Economics is like looking in a completely darkened room for a mute black cat that isn’t there. If they cannot predict collapses like the one in 2008, they are of very limited utility. There were a few traders and economists that did predict the problem. Their methods should be studied. From a public economist those kind of predictions are exactly what we want, but longer in advance.
So take those fellas methods and figure out which ones just got lucky, and which ones knew why and use and study and build on their methods and theories.
The Chicago school, which missed the 08 debacle and didn’t care because markets will straighten it all out can go to hell in my book. Their contribution to the public well being is limited if you are not a Chilean dictator.
I don’t think you’ve grasped what Keynes was talking about there. He wasn’t saying “Oh, let’s go ahead and run up unlimited deficits because we’ll be dead before we have to suffer the consequences, and who cares about posterity?” What he was saying was this:
Keynes was saying the very reverse of what you think he was saying there. He wasn’t saying that short-term policies don’t matter because in the long term we’re all dead anyway. Rather, he was saying precisely that economists shouldn’t be cavalier about the short term, because short-term events have serious impacts.
No Kimstu, you’re not being reasonable. Only Ron Paul can save us due to his economic genius, clarity of thought and love of freedom. If he (or his followers) say that Keynes said something, who are you going believe, Paul or Keynes’ own words?
After all, we already know that Paul’s own words on Paul’s own website to clarify Paul’s own position can be ‘overstated’, how can we trust that Keynes really meant what he said and not the opposite?
Ron Paul highlights a basic problem with the libertarian movement in the United States.
I believe there are good, even compelling arguments to be made for libertarianism in many areas of American life. I have no doubt that MANY Dopers, on both the Left and the Right, would be open to libertarian arguments of one kind or another.
The problem is, the real, live, flesh and blood libertarians tend to be utter flakes and loonies!
There’s no particular reason that SHOULD be true, but it is. Long ago, a rather well known socialist named George Orwell wrote, in exasperation, “One sometimes gets the impression that the mere words ‘Socialism’ and ‘Communism’ draw towards them with magnetic force every fruit-juice drinker, nudist, sandal-wearer, sex-maniac, Quaker, ‘Nature Cure’ quack, pacifist and feminist in England.”
Well, if Orwell were a modern American libertarian, he’d be writing (with equal or greater exasperation) that “Libertarianism seems to attract every smug Rand-loving teenager, Klansman, pot-head, gold-hoarder, snake-handler, conspiracy theorist, survivalist and UFO watcher in America.”
Ron Paul seems like a decent man in most respects. Unfortunately, libertarianism is a fringe movement. And when you’re part of ANY fringe movement, you associate mostly with OTHER fringe characters, and get a very unrealistic idea of how normal and mainstream your ideas are. Crackpot theories start to sound pretty ordinary and reasonable to you.I don’t think Ron Paul is a hateful man, but he’s been associating with genuine racists and anti-semites for so long, their creepiness doesn’t even register with him.
There MAY be somebody out there who can make an appealing, logical, articulate case for libertarianism. I’d like to see that happen, if only to elevate the political debate i nthis country. But Ron Paul is NOT the man to do that.
This is kind of true across the board for political ideologies. For example, most Americans on both the left and the right are open to arguments for at least a few kinds of policies that are sort of “socialist” in nature, such as Medicare and welfare support for children. But flesh-and-blood people in America who actually identify as socialists are a tiny minority, many of whom are utter flakes and loonies.
Likewise, even extremist hard-right conservatives have some ideas that are broadly appealing to many Americans, such as a strong military and more diverse choices in formats for schooling. But the people who actually are right-wing extremists are frequently utter flakes and loonies.
I don’t think it’s any use hoping that any ideological political movement will be hijacked by reasonable and articulate moderates. The best one can hope for is that the movement will effectively latch on to a more centrist and pragmatic organization like a major political party, and successfully nudge some reasonable and articulate moderates closer to its own views.
