The Growth Myth of Economic Recovery

Lately, it seems like the message du jour from mainstream media and talk radio hosts, is that the solution to our economic problems is being able to "grow" our way to recovery. That sounds nice on the surface, but I don't think it's feasible looking at the gargantuan amount of debt in America in the public and private sectors.

Our "official" national debt has passed $16 trillion and rising. When you factor in unfunded liabilities, estimates range from over $50 trillion, up to Lawrence Kotlikoff's latest estimate of $222 trillion. Even in more "normal" economic circumstances - with a lot less public and private debt in the system - we'd be hard-pressed to achieve this lofty-sounding goal.

With a GDP of around $14 trillion, even if you took every penny of economic activity and applied it to these liabilities, it would still take almost 16 years to retire this debt. When you do the math, there's no easy economic way out.

Neither Romney or Obama have plans that include the honest-to-Pete spending cuts and tough choices that will need to be made sooner, instead of later. Before we can see a true economic recovery in the US and Europe, this 900-pound gorilla in the room (known as DEBT) will have to be dealt with. The majority of it will probably be defaulted on instead of repaid - especially national sovereign, state and municipal debt.

I don't hold out a lot of hope that either party will "get religion" and make the tough choices before we have another crisis on our hands like we had in 2008. Frankly, I don't see much difference between Socialist Party (D) and Socialist Party (R). The Rs have better limited government rhetoric, but haven't done anything significant to fix the budget deficit and debt problems.

I have a lot of friends who are "true believers" that if elected, Romney and Ryan will (really!) reduce the size of Fedzilla, cut spending and bring us closer to a balanced budget. Unfortunately, I don't share their optimism.

I think another economic crash is coming, and the best thing to do is to brace for impact. Forget about waving signs, making multiple political Facebook posts, or trying to argue your point about why your candidate is best. Our political system is broken, and it won't be fixed working within the rigged political game.

Corporations, lobbyists and special interests rule DC with an iron fist, and to a lessor extent at the state level. I still hold out some hope for change at the local level, but its also difficult to make positive change in large metropolitan cities.

I think the best thing most Americans can do is focus on their job or business, and prepare friends and family for the next crash to come. I don't paint a very rosy picture of the future, but I think it's a realistic one. Hope for the best, and plan for the worst. And for the sake of you and your family, I hope that you'll do the same.