Biden: We 'Misread the Economy'
By Staff News & Analysis - July 06, 2009

"The truth is, we and everyone else misread the economy," Biden (pictured left) told me during our exclusive "This Week" interview in Iraq. Biden acknowledged administration officials were too optimistic earlier this year when they predicted the unemployment rate would peak at 8 percent as part of their effort to sell the stimulus package. The national unemployment rate has ballooned to 9.5 percent in June — the worst in 26 years. "The truth is, there was a misreading of just how bad an economy we inherited," said Biden, who is leading the administration's effort to implement its $787 billion economic stimulus plan. "Now, that doesn't — I'm not — it's now our responsibility. So the second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstances we're in? And we believe it is the right package given the circumstances we're in," he told me. The vice president argued more time is needed for the stimulus to work. – ABC News

Dominant Social Theme: We didn't get it right but we will.

Free-Market Analysis: In fact, there are so many people who did get it right. One only has to go on the ‘Net and read literally millions of pages predicting what is now occurring. They are written in all sorts of ways, and with all sorts of theoretical subtexts. They are historical or factual, or both, but above all they are, to varying degrees, economically literate — or moreso than Biden apparently is.

These viewpoints partake of free-market economics. Why is it that US leaders cannot adopt them? And just as importantly, why is it that George Stephanopoulos cannot ask Biden about the underlying philosophy that the administration is using. Stephanopoulos does ask him what went wrong, and that's when Biden gives the above, excerpted answer.

Stephanopoulos worked at very high level for the Bill Clinton administration, and has the massive resources of ABC TV to help him figure out how an economy really works. You would think he could have verbalized a better theoretical question, especially given that the information to build one is widely available. He could have said something like this:

"Mr. Vice President, there are many who write that the stimulus is not going to work under any circumstances. They believe that the way we print and produce money has centralized money flows and institutionalized inflation. The more money printed, the more inflation we will inevitably have. And if you try to distribute more of this money via stimulus, it will do no good because it does nothing to adjust the mal-investments created by the original over-production of money." That would have been an interesting question. Instead we get this:

I pressed the vice president, who is also leading the administration's middle-class task force, on whether he'd rule out a second stimulus package. "So, no second stimulus?" I asked. "No, I didn't say that," Biden said, "I think it's premature to make that judgment. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid — the new electric grid. And so this is just starting, the pace of the ball is now going to increase."

Does Vice President Biden really think that various billions for broadband, high-speed rail and a new electric grid are going to provide necessary jobs? Amtrak has been a miserable failure as government-supported transit, never once making a profit and under President Reagan it was almost shut down. While broadband may be a good idea, why is the federal government paying for it? President Obama has spoken of other energy and industrial projects as well, but one might note the time it has taken for new buildings to rise from the World Trade Tower rubble – and they are no closer to completion now than they were a decade ago.

After Thoughts

When things are going well, it is often difficult to discern the honesty or even the methodology of the Western economic conversation. But when the economy takes a stumble, it is a good deal easier to figure out what works and what doesn't. The monetary elite and its economic apologists never saw the economic crisis coming – or if they did, they certainly didn't talk it up. And the corrective elements that have been put in place don't seem to be doing the job. Meanwhile gold and silver – which get little attention in the mainstream press – have performed as well or better than any other asset class. Stephanopoulos might have mentioned that too, but he didn't.