Let me begin with the end of your post. It’s clear that in your mind, you’re vastly intellectually superior to everyone else who’s posting in this thread. You seem to think that you have some stupendous amount of education and wisdom which allows you to disdainfully brush aside anybody who disagrees with you. The problem you’re having is that nobody else sees it that way. Believe it or not, the rest of us here have education aplenty. I’ve studied all the economics you want. I’ve read van Mises. I’ve read Hayek. The reason why I reject their arguments is not lack of familiarity, but rather because their arguments are weak. That why’s all your self-righteous bragging about intellectual superiority is not convincing anybody. You are not the lone intellectual presenting new ideas to a board full of ignorant children. Most of the people on this board have more education than you and have read and studied a lot more than you have relating to the topics that you’re trying to lecture us about. As long as your position is based on imaginary intellectual superiority, you won’t accomplish anything.
Second, you keep challenging people to “elaborate” and “focus on substance”. The problem is that we’re already doing that, and you’re not responding. Meanwhile you refuse to elaborate or focus on substance. For example, you keep challenging people to present specific problems with Ron Paul’s economic stances. I did so in post 74. You didn’t respond to it. Why not? If you’re going to ignore posts, perhaps you shouldn’t be lecturing me about what I need to do to get taken seriously.
So with that said, here are some direct questions for you to answer:
Do you have any response to the problems with the gold standard listed in post 74?
You claim that Ron Paul “never made any racist statements”. FinnAgain has quoted many racist statements directly from him. Are you willing to admit that Paul has made racist statements?
You claim that “Most democrats unconstitutionally transferred authority over waging war to the executive”. Actually most congressional Democrats opposed transferring that power. (cite) Are you willing to admit that you were wrong about that?
You say that “there is overwhelming evidence” of plans for the NAFTA Superhighway. Can you link us to a copy of this evidence? Likewise for your claim about plans for merging the US with Canada and Mexico.
You say that Ron Paul won every post-debate poll in the Republican Primary Debates. He didn’t. Are you willing to admit you were wrong?
All of those are yes or no questions and you can give simple yes or no answers. However, I have my doubts that even after being proven wrong on these issues and many others, you’ll change your position. You see, I’ve been there. When I was 18 I supported Ralph Nader in the 2000 election and I knew that he was on the path to long-term victory for exactly the same reasons that you know Ron Paul is. Ralph Nader had a long history of being right about everything and predicting upcoming events, he had lots of money, he had an energized base of young supporters, tens of thousands of people flocked to his rallies, and we Naderites were just so much smarter than everyone else. Add it all up and it was clear that soon Ralph Nader and his movement were going to sweep the nation. Logic, data, and polls could not convince us otherwise. However, there was one thing that could convince us, and that was seeing Nader flop miserably in the actual election. So I have no doubt that you’ll keep going for Ron Paul into the 2012 election season. However, after you see Paul squander all his money and his support and still win only 1 or 2 percent of the vote in the Republican primary, then you’ll start waking up to the truth about the man.
Oh, please let Ron Paul do less damage than Ralph Nader did in 2000. (yes, I know he was attractive, but the unintended and – so far as I can tell – unrepented consequences…)
Do you have any examples of how the Austrian school was put to the test of being applied in real situations, the way Keynesianism has been - and the Chicago school also, to be fair?
Economics has moved considerably from the '30s. No one would take Keynes as gospel, but rather later work which has built on and expanded his. For one thing, they didn’t have sophisticated models back then. I’m not an economist but my daughter has an economics degree from Chicago, and the math she took was harder than what I took as an engineer. Anyone can give you widely respected disciples of both Keynes and Friedman working today - who is the widely respected heir of the Austrian school?
Greenspan’s mistake was not from suddenly becoming a fervent supporter of Keynes. First, his holding the interest rate low had the desired political effect, even if it caused problems long term - so you can’t say it didn’t work. The issue more was his antagonism towards regulation, which is hardly a place where he disagrees with you and Paul.
