Can government spending contribute to macroeconomic stability and the higher productivity of labor? Many people say yes, because they believe that government spending can stimulate the aggregate demand and contribute to the accumulation of capital if it finances large public investment projects.
Mary Anastasia O’Grady has written an interesting analysis of the Venezuelan mess in the WSJ today, and she quotes Mises on prices:
...but, if there is some “disruption” that “severely” affects the economy, the President is hereby given all power for the purpose of “protecting and stabilizing the Nation’s economy and ensuring public confidence in its financial systems.”
Whenever economic activity stagnates or declines, they quickly lower their interest rates and expand their credits. But when business seems to improve, they hesitate and vacillate in removing the rate cuts. The consequence is a permanent addition to liquidity. According to calculations of the German central bank, between the end of 1997 and September 2006 the stock of world money nearly doubled, but nominal economic production rose only by some 60 percent. Such an imbalance is bound to either cause consumer prices to rise or create price bubbles in stock, loan, or real estate markets.
Treasury Undersecretary Robert Steel is complaining about US regulation, stating that the US is losing business to Europe and Asia because of the strangling effects of its regulatory policy.
In what has to be the most telling example of the desire of government to use violence as its primary means to any end, officials in Ohio, Michigan, Indiana, Maryland and Ontario, Canada, have destroyed over 20 million ash trees in an attempt to slow the spread of the Emerald Ash Borer.
The larvae of this voracious Asian pest — first identified in the US in 2002 — tunnel through the softwood just under the bark, cutting off the tree’s supply of water. The result, the tree dies in about five years.
For years, the environmentalists have been trying to have it both ways, claiming that in the midst of the global warming that they allege, Europe might suffer an ice age. According to this scenario, ships would sail through an ice-free Arctic Ocean but be unable to unload their cargos in the ice-bound ports of Northern Europe.
In all the discussions across the internet about Ron Paul and his views it seems there still remains a lot of confusion.
Here is just one example:
