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The Modern American Economy: An Illusion of Growth

The transformation of the American economy is largely due to the debasement of common currency or legal tender, the disincentives which have followed to discourage savings, and the dramatic changes to the composition and complexion of investment, the largest of which can be aptly characterized as (direct or indirect) government spending at the real yet unseen expense of business investment. 

Whereas direct government spending once constituted a mere 3 percent of American economic activity at the turn of the twentieth century, it has ballooned to greater than 40 percent of that pie today. 

Notwithstanding the rear view mirror economists who attribute growth to spending, purchasing power and meaningful enhancements to the average standard of living follow from changes to marginal (and utile) productivity, not just to the vivacious velocity of money. 

Of course, the identifiable factors which have been popularly lauded for driving nominal economic growth in the new American economy have leveraged artificially-suppressed capital costs, widespread subsidization programs, diminished savings and their attending byproducts of artificial asset appreciation to experience that short-term euphoria predicated upon untenable cycles of debt and myopic investments which have little business even being labeled accordingly. 

So while nominal models may showcase a brilliant spectacle of promising proportions, a sharper evaluation reveals that we have merely been seductively entranced by a dizzying display of incredible illusion. 



This has imparted upon civilization a draconian reversal in the social-evolutionary trend, from refined satisfactions of wants in an increasingly competitive space to a mechanism of debt-intoxicated capitalists who have grown increasingly liable for the bulky Leviathan of government and its programs’ many (direct and indirect) unaccountable beneficiaries, who collectively also face a grave loss once they oppose the very policies responsible for the flimsy industries they’ve built, the prices they’ve paid, the subsidies they’ve exploited, and the asset appreciation and spending they have come to expect. 

This economy’s growth is purely, as famed economist Henry Hazlitt once articulated, akin to one’s addition of water to milk while claiming to have created more of the desired substance. 

Of course, you can get away with fooling the unwitting beverage consumer for only so long, and once the faucets are off or the fraud is exposed, so too is the illusion of growth.

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