To go back to the gold standard for a bit, the funny thing is, back when we were on the gold standard it was illegal for Americans to own gold. That’s right. In order to maintain control over the currency, the government made it illegal to own gold. So even though we were on the “gold standard”, you couldn’t go to a government office and convert your paper money to bullion. The gold standard was a fiction. It was made up.
In other words, ever since FDR we pretended to be on the gold standard, but everyone could clearly see that was a lie, because everyone could clearly see that there was no way to exchange your paper money for gold. All that happened when we “went off the gold standard” was that we finally quit pretending, and honestly admitted that the only thing backing up the dollar was the credit of the United States government.
And back in the days when international debts between countries were paid in gold, how do you think that happened? Did they load trains or cargo ships with gold bars? No, central banks would have gold warehouses. In those warehouses were shelves full of gold bars. And when France had to pay Germany 10,000 grams of gold, all they did was change the labels on the shelves. They didn’t even move the gold from one shelf to another. So Germany “owned” the gold sitting on a shelf somewhere in France or Britain or wherever, but the gold never actually changed hands, all that changed hands was a piece of paper asserting that Germany was the new owner.
So you can see that even in the days of the sacred gold standard it was still pretend.
It reminds me of the way that Spain looted the gold and silver of the Aztecs and the Incas, and shipped it back to Europe in the treasure fleets. They thought they were literally bringing back money. Except all they were doing was shipping back shiny metals that could be used as money. And with the flood of gold and silver, the predictable result as any freshman economics 101 class could tell you was that the value of gold and silver plummeted due to the flood of the new supply. Or another way to put it was that there was massive and unstoppable inflation.
Adding all that gold and silver didn’t increase the wealth of Spain except temporarily. It was used to purchase imported goods, and eventually made its way to the Ottoman Empire, India, and China, which at that time were wealthier and more productive than Europe. And it destroyed native Spanish industry, because everyone in Spain was rich, so why should they work?
If we replace gold with any other good, the problem is the same. If there’s a cacao blight this year, suddenly we have massive deflation as the value of cacao beans soars. Or farmers plant more cacao beans, and then we’ve got a glut, and massive inflation. Cowrie shells, gold, silver, cacao beans, whiskey, cigarettes, it doesn’t matter what goods you use your money supply isn’t stable.
Of course, money is simply a particular kind of good that you can exchange for other goods and services. The thing that makes money different from other goods is that people take the good used as money in exchange for other goods and services, even if they don’t want the good used as money. So even if you don’t smoke, you’ll take payment in cigarettes from your fellow prisoners, because you know that you can turn around and easily exchange the cigarettes for any other good or service.
And it turned out that gold and silver ingots were particularly useful as key goods that could be used as money, because they were compact, didn’t waste, were divisible, were fungible, and so on. But gold isn’t money, it’s just a good that can be used as money. And any good can be used as money, even coupons for free backrubs. And it turns out that since no actual backrubs need to be performed for the backrub coupons to be used as money, you can just use a coupon that says, “1 dollar” that is backed by NOTHING, except the promise that you can use it to pay your taxes.
And a “basket of goods” standard is even worse than one good, because then it becomes possible to arbitrage the value of the goods against the goverment. So if the government says that a dollar is either 1 oz of gold or 16 oz of silver, whenever silver is abundant people rush to the goverment and demand gold for their silver, and whenever gold is abundent people rush to the government and demand silver for their gold. And the government is forced to pay out either gold or silver until the market value is equalized at 16:1. And every time there’s a new silver strike, or a new gold mine, and the relative value of the two metals changes, the taxpayers take it in the shorts. It’s a freaking nightmare, which is why a bimetallic standard or any other basket of goods standard is ludicrous.
