“Depression is the aftermath of credit expansion.” – Ludwig von Mises
I’d love to find someone that can venture through a single day without reading, hearing or talking about the current state of the economy, the stimulus plan, the bailouts or ponzi schemes. It’s sickening but what’s worse is the fact how NO ONE talks about fixing the problem correctly. Does anyone learn from the past?
I didn’t read the stimulus package in its entirety (it appears that our representatives didn’t either) so take what I say with a grain of salt.
We can blame Bush, blame Clinton, blame Obama, blame Regan, blame Nixon, etc. – it’s all the same; they work for the same crooks, I mean corporation, the US Government!
Time magazine recently published a list of the top 25 people most responsible for this crisis but I would argue that their thinking is flawed and dated by at least 100 years. As Victor Sperandeo noted in his book, Trader Vic – Methods of a Wall Street Master, Thomas Jefferson understood better than any political leader in world history that government “profusion” can only be paid by the “labors of the people.” He knew that a growing government budget and an extension of the services government offers “under the pretense of caring for [the people]” can only come at the expense of private property and individual liberty.
“I place economy among the first and most important virtues, and public debt as the greatest of dangers … We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.” – Thomas Jefferson
“The issue is always the same: the government or the market. There is no third solution.” – Ludwig von Mises
This blog entry is not about playing the blame game, pointing fingers or determining who is responsible but rather a move towards first discussing and then implementing responsibility and accountability based on how economics 101 truly works (without government interference). I am certainly not ruling out oversight and regulation but I am asking the government to just butt out of the free-market system we call capitalism. They will not make things better. For example, Ludwig von Mises once said:
“Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other.”
He made this statement more than half a century ago but the current administration is doing exactly that, spending an unprecedented amount of money (trillions when they look in the mirror and state the truth) on a stimulus plan that will most likely fail to achieve what its authors claim. I am not arguing that is won’t create jobs but how many jobs will be lost due to the new package. What will the net gain or loss total be once we look back in five or ten years?
The talking heads of the media offer no help as they skew the unemployment numbers every chance they get so they can “GET” their headlines. Even the president is talking about the economy and unemployment numbers reaching levels not seen since the Great Depression. Really? What stats are they looking at? This is a sensitive topic as several of my family’s closest friends have lost jobs in recent months but the truth is the truth.
Business Week noted:
In the last year, the U.S. economy shed 3.4 million jobs. That’s a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost — fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.
Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82. This was reflected in unemployment rates.
The latest survey pegs U.S. unemployment at 7.6%. That’s more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can’t equate 7.6% unemployment with the Great Depression.
Come on, 7.6% is not 25.2%. Gross numbers of jobs lost today may be larger than a specific time in the 1930’s but an apples-to-apples comparison using percentage ratios shows us that the comparison is stupid. Times are tough and many people have lost their jobs and many small businesses are shutting their doors but let’s not spew inaccurate data to rush a stimulus plan through congress.
“The wavelike movement effecting the economic system, the recurrence of periods of boom which are followed by periods of depression is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
As the quote says above, economic cycles of booms and busts are inevitable so let them run their course rather than have these non qualified elected politicians (with lobbyists in their pockets) making the decisions. How many current and past administration members actually started and owned a business or were active investors? So why are they the ones trying to pull us out of this mess? It’s a joke!
I don’t have all of the answers and I am not the smartest or most qualified guy in the room; however, Washington doesn’t have the most qualified guys in the room either (the most qualified guys/gals were not even on the ballots prior to the election)! With all of the bailouts running though Washington, what’s the incentive to do the “right thing” when Uncle Sam will come to your rescue and in some cases reward you for fucking up! Sorry but this pisses me off.
Many of the quotes throughout are from Ludwig von Mises (1881 – 1973), who was an Austrian Economist, philosopher, and a major influence on the modern libertarian movement. Although I don’t agree with everything Ludwig wrote, I can say that the vast majority of his writings are singing the tune: “I told you so”.
One last thing – I HATE THE PHASE: “Distribution of Wealth”
- “The masses, in their capacity as consumers, ultimately determine everybody’s revenues and wealth.” – Ludwig von Mises
- “Taxing profits is tantamount to taxing success.” – Ludwig von Mises
- “It is untrue that some are poor because others are rich. If an order of society in which incomes were equal replaced the capitalist order, everyone would become poorer.” – Ludwig von Mises
- “The riches of successful entrepreneurs is not the cause of anybody’s poverty; it is the consequence of the fact that the consumers are better supplied than they would have been in the absence of the entrepreneurs effort.” – Ludwig von Mises
Finally, I sure as hell hope we are not walking down the path of Socialism (and I am not targeting Obama and his administration; this journey started decades ago).
“A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism: is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.”
Tell me what you think, let’s start a discussion! I prefer to hear from you as the media and these so-called experts are pure garbage.