In recent newspaper columns, Paul Krugman of Princeton University and Lawrence Kudlow have sounded deflation alarms. The solution to combat falling prices, they argue, is for the Federal Reserve System to increase the money supply.
When it comes to national trends, Georgia tends to be not a leader but a laggard—which is a fine quality if the country is marching toward Leviathan.
An example of a national trend in which Georgia has been a laggard is the trend in cigarette taxes. Over the past decade, states have been all but chain-raising their cigarette taxes. Nineteen states raised their cigarette taxes in 2002 alone.
All the while, Georgia maintained its cigarette tax at 12¢ per pack.
How powerful is economic law, that mysterious aspect of the structure of reality that causes prices to rise and fall and thereby give direction concerning the use of resources? More powerful than the US government, even more powerful than all the governments in the world combined. In Iraq, the US demonstrated that it can overthrow a despotic government but it can’t finally control economic forces, particularly as they affect money.
Few countries around the world wanted to be entangled in the war on Iraq, but everyone seems eager to participate in reconstruction. The United States, as primary military aggressor, has estimated the cost of this effort as totaling $100 billion over the next several years.
No one can argue about the current moribund economy, complete with falling stock prices, nonexistent profits, layoffs, airline bankruptcies, and exploding federal and state budget deficits. People certainly have argued about the cause of this downturn, but few people have accurately pointed out why there is no recovery from the original recession.
The extent to which we are secure in our homes, property, and the places we shop is due in large part to the commercial marketplace. It is the free market that makes available alarm systems, locks, fences, cameras, security services, and in purchasing these items we are free to make a choice among competitive products. If they don’t work, we can try something new. If there is fraud, we can hold the producer liable.
It has finally come down to this: Martha Stewart must go to prison, or at the very least be forced to step down from her position as CEO of Martha Stewart Living Omnimedia. The US Attorney’s office in New York City has obtained a grand jury indictment on obstruction of justice charges against Stewart as a result of her December 2001 sale of ImClone stock after the Food and Drug Administration had rejected its application.
There is always a bubble someplace. In a world of fiat currency and fractional-reserve banking, where money is effortlessly multiplied and pyramided, the sequence of boom and bust become inevitable, like the sequence of the seasons. In this system, the government cannot prevent the expected corrections anymore than it can prevent the onset of winter. The strong housing market has all the makings of being the next bubble—in particular high leverage and unsustainable price increases.