If we want private and competing currencies, well, go right ahead. The only problem with private currencies is finding people willing to take your currency in payment for goods and services. If I can’t find people willing to accept Lemurbucks instead of US Federal Reserve Notes, then that’s my problem, not anyone else’s. But note that there are several sorts of quasi-money systems in existance–Frequent Flyer miles, reward systems, coupons, gift cards, and so on. The reason these never rise to the level of full-fledged money is that there’s no real need for them, since dollars are doing fine. And of course there are foreign currencies too–you could demand payment in euros, or pesos if you don’t trust dollars. In some places around the world people would rather take euros or dollars rather than the local currencies, and maybe someday we’ll be in the same situation here in the US.
But there’s no need for this unless the dollar is in the toilet, and people would rather use other forms of money. Right now the US dollar works perfectly fine as money, and so people use it as money, for no other reason than other people use it as money.
This is exactly what we have. Except in keeping with the libertarian ideal, we let the contents of that basket be decided through the free market, and changed by the free market, rather than having the government mandating some inflexible hard list. When the local convenience store sells milk for $2 a half-gallon, they’re part of that basket: The dollar is backed by half the value of a half-gallon of milk. When the dude down the street is selling his used car for $6000, he’s part of the basket, too: The dollar is backed by one-six-thousandth of the value of a used car. When a teenager takes a minimum-wage job flipping burgers, he’s also part of the basket: The dollar is backed by 1/7.25 of the value of one hour of unskilled labor. And because the basket is so incredibly diverse, backed by literally everything that can be bought or sold, the dollar is much more stable and robust than it would be if it were backed by a single commodity like gold, as Paul suggests.
Gold has value because there is a limited supply of it. Yes, you can discover more gold, but this happens very slowly over long periods of time. It is a historical fact that civilizations from the beginning of time valued gold. If we, for example, excavate an old civilization and find a store of gold, it has immense value. Think of all the tomb robbers over the centuries stealing from the Egyptian tombs. If we dig up some paper currency from a previous civilization (even one less than one hundred years old), it is worthless.
History has proven that gold maintains its value over long periods of time. This is why there is trust in gold.
Civilizations literally rise and fall based on the quality of their money. Central banking has been tried over and over again throughout history. The inevitable consequence is the destruction of the currency because the bankers are unable to exercise restraint in printing money out of thin air.
Today, Keynesian and Chicago school economists believe that they have solved all of these problems through mathematical models and central economic planning, yet they are fooling themselves. Even Greenspan claimed that fiat money could work because they had figured out (meaning the Federal Reserve) how to make paper money operate “like a gold standard”. You know, Greenspan used to believe in a gold standard. I think once he got in charge at the Federal Reserve, he developed an arrogance and hubris to think that he could effectively manage the economy and there would be no problems.
Over and over again, those who believe in central economic planning have suggested that they had ended recessions and depressions for good and that they had ushered in a period of unlimited economic growth. But it was all an illusion, a bubble which they felt they could inflate forever. Just like throwing a ball up in the air, eventually gravity brings it back to earth no matter how high it is thrown. The inevitable correction occurs and we suffer a severe recession or depression.
The other issue is power. The power to create money out of thin air and force everybody to use that currency, not to mention the ability to do all this in secret, is one of the most ominous and dangerous powers men have sought throughout history. Bankers have always sought to enslave men through debt and “money changing”, financial sleight of hand that enriches a certain class at the expense of the masses.
That is the primary issue at hand. For the founders, it was an issue about the protection of liberty as much as anything. If a government is supposed to represent the people, its functions should be funded through open and fair taxation, rather than printing money. There is a give and take between government and the people. A secretive body that continually devalues the peoples money is the greatest threat to liberty that exists.
Don’t think that our financial elite hold some vast knowledge that past generations lacked. All their mathematical models and schemes have led us to where we are today. History repeats itself. Past civilizations have risen and fallen based on monetary policy.
