Conventional collectivist created authority is a deception in consciousness. You are your own Authority!

Thursday, January 13, 2011

Government against the tide

Boom and bust is the nature of reality. The geological and fossil records present just two of countless convincing examples. There is no stopping it. We can’t halt the seasons. We can’t interrupt the tides. Powerful cycles will run their course.

The history of human activity is a long chronicle of boom and bust. That is especially so with human economic activity. When too much of something is created by a boom, the boom goes bust.

Farmer’s plant and harvest too much crop in a boom, the price spirals down into a bust. The eventual scarcity of that crop caused by the bust triggers another boom, and the cycle continues.

Demand for real-estate becomes a boom with rising prices. Eventually, the market becomes saturated with buyers; prices begin to fall; the buyers become sellers; and the market crashes into a bust. When the market becomes saturated with sellers, and prices are ridiculously low, new buyers suddenly appear; another frenzy ensues which evolves into the next boom, and the cycle continues.

There is no stopping it. As long as there is human economic activity, there will be cycles of boom and bust. When governments intervene artificially to try and stop the pain, they only delay and compound the effects of the cycle, making things worse.

The federal government, for example, grossly exacerbated the last housing boom. Its legislative policies of easy credit and encouraging home ownership for everyone resulted in a flood of new buyers into the market, a large percentage of whom could not otherwise afford to buy.

The market became saturated with homes and buyers. Prices continued to rise. When the normal economic cycle was ready to bust, the government stepped in again to stop it; to encourage even more unqualified buyers with all kinds of financial incentives and legislative decrees. Anyone could now buy a home.

The boom expanded seemingly forever. But eventually everyone who wanted a home had one, and the un-creditworthy ones began to default on their loans in droves, prices crashed, the market is flooded with sellers of homes, and the resulting bust has caused catastrophic financial damage to the economy – far greater than would have resulted from a normal turn in the cycle.

What did the federal government do then? Why, it blamed the catastrophe on private business; on Wall Street greed; and run-away capitalism, that’s what. As government always does, it blamed its failures on the governed. “We need more regulations on business,” declared the government.

But do we?

The federal government has constitutional power to regulate commerce; the power to make laws; declare rules; to tax; borrow; lend; control the flow of cash and credit; monopolize and print the currency; determine the money supply; arbitrarily set interest rates, and spend huge sums on a vast scale. In short, the federal government today controls the economy almost entirely -- not business, not Wall Street, and not capitalism. No private business or group of private businesses has anywhere near that kind of power. This is common knowledge.

Why, then, is it so difficult for most people to understand and accept that the meddling of government into the normal boom and bust economic cycles is responsible for the out of control financial consequences which loom so large in America today?

1 comment:

  1. "Why, then, is it so difficult for most people to understand and accept that the meddling of government into the normal boom and bust economic cycles is responsible for the out of control financial consequences which loom so large in America today?"

    Because there are whole armies of politicians, pundits and academics spounting the statist line, and they have free range and support from the establishment media. Our modern day aristocrats, mandarins, priests and scriblers have all prospered under this system, and the majority of the population in not capable or not interested in learning anything different.

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