Over the past few months, the government has literally blasted the economy with trillions of new dollars conjured from the ether. The fact that this “stimulus” has blown some air back into our deflating consumer-based bubble economy, and given a boost to an oversold stock market, is hardly evidence that the problems have been solved. It is simply an illusion, and not a very good one at that. By throwing money at the problem, all the government is creating is inflation. Although this can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people.
Sunday, May 10, 2009
Inflation Days Are Here Again!
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I couldn't agree more. If anything it is time to tighten money policy, By reducing the amount the government takes out of the economy, wealth could be put in to circulation without devaluing currency.
ReplyDeleteThere is a problem with this that does cause the theory to fail. It isn't that the theory of market economics is wrong. It is because America no longer fits the parameters of the theory.
In a market economy the best way to get wealth moving is through the consumer. Also the working class are the best consumers because somuch of their income goes directly in to the economy. I am not talking down to the working class by saying this. I am part of the working class, I am just stating economic facts.
In a market economy, reducing government size and taxes would put more money in to the hands of the working class and therefore the economy would grow. However in America the overwhelming number of working class people already pay no taxes. Many get a return larger than they paid in due to refundable credits. Then there are the people using government assistance who pay nothing at all.
So in reality there is no short term gain to be had by reducing government spending. It will in the short term harm the economy just as the Democrats claim. That doesn't mean it shouldn't be done, it would in the long term be exactly the correct course. Unfortunately it can't happen, the short term costs of doing so, combined with a lack of immediate returns will insure than anyone who tries will be voted out before any results can materialize.
Then they will be replaced with someone who believes in big government and debt.
Look at the Reagan years. He was lucky and had circumstances where his policies were somewhat effective and plenty of popularity so tax cuts were given a chance and worked despite his nasty deficit spending.
George Sr. was actually in many ways more responsible than Reagan. If he had not made the no new taxes pledge, I don't think many people would have faulted him for the modest increase he ended up making. Other than that the rest of his economic policies weren't that bad.
Bill Clinton inherited the resulting boom and frankly didn't do that bad a job with it. I was no supporter, and many of his policies did help create todays mess but compared to his successors he was a model of fiscal restraint.
Barrack and Geargie jr. Are both big government nanny staters and trusting them with the economy is like buying an alcoholic a brewery. Between what Jr. did and what Barrack is doing we can kiss prosperity goodbye. Their policies are however great for getting stupid people to vote for them.
Oh and thanks for reminding me about Lou Rockwell. I have it bookmarked but it has been forever since I read any. I am going to add him to the blogs I folloe.
Ryk, great comment (in fact better-and longer-than a lot of my posts) thanks!
ReplyDeleteNo one can agree with everything Rockwell posts at his site, but it's still the best pro-freedom website on the net, and no doubt the most influential.