I know you probably didn’t take the time to look through the youtube videos in the OP, but look at this exchange between Ron Paul and Alan Greenspan from 2002, I think Greenspan’s answers are not especially reassuring:
FinnAgain’s quotes are not from Dr Paul. And most of them are not racist. As for the charge of not returning a donation from Stormfront, don’t be ridiculous. The answer given by Jesse Benton and his staff was perfectly reasonable. Why should they implement a system of tracking every donation? The articles he linked to are simply smear pieces designed to discredit his campaign.
I don’t know where he got the info in post #153, but the quotes are not Dr Paul’s. The confusion you and FinnAgain have is that when reentering politics in 1996, the newsletters were an issue that came up. Even though he did not write those statements, he took moral responsibility for allowing them to go out. Those weren’t his beliefs. They weren’t his words.
In fact Ron Paul’s ACTIONS have indicated that he is absolutely not a racist. He has many times said that Martin Luther King Jr and Rosa Parks are personal heroes of his for their practice of the libertarian concept of civil disobedience to change unjust laws. He has said this many times.
He has spoken out against the war on drugs and the death penalty, in large part because they disproportionately affect minorities. He has spoken out against the inequalities in the justice system, which is tilted towards white collar criminals and against African Americans. He opposes overseas wars and inflation for these very same reasons.
In fact, if Ron Paul’s policy positions were enacted, it would do more for the African American community than anything the Democrats have done for thirty years.
Why would you dwell upon an old smear that has been long resolved? He was wrong to attach his name to something that he didn’t pay attention to during those years. Yet, his entire political career he has advocated for policies that contradict those vile statements. Every politician would be proud to have as spotless a public record as he does.
Does Ron Paul strike you as man who hates anybody? Nobody who knows Ron Paul or has met him or heard him speak for any period of time would think he has a racist bone in his body. This smear was brought up during his election campaign in 1996 and people in his district believed him. Nobody bought the notion that he was a racist.
His demeanor is that of a kind, grandfatherly figure who cares deeply about this country and is too busy immersed in obscure economic literature and history books and monetary policy to engage in personal attacks or race baiting tactics. It is just not in his character.
I will qualify that statement. I don’t believe there was a democrat that took as principled a stand against war as Ron Paul did. I mean demanded that if we go to war the Congress should demand a vote and assert their Constitutional prerogative to determine whether or not this country goes to war. How about demanding more evidence from the Bush Administration about the justifications for war? There was so much fraudulent evidence presented in such a shoddy way, that if there were more like Ron Paul and we had a more vigorous debate, we could have avoided the whole mess.
If you were a Republican who voted against this, you have principle. If a Democrat did, thats expected. How many of those Democratic voices would have opposed Clinton or Obama if they wanted to go to war? Not many. There are some good progressives like Dennis Kucinich who are truly antiwar and I respect them a great deal. I wish there were more like him. I also wish the Democrats had a spine and actually stood up to Bush on most of his agenda.
Would you at least grant that Ron Paul was spot on accurate about this war and the broader war on terror?
You know, sometimes there is overwhelming evidence that plans are being laid for something and some people connect a few dots and dress it up a little and then it becomes a “crazy conspiracy theory”. This happens all the time. There is so much information out there. Long term, I am sure there are those in our government who would like to cede sovereignty to international bodies. A north american union similar to the European union is not crazy at all. It may happen or it may not, but there is evidence of plans being made.
The bottom line is, do you care about US sovereignty? Would you prefer the United States be governed by the Constitution or unelected global bodies?
Ron Paul has seen bills passed appropriating funds for a Nafta superhighway. He knows the agenda of the Security and Prosperity Partnership act. He is very careful about what he says. I don’t think he would make any claims he can’t back up with evidence.
Here is a clip of Ron Paul talking about it:
I was involved in Ron Paul’s campaign in 2007 - 2008. I watched every debate. On every network there was an after debate poll for the viewers to vote on who they thought won. You could only vote one time, so it wasn’t possible to vote many times. Every debate I watch Ron Paul either won or was a very close second (early on when nobody knew who he was). Okay, maybe he didn’t win every single poll, maybe I exaggerated a little. But it was overwhelming and it supported my position that he performed well in the debates.
