Why the Government’s Attempt to Instill False Confidence Will Backfire

WASHINGTON”S BLOG

The government is doing its best to try to “restore confidence” in the economy. Indeed, Obama’s top economics advisors believe they can fool people into believing that everything is fine, and then the economy will recover.

And for that reason, defenders of the status quo think that it is important for everyone to keep quiet about how severe the crisis really is.

Are they right?

No.

As economist Irving Fisher pointed out (as recounted by economist Steve Keen):

Hobbled by this naive belief in equilibrium, the economics profession was as unprepared for today’s crisis as it had been for the Great Depression. Now that the crisis is well and truly with us, all conventional “neoclassical” economists can offer is the hope that the crisis can be overcome by a good, strong dose of confidence.

From [Irving] Fisher’s point of view, such a belief is futile. In an economy with an excessive level of debt and low inflation, he argued that confidence was irrelevant–and in fact dangerously misleading, as he knew from painful personal experience.

In short, happy talk and fake confidence-building exercises don’t work.

Indeed, trying to instill false confidence will actually backfire on Geithner, Summers and the boys and make the crisis worse.

Why?

Because psychologists say that – until government and business leaders prove they can behave responsibly, and until the perpetrators of financial fraud are held accountable – real trust will not be restored and the economy will not recover.

Trying to put a happy face on a grim situation, continuing to do things which are transparent attempts to instill false confidence, and leaving in power the people who caused the crisis reinforces the market’s convictions that (1) government and business leaders are behaving irresponsibly instead of addressing the fundamental problems and (2) there is no accountability.

So people’s trust declines still further, thus substantially delaying any chance of a sustainable economic recovery. In other words, by trying too hard to instill confidence, the powers-that-be actually undermine it and exacerbate the financial crisis.

Keeping quiet about how bad things are won’t help. As the leading independent economists and financial experts all agree, the three things that will help are:

  1. Honestly addressing the causes of the crisis;
  2. Honestly addressing the necessary – if bitter – medicine needed to get out of the crisis; and
  3. Holding responsible those who caused the crisis.

TRUTH 11 Editor Comment

Dylan Eleven

The economy is a fake entity anyway, even when its working it is a fake system that favors a few.  This article outlines that they are trying to fool everyone and the economy will do just fine.  They are thinking it will work, because it has worked for so long.  In order for a monetary system to enslave the participants in a game, they players must be fooled into believing its real and they must not know its a game.  If they did, the enslaving power would be lost.

This is what should happen!  The lid is blown off this control system that has enslaved us for too long.   We don’t need them or their money. We certainly do not need to prop up a false entity of the economic system by further enslaving us for generation to debt and servitude.   Stimulus Package to save the economy?.  This is typical government speak.  Say one thing and do another.  Say they are trying to save us from the banks colllapse (for our good) by enslaving us for generations to come.  (which is not good for us)

The government is the biggest scam of all.

Drop the whole economic monetary system on the floor and walk away…. See what happens.. Will it be chaos or will it be freedom?

I think we would all get along just fine.  We are all basically fair people who can negotiage a fair trade.  I walk into a grocery store and ask the owner, what does he need in exchange for my family to have weekly groceries.  He answers a new roof on his house, I respond not a problem what colour shingles would you like?.

That doesnt sound like chaos to me.  Whats is chaotic is millions of people giving away half of that deal listed above to the government off shore holding corporation which is the IRS.  None of the money given to the IRS for income taxes pays for anyting in society.  It all goes to an offshore corporation.  Taxation is volentary.  So if we loose the economic bind that enslaves us, loose taxation and just start dealing in resources, we will instantly find there is enough resoruces to go around.

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