Recently I heard a song by this title sung by Merle Haggard, and it seemingly described the feelings of a lot of folks right now. Don't worry, it was first published in the Spring of 1982 in the midst of the recession caused when Paul Volcker of the Federal Reserve cut off the credit spigot that had caused accelerating inflation from the late 1960's through the 1970's.
Lyndon Johnson's War on Poverty and the War in Viet Nam had been financed with credit, and very loose monetary policies were followed by Nixon, Ford and Carter, and the Fed chairmen that served under them. This created double digit inflation and extremely high interest rates by the end of Carter's term. He appointed Volcker to solve the problem. He did, but at the cost of a serious downturn.
At the end of the recession, the good times started back as a result of tax cuts and more deficit spending under Reagan, but this was again briefly halted by a real estate bust and the failure of most savings and loan institutions around the country.
Volcker was not reappointed, and Greenspan replaced him as chairman of the Fed.
The good times started back, to be only briefly interrupted by a tightening of money just in time during George H. W. Bush's term to cause a short recession in the election year of 1992, when Clinton was elected.
During Clinton's two terms, the good times returned, and the party, which was based upon very easy credit, lasted until 2007. Then, the world ran out of credit.
A slump has ensued that we are still not recovering from. So how about the good times? Are they really over for good?
I say "No." There are plenty of good times left. To get there, however, there must be some pain.
We as a country, and indeed the whole world, are at the end of a long term credit cycle. These have happened before, and, given human nature, surely will again.
What has happened? Chris Martenson put it this way:
"Banks began lending money at a faster rate than the global economy grew, and we're now at the turning point where we simply have run out of new borrowers for the ever-growing debt the system has become addicted to."
Now the bill is coming due. When one tries to create prosperity with easy credit, which the world has done, it will always end with a serious contraction.
Prosperity has to be earned, not borrowed. We have borrowed to obtain prosperity, and now, having danced to the tune, it is time to pay the Piper.
The economic paradigm we have operated under in the world since Bretton Woods in 1944, and particularly since Nixon closed the gold window in 1973, was based upon easy credit and fiat currencies, particularly the dollar.
In spite of huge efforts by governments and central banks around the world, led by the US, that old paradigm is failing, and cannot be saved. They are literally creating trillions of dollars and Euros out of thin air trying to do so, but it won't work in the end. But it will make the world's currencies, including the dollar, worthless if they continue. It may already have.
That reminds me of another country song, by Willie Nelson: "Turn Out the Lights, the Party's Over." All we have to do is recognize it, and move on.
Now, how about the good times? We have to get over the funk we are in. It will be painful, but we must go back to sound money. I am not expert on that, but we had pretty sound money before 1913, and since then the dollar has become worth only a penny of its value during that year.
Perhaps we will see whether after the Great Depression and the current ongoing crisis, our government and our people have the courage and determination to put in place a more sound and sensible economic paradigm.
If we do, the good times will come back.
Afterword:
For those who like country music, here ate the sites for the two songs:
http://www.youtube.com/watch?v=eFHJ41ktt3Q
http://www.youtube.com/watch?v=tsTAUs_h_uY
