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Despite the happy talk about economic recovery it is both exaggerated and fleeting. The elements of the gathering financial storm are numerous:  

• Tens of trillion dollars of government debt to be financed over the next decade, including about 4 trillion in 2010 
• A credit freeze especially for the job producing small business sector 
• Debt buyer nations such as Japan and China showing reluctance to take on much more US dollar debt 
• Sovereign nation debt being downgraded and close to default (Greece first then ?) 
• US large banks with much of the same bad loans and financial derivatives still on their books whose value depends on interest rates remaining very low 
• US consumers with little ability or desire to take on more debt to fund purchases 
• Considerable amount of adjustable rate mortgages due for upward reset over the next few years 
• Several states, most importantly California and New York, near bond default or needing to take Draconian measures to prevent it

 If you represent the administration and know that the choices are limited with regard to a continuing need to bail out the US economy from this impending train wreck, what would you do? 

1. Since all the bullets in the gun have been fired thus far to hold the economy from going over the cliff, including bringing short term interest rates to near zero, throwing a few trillion dollars out for bailouts and stimulus programs, and printing more dollars, the remaining remedy is to exude confidence in the soundness and recovery of the economy in every speech and news release. Once confidence in the US drops below some unknown critical level, things could quickly spin out of control. When you run the largest Ponzi scheme in the history of the world maintaining confidence is essential. Think dollar collapse as the ultimate end result. 
2. Set the bar very low for success of your program by constantly reminding the listeners that things were ‘worse than anything since the Great Depression when we came into office’. Of course, continuing the same policies of borrowing and spending that led to the great credit bust during the last administration is not even suggested. 
3. Always choose inflation over the other difficult choices, by creating more dollars out of thin air to buy your own debt (since other nations are reluctant buy bonds at such low interest rates) and to reduce real dollar debt load. This is sometimes called ‘inflate or die’. This is effectively takes money from savers and gives it to borrowers. However, voters do not understand this at this point, and our ‘leaders’ know it. 
4. Since the administration, acting through the Federal Reserve, is creating inflation by unprecedented dollar creation, you must talk down inflation every chance you get. This is because ‘inflation expectation’ must be tapped down otherwise wages and consumer prices will more quickly reflecting the excess liquidity of dollars that exists. Bernanke, with a straight face, said recently that inflation should remain low in the long term. Now that is truly putting lipstick on the pig! 
5. Make it clear to the civil service side of the government, such as those who work on reporting economic statistics, to ‘cook the books’ by creating ridiculous adjustments and reformulations to show either things are less bad or a recovery is at hand. The examples of this are numerous—check out the web site Shadow Government Statistics to educate yourself. I will cite one example here: the recent release of the Gross National Product percent change included a growth component coming from the ‘cash for clunkers’ program. In effect, taxpayer money was given to car buyers and then used in the formulation to bolster the economic growth statistics.  
6. When markets move the wrong way have the ‘Working Group on Financial Markets’ (aka  Plunge Protection Team) take created dollars to buy the market at carefully selected junctures. This interferes with the free market. Readers who have an interest in this can use Google to find further explanation. 

Some call this the ‘Age of Information’, a good description. However, an equally good moniker is the ‘Age of Spin’. From top to bottom our society rejects any semblance of honesty. Night is day and day is night. Obscure, falsify, hide, minimize, distract, shift the blame—apparently those are the skills you need for success. However, when the immutable laws of economics combine with the basic dominant human emotions of greed and fear the false recovery façade will fall away and the Emperor will be  revealed to have no clothes.

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