The title of today’s post is my humble attempt at taking “artistic” license with the title of an outstanding article at Monty Pelerin’s World, Economies Don’t Die. By quoting extensively from this article, my hope is that you will be encouraged to read the entire essay. I have never seen a more clear explanation of what is happening to our once great nation and why it is happening and who are the actors who are a fault. The author (Monty Pelerin is a pen name) starts with this pronouncement:
This country will die. History will record the cause as due to an event worse than the Great Depression. That diagnosis will be wrong.
Most conservatives know that this fiat debt driven economy will collapse in the not so distant future and it will be catastrophic for all but the most rich. So, why does the author say that the diagnosis will be wrong?
Economies do not die except when they are murdered. Free markets are self-equilibrating, healing themselves unless they are prevented from doing so.
And the, the author goes on to explain how this happens:
The very purpose of government intervention is to produce outcomes that otherwise would not occur. Intervention is always an attempt to overcome the natural equilibrium at which an economy would settle. Its very purpose is to thwart the intentions of individuals who make up the economy. Intervention is intended to alter the natural healing process.
Every so-called “economic” problem can be traced back to prior political intervention(s). Political actions deemed necessary today result from damages inflicted by prior government interventions.
And, the results are predictable:
- Prices become inflated and distorted by liquidity and regulatory interventions. They no longer reflect true supply and demand.
- Capital is mis-allocated as a result of false interest rate signals. Eventually this capital is seen as unprofitable and is abandoned.
- Cheap lending and low lending standards encourage imprudent and eventually unsustainable levels of debt.
These distortions decrease an economy’s efficiency. General economic metrics like GDP eventually grow more slowly as a result, prompting calls for more political intervention. Eventually the distortions and disincentives grow to a point where standards of living and economies stagnate and then retrogress.
So, does the author put all of the blame on the political elites? No. He says that much of the electorate is as corrupt as the political class. He makes his point with a lengthy quote from Angelo M. Codevilla, professor emeritus at Boston University. The lengthy quote is about how the lies of President Richard Nixon were dealt with compared to the lies of Presidents Bill Clinton and President Barack Obama. This one paragraph catches the essence of the professor’s point:
Consider: In 1974 President Richard Nixon lied publicly and officially to cover up his subordinates’ misdeeds. His own party forced him to resign. In 1998 President Bill Clinton lied under oath in an unsuccessful attempt to cover up his own. But his party rallied around him and accused his accusers. In 2013 President Barack Obama lied publicly and officially to secure passage of his most signature legislation. But when the lies became undeniable, his party joined him in maintaining that they had not been lies at all.
When the professor says the “party” rallied around Clinton and Obama, he is not referring to only the party apparatus but also to those who support the party; the electorate.
As much as I enjoyed this Monty Pelerin essay, I humbly suggest that the author left out one of the main culprits to the murder of the American economy; the Federal Reserve and its monetary policies. The Fed’s interventionist monetary policies cause as much or more distortions to the economy than do the politicians. Defenders of the Fed often argue that their monetary policies are necessary to try to counter balance the detrimental fiscal policies perpetrated by the politicians. I don’t buy that argument. The Fed and the Political Class work hand-in-hand. They serve the same masters; the 1/10 of the “one percenters”. One of the principles of a murder investigation is “follow the money”. The same is true in the murder of an economy (although the word money should be replaced by the word wealth). It should be obvious that when the American economy dies, the only beneficiaries will be the 1/10 of the One Percenters. They will end up with all the marbles and then the game can be started over again. This premeditated murder of our economy has been going on for over 100 years.
The Players Play and the Payers Pay
For a further explanation of what I mean by that statement, please read the “About” page here at Asylum Watch.
Well, that’s what I’m thinking. What are your thoughts?