The Federal Reserve and the Federal government are both desperately attempting to "manage perceptions" of the bogus "recovery" and of their own legitimacy. Can "managed perceptions" replace reality?
The Federal Reserve is quite open about the ultimate purpose of all its machinations: to "manage perceptions" so the citizenry believe the "recovery" is real. The Fed reckons that belief will cause people to start a new debt-consumption orgy that will fuel a self-reinforcing cycle of expansion.
Put another way: the Fed is trying to induce a reanimation of "animal spirits," i.e. a restored faith in future prosperity that inspires households to load up on more debt and buy, buy, buy.
The difference between blatant propaganda and "managing perceptions" is... well, there isn't any. The Fed and Federal machinery are both engaged in a massive propaganda campaign to obscure the gargantuan risks implicit in their various trillions-dollar campaigns to mask systemic failure and risk and construct a facade of normalcy and "recovery."
Meanwhile, even the staid MSM flagbearer The Economist is noting that America's "leadership" hasn't fixed anything, and has no intention of doing so: What's wrong with America's economy? (Thank you, John R.)
The U.S. economy is "recovering" like a drunk "recovers" by chugging half a bottle of rotgut: the terror of reality is replaced by the warm glow of a new high. The terrible reality is the U.S. economy has been hollowed out by financialization and the dishonesty, fraud and corruption that are the essential components of financialization--a process that invariably leads to a concentration of wealth and power.
This concentration of capital and power then creates more incentives for fraud and corruption, which then reinforces the forces of financialization and so on in a self-reinforcing feedback loop.
The Department of Truth, a.k.a. the Ministry of Propaganda, issues a stream of massaged/manipulated data to support the mind-bending "perception" that the economy is in "a real recovery." Does anyone outside the lapdog mainstream media take the bogus employment statistics seriously? It's so painfully obvious that the "headline unemployment number" is manipulated via removing millions of people from the workforce, and removing the unemployed from the statistical ledger once their benefits expire.
The nation's GDP is a similar concoction of smoke and mirrors. Let's see: the Federal government borrows $1.6 trillion a year and transfers much of it to individuals, where it is then counted as "income."
So if I borrow $50,000 and "pay it to myself," then my $50,000 a year income just doubles to $100,000! Who knew prosperity could be this easy?The MSM sycophants, toadies and aparatchiks on both sides of the political spectrum (basically two sides of the same Imperial piece of paper) wonder why "job growth" is so weak--could it have anything to do with the actual real economy being so weak that only $5 trillion in borrowed Federal money and another $2 trillion in Fed money has kept the economy from imploding?
What with the bogus "recovery," a couple of hot wars and an utterly dysfunctional and corrupt political system, the Ministry of Propaganda has been quite busy of late. Housing has bottomed--once again, for the third time since 2008. And we really really really are exiting Afghanistan and Iraq--soon--please ignore those permanent bases and proxy armies.
It doesn't matter if the Fed or Federal government apparatchiks really believe that managed perceptions can replace reality: they have no choice but to hope perception can become reality. Conventional economists in the Keynesian model have no explanation of what fires "animal spirits"--it is a peculiar mix of faith, trust, hope and confidence.
In other words, faith in the legitimacy of the institutions which report on the economy and in those institutions on which the economy depends.Unfortunately, all these institutions are in tatters: all are in various stages of delegitimization: the Federal oversight agencies, the Fed, Congress, the Executive Branch, the ratings agencies, the financial sector, and of course the lapdog mainstream media.
I once saw a yellowed newspaper from Thanksgiving, 1935. the headlines proclaimed "growth has returned and the worst is over." It was all lies, of course, mere propaganda issued in the abject fear that the populace might become restless if the nation's institutions confirmed what people could see with their own eyes.
When the current stock market bubble pops, the last shreds of the Fed's legitimacy will be blown away. Strip away all the distractions, and the Fed's entire campaign to "restore confidence" and "animal spirits" so that the "recovery" magically becomes "self-sustaining" is based on one thing, and only one thing: the current stock market rally.
The equities rally is the only metric of "success" the Fed can point to that isn't risible. Once the rally implodes, so too does whatever remains of the legitimacy of the Fed and the Federal agencies which have aided and abetted the Fed's unprecedented propaganda campaign to replace economic reality with happy-happy "managed perceptions."
The "news" is always good, because who knows what the people might do if the flimsy official facades sway in the breeze of truth and then collapse in a heap? They might demand new leadership and systemic changes that would disrupt the cozy Status Quo partnership of cartel-crony Capitalism, Wall Street and the Central State fiefdoms.
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