This is a very irrelevant point though.
You haven’t “proven me wrong” on anything. I like Ralph Nader. I voted for him in the 2008 general election. Ralph Nader is good friends with Ron Paul by the way and would never be stupid enough to call him a racist.
You know, you and others have spent a lot of time on somewhat meaningless points about repeatedly bringing up those old newsletters from the early 90s, whether or not Ron Paul entertains what you consider “conspiracy theories”, and his support for the gold standard. All this while our country is going down the tubes due to Federal Reserve secrecy and bailouts, unending overseas wars, double digit unemployment and loss of civil liberties.
Ron Paul has great solutions for our country. Why won’t you listen? Whether or not Ron Paul believes in a north american union or the gold standard is a minor point. He wants to end too big to fail, audit the federal reserve, have transparency of government, balance the budget, restore civil liberties and end the wars in Afghanistan and Iraq. And he wants to prevent wars with Iran and Pakistan. Obama is doing all the wrong things in office.
Maybe Ron Paul won’t win (if he does, believe me he’ll get more than 1 or 2 percent of the vote), but we need more like him to advocate policy positions that we need to follow up on.
Broadening the discussion a little, isn’t it clear to you that Obama is on the side of secrecy and the banks, he is against an audit of the Federal Reserve, he is for expanding the wars and propping up the military industrial complex, he is against medical marijuana, he voted to reauthorize the patriot act, and he is against any common sense reforms of our financial system.
Maybe you don’t like Ron Paul, but there’s got to be somebody who can break through this system and provide some real changes. Maybe someone like Nader, Paul, or a third party. Do you really want another election cycle with a choice of Obama vs Romney or Palin? What hope does our country have if thats the case?
I don’t think anybody should be hammering Paul for the 20-year-old comments in his newsletter and the (unfortunate) fact that Storm Front endorses him any more than Obama should be hammered for the racists rants of his old pastor. I certainly don’t expect every candidate to answer for stupidity of whoever happens to endorse him.
It’s enough that Paul is a gold bug and a conspiracy believer (e.g. the Unero foolishness) for me to look elsewhere.
You know, this attitude pisses me off to no end. Ralph Nader was a good candidate and nobody who voted for him should feel the least bit of remorse. Al Gore could (and probably would) have been an awful candidate too. If 9/11 occurred on Gore’s watch, we would have been involved in Afghanistan and possibly other middle eastern countries anyway. It may not have turned out that much different. Democrats have gotten us into plenty of dumb wars over the past century.
The key is to get a third option available to the masses. Even candidates cracking 5% in the polls would be a huge victory. Open up the debates. The Republican party and the Democrat party are one and the same. They play to different audiences, but the policies are the same.
That’s as true as you claim that Paul’s own words on Paul’s own website overstated Paul’s own position. Some were Paul’s words, directly and verbatim and others were his spokeman’s.
The ridiculousness is your dodge, not the claim. Nobody ever said that all donations had to be screened, but that when someone like Black was pointed out as a donor, they were supposed to return the contribution. You claimed that they repudiated the donations, but you’ve still offered no cite.
Likewise, nobody said that all donations had to be screened, but when it was discovered that Stormfront was running a donation drive, that the Paul campaign should have forcefully repudiated it and block their IP address. It’s telling that you’ve tried to change the subject with a strawman and claimed that since your strawman is unreasonable, expecting Paul to repudiate donations from hardcore racists is beyond the pale.
So, to keep track:
-Paul’s own newsletter written under his own name and edited by his own chief of staff, not his .
-Paul’s own words on Paul’s own website, also not his.
-Paul’s own words when interviewed, where he didn’t deny writing things in his own newsletter but instead defended them while his campaign was, likewise, not denying that he wrote them but defending them. Also also not his.
What fantastic moral responsibility! “They’re not mine, I have nothing to do with them, I won’t tell you who did write them. I will, further, defend them. And I am taking full moral responsibility for them.”
