Back In The High Life Again?

Either they're smoking the good stuff at the White House, or somebody heard what Ben Stein said this week.

Stein: Fear-Mongers Keep Us In Recession

As we all know, we are in a recession that is bad and getting worse. So, basic question: How do we get out of it?

...The economy grows because of two factors: M, which is the quantity of money in the economy, which is controlled mostly by the Federal Reserve; and V, the velocity of money, or the rate at which it changes hands - or, as one might say, the speed with which it is borrowed, invested and spent.

Mr. Ben Bernanke, head of the Federal Reserve, has been doing a fine job of keeping the supply of money pumped up. Score one for him.

But the velocity of money has slowed dramatically.

People at every level are afraid to spend because they fear conditions will get worse and they're going to need the money in the future just to survive. So they don't spend it.

One of the big contributors to fear is the big goombahs in the society saying how bad things are. When Mr. Obama or his economists tell us how terrible things are and how they're going to get worse, they're shooting fear into the economic bloodstream, and that hurts velocity and kills stocks.

...What we need, as Bill Clinton aptly pointed out recently, is more cheerleading and less fear-mongering. We elected Mr. Obama to be National Spirit Leader, not National Scary Storyteller.

If Mr. Obama and Mr. Geithner, his Treasury Secretary, and Mr. Volcker, his well-respected advisor, and some real superstars like Warren Buffett and Jack Welch all came out and said, "The recession will end within 12 months. We are sure of it," the recession WOULD end within 12 months.

It's all about confidence, and the confidence of the heavy-hitters means a lot.

After all, no one is bombing our cities right now or poisoning our rivers. This whole thing is about confidence. Ninety-two percent of us are still employed. Roughly 90+ percent are not behind on our mortgages. If we had some confidence, we could get this ball rolling again.

Yesterday the Boogie Man tried to turn into the National Spirit Leader when he said the national crisis is "not as bad as we think".

"I don't think things are ever as good as they say, or ever as bad as they say," Obama added.

To me, Ronald Reagan was the ideal National Spirit Leader as he was always proclaiming America a "shining city upon a hill".

Reagan, having majored in economics in college, also new that that too much pessimism could be deadly.

"Well, some people criticized me for trying to sugar-coat bad news. I merely wanted us to remember that there's a psychological factor in recession, and too much hammering at it makes recession worse."

One of Reagan's best explanations of the economy...

"Recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his."

I'm thinking the Republican nominee in 2012 may be able to adapt that line and the scientific community is united in that fact.