Bailouts Will Not Work

My friend Stephanie sent me this link showing all the wonderful things The New Deal brought us. Now, we have all been taught that we “spent” our way out of the Great Depression via FDR’s New Deal. The bridges and dams are nice, but I think the economic theory behind it is hogwash, yet we have been living “under” it ever since. I believe Keynesian economics is incorrect. Here was my response:

I, for one, count myself as one of the anti-Keynesians and I have never been a Republican. I believe the Great Depression lasted LONGER because of how FDR dealt with it. Keynesians believe the only way to fix a bad economy is to spend more. I, on the other hand, believe that the economy goes in cycles and that it needs to correct itself. And, in fact, government involvement only makes the cycles WORSE!

For instance, the government is trying to keep housing prices from dropping any further by keeping interest rates low. But in reality, the housing market won’t come back until the market decides that housing is fairly priced and individuals are convinced it is time to buy again. Government can’t convince people of that, but by artificially propping up housing prices, they are only PROLONGING the bad housing market.

On a personal level, we instinctively know Keynesian economics is wrong. If your credit cards are over-extended, you know you need to spend LESS, save more, and cut back on wasteful spending. But the Neo-cons (Bush and his clan of idiots) and the Left (that are now in charge) both believe in this Keynesian philosophy because it is the only solution big government can offer. That is why they have pushed this consume-on-credit culture we now have. But since we no longer have any more to spend, they, the government, will spend for us. Of
course, in reality, they are spending OUR money to do it!

Neither side would get elected by telling people to be responsible for themselves, spend less, save more, but that is what I think the real solution is. But since we are now “consumed” out, they feel they get to choose how to consume for us.

I wish Obama the best, but he is destined to fail. Centrally planned economies can build many great things (I am sure Russia is filled with awe-inspiring structures left over from the Soviet years-I would love to see that slide show), but in the end, economies thrive because of individual ingenuity and entrepreneurship, not from some great wisdom handed down by our great messiahs in government....

(Then I continued with a later response...)

I know my libertarianism sometimes borders on anarchism, but I truly believe in the productivity of people more than I do government. I have been listening to Lew Rockwell pretty frequently lately. I subscribed to his podcast on iTunes, but you can get it from his website as well. Today’s podcast pretty much sums up my view of government and it’s role in today’s economy...Government does need to do something. It needs to get out of the way...

http://www.lewrockwell.com/podcast/?p=episode&name=2009-02-08_098_the_left_the_right_and_the_state.mp3

There may be a couple of things the government redistributes our wealth to pay for that I may be okay with, but generally it is inefficient and immoral for government to make those decisions. One, it is not their money. Two, why prop up losers when that only victimizes those who economically have to compete with these scum bags? A $246 million tax break for Hollywood movie producers? A $25 Billion Lifeline for GM, Ford, and Chrysler? Congressional leaders calling for $700 billion to buy distressed mortgages?

If the government didn’t give money to any of these people, there would still be movies, automobiles and houses. More importantly, the sooner we let these poorly run businesses fail, the sooner more efficient entrepreneurs will fill their vacant market segments...But because our government has decided to bailout the losers, these same entrepreneurs have to hang tight until the scum bags pillage through this cash as well...I say again, government is prolonging the pain...

A bridge from LA to Honolulu would be pretty cool, though....

Sorry, I’ll get off my soapbox. ;-)

Have a great Monday...

-dn

Steph’s apt response:

900 billion...gulp...

http://www.phoenixrealestateguy.com/stimulus-bill-putting-900-billion-in-perspective/1877