The Big Lie About The Economy

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It’s a dirty political trick that keeps getting played because it works — at least for awhile. The trick of lying about something over and over again, in as many ways as possible, in as many media as possible, until people start believing it. Even people who were originally skeptics. Even people who sense in their gut, feel in their personal lives, that the lie seems very, very wrong.

It’s the old Big Lie technique, today being used on the American public to convince us that the economy is improving, something that is most certainly not true for a growing number of middle class Americans. This Big Lie is being systematically promoted by Wall Street for its own benefit at the expense of Main Street, and being bought into by our governing class because this group of worthies lacks the will— or the ability — or the desire — to see through it

What are some of the bogus numbers that are part of this Big Lie campaign? Let’s start with employment.

The last report from the Labor Department found 195,000 new jobs created last month, and an average of 202,000 new jobs per month created in the quarter ending in June. Sound good? Yes, but only if you don’t look too closely at the numbers.

What we’re seeing today is a lot of lousy new jobs that will never produce middle class lifestyles for those working at them. More than 300,000 of the new jobs created in the last year were part-time jobs. Another 300,000 were second jobs people were forced to take because their first one didn’t pay enough to live on. And the full-time new jobs that are being created are not, by-in-large, middle class work, but low paid ones in box stores, the leisure and hospitality industry, non-professional hospital workers.

Then there’s real estate. Home sales are booming again and home prices are soaring. It this proof that the Fed’s quantitative easing is animating this vital part of the economy? They seem to think so inside the Beltway. In the real world the view is very different.

Overall, the percentage of home ownership in this country continues to fall. Young couples who should be buying homes can’t afford to do so because of things like college debt, and because of tougher lending standards by banks.

So who is buying all those homes today and jacking up the prices? Hedge funds and Wall Street private equity flippers. They tap the Fed money giveaway machine for free money, buy blocks of homes for cash, keep them until another hedge or private equity entity buys at a higher price. It’s the classic real estate crash-a-coming, flipper-based scenario in a basically unhealthy housing market.

The worst instance of Big Lie economics involves the gross domestic product, which has been rising — slowly, but rising nonetheless. Increasing the GDP has become the questing beast of policy-makers, which sounds like the height of wisdom because don’t we all benefit when the GDP rises?

No, most of us don’t. Only the top 1 or 2 percent have benefited from such growth in recent years. And a policy that boosts GDP growth without a concern for how these benefits are distributed, claiming that the growth itself is good for the country, is a very Big Lie indeed.

I believe that inside the beltway they deliberately fudged economic numbers to jolly up the American public after the crash of 2008. OK. Maybe that made sense back then. Maybe a Big Lie then was necessary to hold things together in an emergency.

Now, however, the Big Lie peddlers actually seem to believe their own lies. It’s not hard to do inside the cosseted confines where our very well compensated ruling class dwells. Alas, those of us who must try to survive in the real world economy don’t have the luxury of believing that if the lies are big enough, you can eat them, pay your rent with them, and use them as a down payment on a kid’s education.

(Now available from Amazon in print and ebook formats — Michael Silverstein’s naughty financial markets take down, The Devil’s Dictionary Of Wall Street.)