Even without the war, we are doing everything wrong that the Hoover-Roosevelt-McDonald governments and the Strong-Norman bankers did in the 1930s, after their long decade of easy money and paper prosperity imploded under the weight of too much debt and too great a strain on real capital resources.
The publication of David DeRosa's latest book is all the more timely given the financial crises and stock market crises that littered the 1990s. The problem with DeRosa’s book, however, is that his solution offers no hope for stabilizing the system. Nicolas Bouzou reviews In Defense of Free Capital Markets.
In the weeks since September 11, the Federal Reserve has zoomed the money supply at an astounding rate--an amazing fact when you consider that the economy has actually shrunk during this time. The demand for dollars has gone up due to higher savings, but not enough to permanently sop up all that extra cash sloshing around the world today, thanks to an incredibly irresponsible policy.
While the politicians and their media allies prattle on about "winners" and "losers" in the Microsoft antitrust case, they miss the larger story, one that has become a typical American tale: the ongoing assault of the Leviathan State upon the once free and productive business sector.
Prior to the Keynesian era, recessions were called panics and had durations of about three months. The shortness in duration reflected the lack of interventionism by extra-market authorities. Today, recessions last much longer, as the bad idea that the state should manage the economy has become legitimized.
The state has a monopoly on higher education, and those who work for it tend, in part accordingly, to favor the state in most every respect. Having higher education managed, ultimately, by the state is one of the most corrupting aspects we find in these institutions.
Some are claiming that the attacks of September 11 triggered this latest economic slide, but all signs indicate that the U.S. economy already was in recession even before the attacks.
The idea that political freedom can be preserved in the absence of economic freedom, and vice versa, is an illusion. Political freedom is the corollary of economic freedom. It is no accident that the age of capitalism became also the age of government by the people.
Presidents assume near dictatorial powers during wars, and FDR was able to manipulate World War II to provide moral legitimacy to his domestic agenda. With the war, Roosevelt could boast of eliminating unemployment at home while fighting evil abroad. Not a bad deal.
