Everything the government has done has been EXACTLY wrong


We know because it happened before. When government got out of the way, the free market fixed itself. When government tried to "help," we had a Depression.
Vin Suprynowicz uses a Murray Rothbard classic to show how Obama economics fail. How does he know? Because it's happened before.

When economies get into trouble, Mr. Rothbard points out, businessmen are "misled by bank credit inflation to invest too much in higher-order capital goods" such as houses and cars. The "boom," then, "is actually a period of wasteful misinvestment. ... Errors are made due to bank credit's tampering with the free market." This is followed by a recovery period that sees a "rapid liquidation of the wasteful investments," and, typically, a deflationary credit contraction, which helps restore confidence in the remaining sound banks.

"In short, and this is a highly important point to grasp, the depression is the recovery process. ... The depression, then, far from being an evil scourge, is the necessary and beneficial return of the economy to normal after the distortions by the boom. The boom, then requires a bust. ...

"If government wishes to see a depression ended as quickly as possible, and the economy returned to normal prosperity," professor Rothbard explains, "the first and clearest injunction is: don't interfere with the market's adjustment process," which will include bankruptcies of unsound enterprises, credit contraction and falling wages and prices.

This is the course the government took during the 1920-21 recession, which was over so quickly that the history books barely remember it. (Except in the farm segment of the economy, where the government made the mistake of interfering to try to hold crop prices at artificially inflated World War I levels -- a mistake that has now been ongoing for 90 years.)

But let us say, for the sake of argument, that government wanted to hamper the normal process of economic adjustment, which helps make recessions brief and relatively painless.

If anyone in Washington were to be so wacky as to seek to extend the pain of a recession, what course would they follow? On Page 26 of "America's Great Depression," Rothbard presents that very catalog of idiocy.

It's worth your time to read the whole thing. Especially since it looks like Rothbard predicted every economic move Obama is making right now.

We know how to fix it. But that wouldn't give government more power and you less liberty.

— NeoWayland

Posted: Mon - October 5, 2009 at 01:40 PM  Tag


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