014 will be the break out year for U.S. economic growth. There have been early signs of this already: Housing sales and prices are on the rise; new car sales are setting records; consumer confidence is up; and unemployment while still high is plateauing and ticking down, ever so slowly. The unknown factors are China and Europe, our two largest trading partners. If they continue to tank, they will stifle the U.S. recovery. But we have to wait and see. Time will tell, like Freeman said.

    Carmine D

  2. Friedrich Hayek was an economist associated with the widely discredited Austrian School of Economics. It is true that he was a Nobel laureate (1974) and many libertarians hold closely to his economic theories.

    The claim that Hayek "recently wrote" anything is fraudulent. He died in 1992.

  3. "Friedrich Hayek, who died on March 23, 1992 at age 92, was arguably the greatest social scientist of the twentieth century. By the time of his death, his fundamental way of thought had supplanted the system of John Maynard Keynes -- his chief intellectual rival of the century -- in the battle since the 1930s for the minds of economists and the policies of governments." Julian Simon, in "Hayek's Road Comes to an End" (3 April 1992)"

    Friedrich Hayek, dead or alive, is one of the greatest economists of ALL time. He has influenced modern day economics and even recent Nobel prize winners in economics like Robert Lucas, to mention just one of many of his ardent believers.

    Carmine D

  4. "Friedrich Hayek was an economist associated with the widely discredited Austrian School of Economics."

    Not quite Jim. I believe you are confusing your Friedrich's.

    "Since Mises time, few Austrian thinkers have accepted his praxeological approach and many have adopted alternative methodologies.[16] For example, Fritz Machlup, Friedrich von Hayek, and others, did not take Mises' strong a priori approach to economics.[17] Prof. Ludwig Lachmann, a radical subjectivist, also largely rejected Mises' formulation of Praxeology in favor of the verstehende Methode (interpretive method) articulated by Max Weber.[13]"

    Carmine D

  5. Come on you guys. Skip Blough can count. Bush W started the current debt jamboree, and Obama has made George W look like an amateur in the spending department. There is no economic recovery in sight the size of which can overcome our staggering debt.There was a day when recoveries were accompanied by enough additional tax revenue to finally overtake the debt and place us back in the black. Not so this time.The government became unhinged under Bush,and has all but collapsed under the present adminiatration. The problem is and has been that nobody in charge in Washington would accept that the wildly excessive deficits that were mounting up would finally generate so much debt that we would never be able to recover. That tipping point was reached in the current administration,and the present leader( if you can call him a leader)never looked back in his out of control spending. While there are signs that the stubborn recession is possibly slowly turning in the other direction, the economy,its debt,the structural resistence of the work force to a permanent recovery,Obamacare's enormous future costs,the madness of a welfare dependency culture that leaves only about 50% of wage earners paying any federal income taxes, and a continuing out of control spending juggernaut that shows no signs of reversing itself,all these factors leave little long term hope that we will bail ourselves out of this debt mess.

  6. Skip,

    I wish I could disagree. Unfortunately, mathematical exponents are real and when coupled with deteriorating demographics, we truly have no way out. I have been opining just that & offering logical and positive suggestions to mostly deaf ears for decades. I only wish I could figure out how I, and those for whom I care can avoid disaster, and even perhaps, prosper.

    Regards
    Purgatory

  7. Mr. Blough,

    You fail to realize it's capitalism that is failing. The system has become "coporate welfare" and the wealthy get to keep more of the wealth because of gov't. handouts. It's the working class who provide the engine for our economy and we have come to a point of diminishing returns with high debt for those who were once considered middle class. Each day more of the middle class is failing, falling into the category of working poor because disparity is rampart.

    As long as the wealthy dictate Washington policy through puppet politicians nothing will change. Take this last House bill about subsidizing farms. Congressional members will receive funds to support their family businesses but take food stamps from poverty stricken children and elderly. Does anyone actually think those politicians will vote against their own best interest? Not!

    Mr. Blough you might believe what you wrote was accurate but we no longer function under caplitalism. We all live in an oligarchy and corporatocracy.

