Do Something!!
A “man on the street” recently told me that the government has to “do something” about the economy.
This “do something” rally cry has turned in to an excuse for everyone to abandon what little sense they have and essentially run around in circles while flailing their arms and screaming. This has lead to a seemingly endless stream of new destructive government policies that will only create future debt, bubbles and recessions while putting more of our freedoms under the control of government politicians whose only qualification to make critical decisions is their ability to say what people want to hear.
Here are a few points that the shrieking public should remember:
- The economy is not worth $0, and the market indices will readjust to some dollar amount above $0. (However, it will certainly be lower as the government prints more money.)
- Government spending is ANOTHER MORTGAGE on the future economy of the US – more of the exact same overspending policies that created the current situation.
- The number of jobs that the current president claims to “create” will be financed by THE SAME MONEY that would have otherwise created more efficient and useful free-market jobs.
- The current government overspending is GOING TO CAUSE HYPERINFLATION very soon (and no doubt the politicians at the time will try to “solve” that problem too).
- Government meddling in an otherwise free-market highly amplifies economic cycles: if Clinton and Fannie Mae didn’t encourage loans to people who couldn’t pay, the housing bubble and subsequent recession would have been avoided (yet, politicians BLAME THE FREE MARKET for the recession).
- Central planning always leads to ruin. Free market capitalism is the most efficient (and moral) system because it allows people the freedom to exchange wealth that they created for wealth that other people created. (The Soviet Union, a socialist dictatorship, operated under countless “five year plans” but always resulted in famines and misery while the relatively free western countries flourished.)
Please remember that there are always real consequences to government intervention in to free markets, and “doing something” is no excuse to create more economic devastation.