It was Albert Einstein who stated that the definition of insanity is "doing the same thing over and over again and expecting different results." After the FED's cutting of interest rates by three-quarters of a point today, those of us wary toward centralized banking and the socialization of money can only think: "Here we go again."
Austrian economists are often scoffed at for their a priorism, advocacy of laissez faire capitalism, and favor toward a gold standard; however, those hostile toward free markets and favoring state intervention are the ones who ought consider Einstein's words. It is the Austrian theory of the business cycle that predicted the demise of the tech bubble in the 90's as well as the current housing/mortgage fiasco (the blame for both can be placed at the feet of the state and the centralized bankers).
Injecting more credit into the economy will only at best send the economy into a sugar high (boom) driven by malinvestments, which will then result the bust to follow. We are not insane; those who have embraced statism and intervention are the ones keep "doing the same thing over and over again and expecting different results."
Lately it seems that it has become fashionable on both the Left and Right to bemoan the evils of the trade deficit; however, this penchant for protectionism is founded upon a general lack of knowledge when it comes to economics.
Let's examine a few false assertions often put forth by what I like to call "pseudo-economists."
Pseudo-economic Assertion 1: A trade deficit is always bad.
This is bogus. When the average person thinks of a trade deficit, they
think it simply means "we buy from them than they do from us." However, this thinking ignores flows of foreign investment
capital. This capital is the flip side of trade deficits. People
seem to think that when a foreign good is purchased, the money is then
stuffed under a mattress. Money spent on imports often quickly returns
to buy assets here in the U.S.--stocks, bonds, real estate, factories.
This inflow of capital buys new machinery, builds new factories, funds
new research, creating jobs.
Pseudo-economic Assertion 2: A trade deficit destroys jobs.
This simple assertion ignores jobs created as a result of a trade
deficit and ignores historical data--that imports and domestic output
tend to rise together according to domestic demand.
often heard, "Go ahead and protest the war, but remember that they are
fighting for your right to do so." Is this really true? I have no doubt
that some truly believe this; however, they are mistaken and/or misled. Often this response is nothing more than a
disingenuous response to anti-war sentiment--an attempt at a guilt trip when a logical argument is absent.
the person really suggesting that somehow my right to free speech
depends upon the system of government in place in Iraq? Is it being
implied that if Iraqis are less free, then the same shall be for me? Is
it being implied that Sadam's possession of nuclear weapons would have made me
less free (no, because this justification for the war turned out to be
false)? When examined in this manner, the absurdity of the claim