Yet again, newsletters he started via foundations bearing his name edited by his chief of staff with family on staff. Newsletters that went out under his name. And your apologia is that he is simply an incompetent and inefficient leader who pays no attention to that which is his responsibility to monitor. Kay.
Ahh, the “Paul is so brilliant and awesome that if you don’t agree, you either didn’t read him or don’t understand his massive intellect.” gamit.
How’s that working out for ya?
And as pointed out, people don’t want crazy conspiracy theorists running the nation or people who don’t understand economics making fiscal policy. You keep ignoring the facts that show show Paul is unhinged while saying that you want to discuss the actual issues.
Well, we had a gold standard in the 19th century and up through the Industrial Revolution. The Federal Reserve was created in 1913, but we were still on the gold standard until 1933 when citizens of this nation could no longer redeem their certificates into gold. But foreigners still could. We had a pseudo gold standard all the way until 1971. Since then we have had a total fiat currency.
Back to its practical application, during the Industrial Revolution the most wealth was created of any period in human history and the fastest economic growth. People were lifted out of poverty and people had a chance to make it. We built this nation with Free Enterprise without a central bank and with a currency tied to gold. Since we’ve had a Federal Reserve system the following has happened: World War I (paid for through inflation), a depression in 1920-21, a boom period in the 20s (caused by easy money through the federal reserve), then a fifteen year depression capped off by World War II. Following this we had relative prosperity for twenty to twenty five years. We had the Korean War in the early fifties, guns and butter in the 60s, then Vietnam. We had rampant inflation in the 70s, brought under control only after Volker raised interest rates. Under Reagan the deficits ballooned and Corporatism reigned supreme. Greenspan came in and orchestrated the bubble economy that led to prosperity in the 90s (plus the internet revolution) then we had the crash of 2000. Then the Fed easy money machine blew up the housing bubble, encouraged the derivatives trading and rampant greed on Wall Street by encouraging moral hazard. Obviously we are in deep shit at the moment.
All the while the dollar has lost over 97% of its value. The middle class is dwindling.
Thats the fallacy of modern economic thought and central economic planning. Ludwig von Mises, the greatest economist of the 20th century, wrote a masterpiece called Human Action: A Treatise on Economics. He called it Human Action because economics is the art of human action, individuals free to pursue their own goals and make mutually beneficial agreements with other individuals. Economies must be run by the people, not by central planners. For all the complex mathematical theories, Mises argued that they always fail because human action is too complex and irrational for a central authority to control. In fact when a government entity intervenes in the market it creates several new problems. A central bank cannot set interest rates, only the market can do that. It will either set interest rates too high or too low, causing misallocation of credit and malinvestment causing an unsustainable bubble to form. This bubble will eventually burst causing a recession or depression.
Capitalism or Free Markets as the Austrians and early Americans defined it was simply economic liberty, people free to keep the fruits of their labor and invest it how they saw fit. They saw excessive government regulation as an impediment to prosperity and economic growth.
Read this:
I’ve linked to this before, but if you want to learn more about Austrian School economics, check out this link:
Here is the problem with your understanding of economics. Regulation cannot and will not compensate for bad monetary policy. Ever. Greenspan, by keeping interest rates too low for far too long, flooded Wall Street with easy money and created a gambling, casino atmosphere were all this reckless speculation could flourish. And then he created the moral hazard of being there to bail out any firms that got into trouble.
We had tons of regulation, SEC regulations and everything. You want to know what the SEC was doing when this shit was going down? Watching Porn. No, I’m not joking. Check this out:
There’s your regulation. If the Fed didn’t first dump easy money into the economy and wasn’t the lender of last resort, it would have enforce market discipline on these firms and they would have had to make money in an honest way, not pushing paper.
The best regulation of all is allowing bankruptcy to occur. Non of this would have happened had we listened to the advice of Ron Paul and the Austrian economists.
