The New Deal is a paradigmatic case of how to turn a downturn into a depression. That US leaders regard this as a model to follow does not speak very well of their economic literacy, and it doesn’t bode well for our future.
And this morning, the Fed has deemed it necessary to lend, with no collateral, directly to businesses, thereby repeating in a worse form the very errors of Fannie and Freddie. Clowns with wrecker balls! Comments at the Washington Times are interesting. “Sounds like a great plan, who came up with that? Now I remember, it was Lenin.”
In Hans-Hermann Hoppe’s important article Banking, Nation States and International Politics: A Sociological Reconstruction of the Present Economic Order (published in 1990 in the Review of Austrian Economics; reprinted as Chapter 3 in his The Economics and Ethics of Private Property), he notes one possible end-result of the state monopolization of money and credit.
Treasury Secretary Henry Paulson needs to change his reading list. Instead of reading the balance sheets and income statements of the failing banking industry, he needs to read Henry Hazlitt’s classic book Economics in One Lesson. It will cost Paulson far less than the $700 billion that he is spending on the bailout, and he might just learn a little economics in the process.
A recurring meme in the mainstream bailout chatter is the idea that the government should intervene to “stabilize” the financial system.
Excellent extended study of the mortgage meltdown by Stan Liebowitz, Independent Institute. (thanks Tom DiLorenzo)
I know I’ve read some version of these first two paragraphs several times, even in the last year, and even critiqued one or two previous pieces. It seems nearly inevitable that the New York Times “Week in Review” will begin a story on the week’s economic news with some version of the “end of laissez-faire” thesis, which is always the same: until now we’ve had this huge and doctrinaire faith in free markets but now events are forcing us to realize that government has a role to play and so we must now adjust to the fact that the market is not all it is cracked up to be.
