Every recession since World War II has been marked by a systematically declining revenue stream to Washington. We don’t mean a decline in the rate of increase. We mean an actually falling rate of revenue. There’s an identity here. It’s close to infallible.
Also, without exception, every period of below-zero revenue increase rates has also been a recession. Okay, there’s one exception, in 1964, but in this case, it was a blip on the radar and the exception proves the rule.
The rule is this: You can wait for recession to be declared or you can follow the falling revenue streams. Each works.
Right now, we’re experiencing a tremendous decline in the revenue being pillaged. This is because less wealth is being made to tax. The less productivity there is, the less wealth and profits are generated, and the less is owed to the government.
Recessions hit governments, too.
That’s where we are. Tax receipts to the federal government are now down dramatically: 10 percent year over year in the last quarter.
What about the revenue spike in 2021? This was the result of trillions of dollars in stimulus payments to individuals and businesses. That’s right: It was money in and money out. All the better for the government that inflation wore out the value of these dollars after just one year.
It was probably the greatest economic head fake in modern history: an utterly sham prosperity in the midst of lockdowns that was revealed once the Fed monetized all the resulting debt.
The trick didn’t last, however. Now, the government is left starving for revenue and is plotting to use its vast new agency resources to come after regular Americans for underpaying. It’s a huge panic in Washington to get what they believe is coming to them. The normal systems of collection aren’t working.
The point is that there’s every indication, based on dollars and cents, that we’re already in a recession. More than that, we probably never left the recession from 2020. It was all an illusion. We’re stuck in low to no growth, which even the gross domestic product data reveals within normal margins of error. The elites just don’t want to call it what it is. Instead, they’re covering it up with false reporting on jobs, productivity, and just about everything else.
The heck of the current recession is that nearly all the business press says that it isn’t here and isn’t coming. What this endless stream of claims doesn’t consider is the possibility that the recession is already here among us. You can’t soft-land an economy that never took off in the first place. Sure enough, Census data on household income—far more trustworthy than the Bureau of Labor Statistics—just clocked its third straight year of declines.
You’ve heard that we live in a post-truth society? Well, it applies to economic reporting, too. The data agencies can’t be trusted. And it isn’t entirely their fault. When lockdowns hit, the cynicism hit new highs. Business people stopped answering surveys. The data collectors confronted a new level of strangeness that they'd never seen before. Essentially, they started just making things up based on the information they had and the political pressures they faced and spilled it all in the text of the data releases, since news agencies crib that and otherwise look no further.
This is precisely what happened in the old Soviet Union. Everyone at all levels just started making things up to match political priorities. Everyone knew it was fake—everyone except Western experts, of course. And it’s true in China today, too, where absolutely no one takes data seriously at all. This applies to infectious diseases but also to all economic data.
We’re accustomed to trusting the data that the agencies crank out because we really have no choice. It’s the only data we have, and we’re a data-driven society. It’s about time we recognize that it’s fake—on jobs, on inflation, on productivity, and everything else.
But there are some things that you can’t fake. One of them is the real revenue coming into the federal government. This is impossible to invent. It’s either there or not. And based on that, there’s now reliable evidence that we’re already in a dramatic downturn.
And this of course is affecting the debt and deficit levels of the federal government. There’s already widespread alarm over the deficit and debt projections based on what we’re seeing with real revenue trends.
So irresponsible are our managers that they’re choosing this very moment in history to announce that the United States can fully fund two proxy wars on the other side of the world, which is exactly what Treasury Secretary Janet Yellen is running around telling everyone.
Yes, it feels like a once-great empire in decline because it is. Did we actually believe that anyone would tell the truth once this hit? Consistent with the style of our times, this would inevitably happen in ways that would be invisible to us. Instead, the elites would call this economic growth or downturn avoidance or some other nonsense.
But the lies eventually catch up to those who are in charge. New revenue data reveals all. When the private sector stops making wealth, the government, too, finds that it’s starved of revenue. That’s precisely what’s happening. It’s the only silver lining of depressed economic times: The parasites also get less.
Call it what you want, but let’s not pretend that this is a strong economy. At any other time in the past 70 years, this would have been called what it is: a recession. What’s remarkable is that you know this, I know this, and everyone knows it, but this is one of the few articles in print that actually calls it.
That’s the essence of post-truth economics. My apologies for injecting truth into the parade of illusion.