  8. Skip, do you think the House is BEGINNING to deal with it--increasing EBT SNAP food stamps for AMERICAN seniors up to sustenance and survival letters and DELETING ILLEGAL BENEFITS? We just cannot afford to feed the entire world. We also cannot afford to force the world to do everything "our" way or the way Hillary/Barrack want them to. We COULD afford to maintain our life style and quality of life IF we INSIST that politicians fulfill their oaths to the Constitution and STEWARD our tax revenue, military strength, technological innovation and such for OUR good and not for short-term political posturing.

  9. "letters" should be "levels". I swear it's some sort of filter or spell check the Sun is using.

  10. Just to clarify for the liberal commentators. Obama won both elections on a pack of lies. All of his words were and still are lies. Tell the lie often enough to the right people and they start to believe them.

    Look at his promises now. Take away the ones that he traded executive orders for promised blocks of voters and you will see he has not fulfilled any of them.

  11. I have a distinct problem with a letter that provides an erroneous "fact" in its very first line. Friedrich August Hayek: born 8 May 1899, died 23 March 1992. Hayek's publication history ranges from 1921 to 1988. Just HOW did he "recently" write that "...the U.S. government is no longer able to sustain itself."

  12. Ref Roslenda's (Roberta Anderson) comment of 9:20 a.m.

    The most recent House action was to sever farm subsidies from food stamps and to vote to fully fund the former. Remember, House members and their corporate owners pocket these. They decided to consider SOME level of funding for food stamps "later." Maybe. After all, House members and their corporate owners haven't yet really figured out how to pocket those.

  13. El_Lobo - "Of course the GOP has been in control of the White House during 20 of those 32+ years. That should tell even the dumbest of the posters on this board what has happened, and why the last thing we need is another George W Bush in the White House."

    Thanks El_Lobo you posted a statistic so-called conservatives overlook or ignore. In those 32 years the economy has been better under Democratic presidencies while the country went into hock under Republican presidencies. I'm sure that's another statistic ignored by those on the right.

    http://www.usnews.com/news/blogs/washing...

    "A new book by a business lawyer and a financial services firm head, hitting shelves just months before the presidential election, finds that Democratic presidents have been far more successful at guiding the U.S. economy than Republicans."

  14. If, and it's a big one, the U.S. economy has a break out year in 2014, it's not due to President Obama who is getting the credit here by some posters. No, it's despite the President and thanks to Federal Reserve Chief, Ben Bernanke a Bush holdover likely to leave in January 2014 when his second term expires. It will take years to know for sure and history will decide.

    Carmine D

  15. Mitt Romney was going to increase Defense spending by 30% and prepare the military to confront Iran. He received an amazing number of votes, only 5 million behind Obama out of ~127 million votes.

    Nearly half the people in this country would have been ready to increase the National Debt to promote war and military objectives and simultaneously give additional tax breaks to the wealthy and the privileged. The Debt would have skyrocketed because Romney would not raise taxes.

    The interest money that China is being paid by the US Taxpayer for loaning us money to pursue the Iraq war without raising taxes is helping to build Chinese military strength - and we are now being warned that China is becoming a threat. That's truly laughable.

    I don't worry about the National Debt because it is a lot less now than if Romney had been elected.

  16. Carmine,

    "If and it's a big one,the U.S. economy has a break out year in 2014,it's not due to President Obama who is getting the credit here by some posters.No it's despite the President and thanks to Federal Reserve Chief Ben Bernanke a Bush holdover likely to leave in January 2014 when his second term expires.It will take years to know for sure and history will decide."

    The President had the presence of mind to keep certain Republicans on board from the Bush administration Ben.Bernanke Fed. Chief being one of them,along with Defense Secretary Robert Gates who retired June of 2011 and was replaced by Chuck Hagel,both Republicans." It doesn't buy the President a thing with Republicans but was a sign of good judgement in all three cases" because Bernanke, Gates, and Hagel are doing good jobs for the country.

    And if they weren't doing good jobs people would be stating so,and complaining that President Obama had picked poor choices to lead. Good or bad the buck stops with the President, as former President Harry S.truman once said.

  17. Truman with a capitol T,my error.

  18. PolitiFacts.org found that Republicans are three times more likely to lie than are Democrats when it comes to political commentary. Mr. Blough starts off lying in the first sentence and builds to spectacular, though erroneous, conclusions from there. Following his lead the RepubliCON commentary shuffles all over the map putting lipstick on the false pig. Like Carmine, RE and some others I try not to read or respond to the anonymenters but sometimes it's just too tempting....sort of like sitting in my upper meadow at early light and picking off the ground squirrels with a .22.

  19. "The President had the presence of mind to keep certain Republicans on board from the Bush administration Ben Bernanke Fed. Chief being one of them..."

    Welcome back Sam:

    Yes and no to your comment above. Obama also selected former Fed Chief Paul Volcker [Reagan-Bush 1 appointee], referenced above by a poster, as a high paid economic adviser/czar. Volcker is largely credited for restoring economic stability after the Carter years, when the failed Fed Chairmen Carter appointed couldn't. In fact, Volcker is credited for laying the ground work for 2 decades of economic growth unparalleled in U.S. history. Volcker and Bernanke soon banged heads over Quantitative Easing policies. Volcker resigned his position. Some economists, me included, say that Obama should have canned Bernanke and kept Volcker and the current recovery would have happened sooner and been much stronger.

    Carmine D

  20. Carmine,

    "Some economists,me included,say that Obama should have canned Bernanke and kept Volcker and the current recovery would have happened sooner and been much stronger."

    "It will take years to know for sure and history will decide" I believe President Obama has made the right choice in picking Ben Bernanke as Fed,Chief. He (Bernanke) lives and breathes his job,and puts in more time then most others, who would never consider doing the same.

  21. Sam:

    I have to agree that Ben Bernanke is probably the hardest working person in the President's Administration, bar none. And likely the reason he will leave in January 2014 after 12 years on the job. Bernanke works in his office days, nights, weekends, holidays etc. Why? He knows the gravity of the job. BUT, I opine that the current President and most of his economic advisors, who are all Keynesians by ideological beliefs, don't have a clue about the economy, and fiscal and monetary policy. That's the reason in part Bernanke works as hard as he does. He has to.

    Carmine D

  22. Carmine,

    " That's the reason in part Bernanke works as hard as he does.He has to."

    I have known people who work hard and are dedicated to their Jobs just like Bernanke is. Why? Because they love what they do,and can't wait to get back to work after a nights rest. It isn't because they have to. it's because they love what they do. Most business owners or any Government agency would love to have such a dedicated and hard worker as Bernanke has proven to be.He's one of a few.

  23. Sam:

    Bernanke won't be honored by how hard he works or the love that he has for what he does. He'll be honored by how well what he did actually works. So far, he's walking a tight rope. One wrong move and he and the U.S. economy, not to mention the global economies that are dependent on a vibrant U.S, are goners.

    Carmine D

  24. Carmine.

    " Bernanke won't be honored by how hard he works or the love that he has for what he does.He'll be honored by how well what he did actually works. So far,he's walking a tight rope.One wrong move and he and the U.S. economy,not to mention the global economies that are dependent on a vibrant U.S,are goners. "

    From your above post and all that you mentioned about Bernanke,it sounds like we got the right man for the job.I will agree that the economy is in need of great repair from what Bush/Cheney had left us, was a complete mess. Cheney has said more then once that deficits don't matter,and he also said if he had to do it all over again he would do it the same way,in a minute.

  25. Sam:

    If your logic is traced back to the source, then Ben Bernanke is the reason for the Bush/Cheney financial tsunami. He was appointed Fed Chair by Bush in 2006. The official start date for the Great Recession is January 2008--on Bernanke's watch.

    Carmine D

  26. "Wow! Wow! Carmine is NOW saying that he's an economist! What's next?"

    I owned and operated a successful family business for over 40 years through good and bad economic times before selling it at a profit. I have a BA in economics from Rutgers University, graduating magna cum laud. That makes me an economist. What are your economic credentials?

    Carmine D

  27. I said I don't respond to personal attacks from untrusted commentators here. Providing my economic credentials, which you conspicuously did not, is my personal and professional pleasure. And certainly no secret to posters here many of whom already know it.

    Carmine D

  28. "I commend you for putting in the needed time to successfully own & run a family business for many years, but that has little to do with your knowledge of the national economy and what makes it tick."

    Owning and operating a successful small business for over 40 years is more indicative of economic process and wherewithal than a sheep skin with a BA in economics and no experience behind it. Of course, having both--experience and academics--is ideal.

    Carmine D

  29. Carmine,

    "If your logic is traced back to the source,then Ben Bernanke is the reason for the Bush/Cheney financial tsunami."

