Austrian Enginomics

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Below are satire articles that include many legitimate logic elements of Austrian Enginomic theory.  However, the motives imbedded within the content are contrived....  I think???  You be the judge...! 



We apologize for the depression we have orchestrated to begin by year 2010 or sooner.  We recognize this course is the only means by which to cleanse the excesses of monetary intervention, overcapacity, malinvestment, regulations, and government largesse, and return to principles of freedom that created our Republic over 200 years ago.  We planned this course to save the Republic and trust history will recognize this bold effort many years from today.  Additionally, it is the only alternative that will return us to a gold-based monetary standard, which should prevent the US fiscal and monetary systems from slowly destroying the Republic for generations hence.  Had we delayed our initiatives any longer, we feared a greater likelihood of tyranny soon after the US dollar reaches its inevitable collapse.  We concluded the alternative of attempting a piecemeal approach in returning to freedom in a Western democracy is impossible.


Our goal was to create a massive economic “wedge” where on the one hand we had to encourage the acceleration of debt at every level (international, federal, state, local, company, & individual) such that a reduction to a simple sustainable linear increase would dramatically collapse demand.  On the other hand we had to encourage an unsustainable level of consumption without savings to ensure the debt acceleration cycle that sustained the consumption was firmly in place.  We knew debt and consumption were very seductive and easily sold to the short-term, “sound-bite” oriented American public.  We were able to accomplish this by creating equity, bond, and real estate asset illusions via expansionist monetary policy. 



It began in 1971 with the abandonment of any semblance of a gold standard.  Thus, the “train” veered off the track.  Beginning in 1995 we pushed the “train” completely off the cliff into freefall when we began to consistently address any “mini” crisis with a flood of liquidity or “re-structuring” (see INTERNATIONAL section below).  In 2003 we jettisoned the emergency chute from the “train” by flooding the globe with liquidity in support of our anti-deflation campaign.


It was very important that we had the ability and power to artificially suppress interest rates and flood markets with liquidity both before and after the greatest contrived stock market bubble of all time.  We needed time to integrate extreme low interest rate levels along with massive “accommodative” monetary expansion to systemically and thoroughly immerse the artificially low interest rate across the housing and financial industries.  The greater the artificial vs natural rate spread and the greater the period of time, then the greater will be the magnitude of collapse when the suppressed rates unwind.  GSE’s (esp. Fannie Mae and Freddie Mac) proved to be very useful in this effort.


Thankfully, the public bought heavily into the artificial suppression of rates following the equity semi-bust in 2000-2002, which enabled our massive credit expansion to inflate Real Estate and bond values far beyond CPI levels.  The massive increase of real estate and bond valuation completely mitigated the $8+ trillion perceived loss in the equity market, thus enabling our total asset illusion plan to continue intact.


We had to time it very carefully such that the Baby Boomers would “buy into” the asset illusions just before retirement.  We knew the ultimate trigger for collapse would be the demands of the Boomers as they begin to retire in 2008 and attempt to cash in on the illusory assets.  By 2010 or sooner the musical chairs syndrome will be in full effect…   All illusions will become visible and there will be a chaotic race to seek real rather than fiat money.    



We had to ensure we reached extreme growth stress levels in companies directly or indirectly dependent upon sub-natural interest rates.  We needed to ensure masses of talent were enticed to these dangerously leveraged companies.  It was important to achieve the greatest proportion of dangerously leveraged companies relative to healthy companies, such that the ultimate correction (or, unfortunately, over-correction) would create maximum labor disruption.  The Austrian economists refer to this as malinvestment and resource misallocation.


During my first term (Bill C.) in discussions with Alan I realized the earlier creation of GSEs would ultimately lead to a systemic breakdown as they represented an unprecedented vehicle available to disperse liquidity with little or no resistance and enjoyed the implied backing of the Federal Government.  These organizations had to be destroyed.  Our course included rapid expansion of these enterprises such that during the ensuing collapse they would become clearly visible as key vehicles that empowered the liquidity explosion under the false pretense of helping homebuyers and shifted risks away from Banks to hapless bond and equity holders. 


It became obvious that rapid monetary expansion indirectly contributed to the artificial explosion of financial asset values.  So, we had to orchestrate a plausible spin that could encourage this excess to an extreme so history would easily be able to identify the root cause post collapse.  As seasoned political masters (Bill and George W.) we were supreme in this effort.


As asset prices expanded and Ponzi schemes became rampant (i.e. technical momentum; increase begets increase) we knew that CEOs of these companies would receive extreme disproportionately large salaries, bonuses, and options compared to their employees because corporate boardrooms associate stock price with their work contribution thus poured out the undeserved rewards.  Our plan ensured significant visibility of this excess along with their creative schemes to generate earnings illusions.  This sub-strategy succeeded beyond our wildest dreams.  The fever even spread peripherally to our NYSE regulatory board rewarding the Chairman in excess of $200 million.  Imagine that….!  The root cause (FED monetary expansion) of these excesses would certainly become another target for true correction during the ensuing depression.



Further, we needed to encourage the same for our consumers hooked upon excessive debt to income ratios.  We knew it would be important eventually to shift ostracizing those who are prudent and save today over to those promoting and partaking in the excess goods saved by responsible people.



Government debt expansion was relatively easy.  It was more within our control so we did not view that as a major obstacle to achieve.


We encouraged passage of significant government programs that would become beacons of largess, thus becoming certain targets to remove while in the thick of the depression. 



We needed their support.  It was very important to expand liquidity as rapidly as possible internationally to prevent any true monetary or economic correction efforts by our international friends.  Fortunately, by teaching and partnering with numerous others we were able to create “mini” crises (i.e. The Mexican Peso, Asian, Russian default, LTC, Y2K, 9-11-01, and finally domestic anti-deflation in 2002-03).  These crises helped engage the world into our strategic plan without even revealing the end goal. 


The seductive slogan of “investing in America” was an extremely successful campaign to orchestrate the massive undermining of US manufacturing.  The asset Ponzi scheme success ensured an artificially strong dollar, which created the one-way “investment” gradient exchanging their Goods for our “paper” rather than Goods in return.  Timing of the Japanese and Chinese Boomer’s retirement will coincide with the US Boomers, thus will initiate or reinforce the illusion discovery and subsequent collapse.  The double whammy of an overvalued dollar and overvalued US assets will fill foreign investors with a terrible resolve to dump US assets regardless of the impact upon the market for their products.



The magnitude of the illusion was critical for success.  If the overvaluation gap (the difference between the non-inflated asset market value vs. the perceived value broadly recorded today) was less than 10-15% we might have had the ability to diffuse the overvaluation and excesses via inflation.  By accomplishing a gross 25-35% asset overvaluation (approx. $28 trillion) culminating with our last major 2003-2004 thrust in equities, we ensured maximum shock impact when any anecdotal newsworthy catalyst finally triggers the collapse of the massive asset illusion we worked so feverishly to build.  Fear and lack of confidence in leadership will become the primary drivers that push all valuations far below normalcy.



Thus, the forming of the New Republic will begin by arming our citizens with maximum motivation.  We are now handing off the country to you for a new beginning…..!



Bill Clinton, George W. Bush, and Alan Greenspan.


                                     Ghostwritten by Russ Randall; Aug 2004

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