What goes up…

The region’s economic bubble will bust

By Mark Luedtke


Dayton Mayor Nan Whaley is riding high on the bubble, but she will go down in history for presiding over the region’s biggest bust. Unable or unwilling to distinguish between real economic growth and wealth destruction via her crony socialism, Whaley declares Dayton is roaring back. The illusion of economic growth is powerful—it’s why Whaley will be the first Dayton mayoral candidate in history to run unopposed—and it produces seemingly contradictory stories.

While Whaley’s cronies roar back, the Dayton Daily News reports, “Dayton had the highest homeowner vacancy rate among major U.S. metro areas last year, according to Census data…” Embarrassed, the DDN adds, “…but some experts said the statistic contradicts other indicators showing positive housing trends.”

But Whaley twists cronies into producing more housing that is guaranteed to increase the homeowner vacancy rate.

The DDN also reports, “The city of Dayton saw unemployment reach 6.7 percent in January, up from 5.4 percent in December and up from the 6.4 rate in December 2015.”

These apparent contradictions are a natural consequence of bubbles. The monetary inflation that creates bubbles doesn’t disperse evenly into the economy. It flows into different market segments and geographic locations at different rates. Where it flows strongest, it most severely misallocates resources and destroys the most wealth.

Bubble-money always flows most strongly into crony socialist programs. The last bubble was driven by the housing market because government pushed housing. The previous bubble was driven by the tech industry because government pushed tech, funding development, before 9/11, of the spy programs used against us today.

The same happens locally. The bubble-money flows into local crony socialist projects while taking resources away from real wealth creation. The disparity is so pronounced in Dayton because Dayton, especially under Whaley, is a world leader in crony socialism, and it infects the entire region.

Crony socialism is especially destructive because, with a few million taxpayer dollars here and there, rulers mislead cronies into destroying hundreds of millions of dollars of wealth through the misallocation of resources. That destruction of wealth increases at the state and federal levels.

The DDN reports a story with local and national implications: “The April 4 announcement that JAB Holdings Inc.—the company that owns Krispy Kreme and Caribou Coffee, among others—had purchased Panera Bread for more than $7 billion rocked the restaurant industry, in part because of its sheer magnitude.”

Because bubble-money begins by being printed by central banks, it flows first into financial institutions that create even more bubble-money, then into big corporations. This fuels overpriced mergers during bubbles. This purchase of Panera Bread is a perfect example.

In more bubble news, February was the second strongest month for new businesses in Ohio history. Rapid Fired Pizza opened 15 stores in the last 18 months and plans to open 20 more in the next eight months.

In contrast, Elder-Beerman’s parent company is closing stores, but the same DDN article links to a story about the company opening more Elder-Beerman stores locally.

In a contrasting scene, state teachers can expect pension cuts because their pension plan projected an impossible 7.75 percent growth. Somebody should be prosecuted for fraud, but nobody will be. This is a canary in the coalmine for all pension plans. They’re all going to go bust. Pensioners won’t be buying much pizza. They’ll be lucky to escape begging for food.

The bubble news gets more ridiculous at the national level. Tesla, which hasn’t turned but one quarter of profit, recently passed General Motors to become the most valuable car company in the U.S. Déjà vu from 1999. Goldman-Sachs, a Wall Street bank, wants to build a spaceship to capture an asteroid. NASA and Boeing plan to launch a new space station by 2020 with the same goal (stealing more taxpayer money—I mean science—and paving the way for sending astronauts to Mars) as the existing space station.

In contrast, 3,500 retails stores are expected to close this year. Only half the anemic number of jobs expected to be produced in March were actually produced.

These seemingly contradictory stories indicate the damage to the economy that is done during the bubble, magnified by crony socialism. The bust must inevitably follow. The pain of the bust is the healing process, and because this bubble is the biggest in history, the impending bust will be one for the record books. Victims will leap from buildings.

Compounding this misery will be Whaley’s legacy.

The views and opinions expressed in Conspiracy Theorist are the views and/or opinions of the author and do not reflect the views and/or opinions of the Dayton City Paper or Dayton City Media and are published strictly for entertainment purposes.

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Reach DCP freelance writer Mark Luedtke at MarkLuedtke@DaytonCityPaper.com.

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