    Ben Bernanke was appointed Fed.Chief by Bush in 2006 is correct.When you have a President such as Bush who would not listen to anyone except Cheney than you have what we were left with,a mess.Bush/Cheney were both over their heads and had no leadership qualities to offer. Even the loyalist of Republicans have seen that,I include you in this group. What do you think would have happened to our country if Bush/Cheney were left the same mess that they left President Obama? It wouldn't be the great recession. It would have been the great depression 11.

  30. Sam:

    The Federal Reserve and its Chief, despite being appointed by the President, is independent from the President. Both [Fed Reserve/Chief] report to Congress. Hence the reason the Fed Chief serves a 6 year term, or more if reappointed. Not 4 years like the President.

    Carmine D

  31. "According to the Board of Governors, the Federal Reserve System "is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."

    Carmine D

  32. El-Lobo,

    "Sam you are 100% correct! The economy is improving only at a slow pace."

    Only a blind man would not see that things are improving in our economy.It's been a slow crawl,but we are getting there. The Republicans are afraid to give President Obama any credit what soever on anything he does,and blame him for the Bush/Cheney mess. When it's all said and done they will say the only reason things have improved is because of Republican leadership and that they fought long and hard in turning things around. Some things will never change.

  33. Carmine,
    I'm sure Bush/Cheney met with Ben Bernanke at cabinet meetings from time to time to discuss the economy.If they didn't meet with Bernanke then shame on them. This would explain why the right hand didn't know what the left hand was doing.

  34. Benjamin Netanyahu wants America to put the entire strength of it's military "on the table" to invade Iran "if necessary" to stop a non-existent nuclear weapons program.

    Republicans are 150% ready to follow Bibi and have all the debt money ready to pursue a decades long war with Iran. Get ready for your Armageddon when the GOP is back in the White House.

    I'm campaigning for higher Social Security and Medicare payments to stop this impending disaster. Only Social Security obligations can stop the next USELESS war with infidel countries.

  35. Sam:

    I cut and pasted this excerpt about Bernanke. I thought you would like to read.

    "On August 25, 2009, President Obama announced he would nominate Bernanke to a second term as chairman of the Federal Reserve. In a short statement on Martha's Vineyard, with Bernanke standing at his side, Obama said Bernanke's background, temperament, courage and creativity helped to prevent another Great Depression in 2008.[30] When Senate Banking Committee hearings on his nomination began on December 3, 2009, several senators from both parties indicated they would not support a second term.[31][32][33][34][35][36]

    However, Bernanke was confirmed for a second term as Chairman on January 28, 2010, by a 70--30 vote of the full Senate,[37] historically the narrowest margin for any occupant of the position.[38] (For the roll-call vote, see Obama confirmations, 2010.) The Senate first voted 77--23 to end debate, Bernanke winning more than the 60 approval votes needed to overcome the possibility of a filibuster.[39] On a second vote to confirm, the 30 dissents came from 11 Democrats, 18 Republicans and one independent.[39]

    Controversies as Federal Reserve Chairman

    Bernanke has been subjected to criticism concerning the late-2000s financial crisis. According to The New York Times, Bernanke "has been attacked for failing to foresee the financial crisis, for bailing out Wall Street, and, most recently, for injecting an additional $600 billion into the banking system to give the slow recovery a boost."[40]
    ______________________________________________________

    Sam:

    Since this is updated on Wikipedia by readers who do so, the $600 billion is an old and out of date figure. It's now in the Trillions. It's called QE [Quantitative Easing] 1, 2, 3, 4, etc. and infinity. Basically the Government stopped counting. It's part of Bernanke's strategy of buying $80 Billion in U.S. bonds every month. Adding money [hot off the printing presses] to the economy. Many economists feel this is hyperinflationary. Paul Volcker did and the reason in part he resigned as an Economic Advisor to the Administration.

    Hind sight is 20-20, Sam. But I opine, and others too, IF Bernanke did the QE 1 in moderation right after January 2008, when the recession officially began, the economy would have recovered rather than languished. That was Bernanke's call. Not Bush/Cheney. Bernanke waited too long. If he had acted sooner, it would not have taken the $ ONE Trillion plus in Government stimulus and the several $ trillions to date AND still of QE. IMHO.

    Carmine D