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Those Old Failed Policies of the Past
By John | February 9, 2009
In the normal course of human events, there will be ups and downs. There will be fluctuations. Throughout U.S. history there have been economic contractions interspersed among economic expansions that are the envy of the entire world. Occasionally, those contractions become “panics.” In the midst of a panic, it may appear that the world as we know it is coming to an end. So far, that hasn’t happened.
We are in one of those panics. Some of the more panicky among us are questioning the viability of the system that got us here. They would condemn capitalism as a proven failure. Really?!!!
Let’s take a brief recess from our panic to examine the condemnations of the panicky.
First, this economic contraction had a little non-capitalist help. If one wanted to create a housing bubble, how would one go about it? One might create government sponsored entities to purchase home mortgages. That will assure an unlimited supply of funds for home purchases. One might enact legislation to interfere with normal lending standards and require that even those who can’t afford houses be granted loans. One might put pressure on bank regulatory agencies to require banks to fall in line behind the goal of providing “affordable” housing. One might package home mortgages into securities that could be pedaled to unsuspecting investors throughout the world. One might enact tax laws that made interest on home loans deductible from federal income tax, while providing double taxation of those funds invested in common stocks of publicly traded companies, thereby directing investment funds away from productive employment and into housing. One might have the central bank of the country support debt by expanding the money supply and keeping interest rates low - even negative at times. Yes, that should do it. That should create an enormous housing bubble that would eventually burst with an explosion heard around the world.
Oh, and here’s the fun part. After having manipulated the economy into a panic, let’s conceal our role in the process by blaming the very system we were manipulating. i.e., this was not the fault of our interference in the market, this was a failure of capitalism!
But wait, it gets better. Now that everyone is in a panic, they need to be rescued, right? Let’s continue to manipulate the ecomony, this time by alleging that we need a large dose of Keynsianism - we need to create a huge spending program that’s now needed to “rescue” the ecomony from the failures of capitalism. And if those programs just happen to consolidate enormous power in the central government, well that’s just great! It worked for FDR in the 1930s. I am sure it will work today.
Of course, in the 1930s, the massive intervention in the economy by the federal government prolonged a recession into a decade-long depression. That depression only ended with the greatest war in world history.
Oh, and to those who object to our tactics? Let’s just say that to do otherwise is to employ those old failed policies of the past. That way, when someone points out that WE are just employing those old failed policies of the past, we will already have tied up that expression.
Confusing, huh?
Topics: Government Excesses |
June 15th, 2009 at 10:13 pm
Hi. I like the way you write. Will you post some more articles?