#1: The Club for Who? The Club for Growth is not what I would call the standard-bearers of free market capitalism. They spout some rhetoric of "limited government," but they are quick to encourage the use of the state to meddle in the markets to try to nudge them into a path that favors their agenda. Not exactly what I'd call Laissez-Faire. You'd do well to learn that there are other philosophies, and schools of thought.
#2: When discussing this type of extra-constitutional Federal spending, it must first be acknowledged by all that the Federal government has LESS than no money. This point is as axiomatic as it gets. Even as I write this, the federal debt stands at 11.054 trillion dollars. In order to spend anything on any program, Washington must get money they don't have.
In order to do so:
a) They must borrow money to pay off the previous lenders. Not only are they paying off previous debt and interest, but they are also simultaneously and automatically creating even more debt.
b) Since borrowing alone will not meet the demands of this extra-constitutional spending, The federal government must find another source of money. This, they gained by granting the Federal Reserve System (a private banking cartel, who is as much a part of the federal government as Federal Express) monopoly powers of money creation. Federal Reserve notes are created out of thin air, they have the backing of no commodity. Make no mistake, these notes are pure credit. Being pure credit, the notes are loaned to the US Treasury at interest. Thus, the interest charged per dollar creates the need for the personal income tax to pay this interest back to the Federal Reserve. To add insult to injury, the more dollars which are created the less those dollars are worth. This is a hidden, regressive tax (A tax, mind you, that directly benefits one singular banking group, not the public). As the dollar is worth less, the poor see their purchasing power sapped increasingly more.
#3: Now that we have that out of the way, the point of mentioning Zimbabwe was to illustrate an important and undeniable point: If a country could print their way to wealth and prosperity, Zimbabwe would be among the wealthiest. The fact is, that Zimbabwe is not at all wealthy. They are not wealthy exactly *because* they tried to print themselves to prosperity. Clue: That doesn't work.
Wealth and capital creation are the results of production and saving the fruits of that production. When enough capital is saved, more production can be created. The fundamental problem with a centrally controlled (and politicized) fiat monetary system is that inflation, no matter how great or how small, is debt. Period. There is no way around this simple truth. To say 'Their inflation rate is 230,999,998% more than ours' is irrelevant. Inflation is still debt. Debt is still capital wealth destruction.
The various loose monetary policies by the FRS, have created wealth in exactly the same way Zimbabwe's printing presses didn't. What those low FRS interest rates did do is discourage savings (i.e., the building of capital wealth) via the lowering of interest rates, and encourage malinvestment in various sectors. This malinvestment has created the various bubbles over the years. The FRS created the tech stock bubble in the 90's- the over-valuation of tech firms who all thought they were going to get rich simply because they had a website and an IPO. No products or services to sell, mind you.... but boy, could they code them some HTML. Of course, when it was realized that those companies had not actual services to offer, their investors went away. Along with all the little pieces of paper that once told them they were "rich".
After the tech bubble busted, fearing a recession as a result, Greenspan and the FRS decided that the economy needed to be stimulated again. This time, they turned their all-knowing benevolence towards the housing market. Using the tools already at their disposal, namely Fannie, Freddie, the Community Reinvestment Act, and the FRS' ability to increase the monetary supply by cutting interest rates, the Feds "stimulated the economy" once more.
Of course, we now see the fallout from this "stimulation." Construction was encouraged far and beyond what the market could actually bear; because of the easing of the monetary supply, houses were greatly over-valued; and people who would not have been given a loan by banks who were free to make their own decisions, were suddenly courted by banks, when those banks began being coerced ... errrr ... encouraged to lend money to unqualified loanees under threat of lawsuits (filed on behalf of Fannie Mae and Freddie Mac). Of course, a great many of those same unqualified loanees have since lost their homes, and any money they happened to be able to pay into them.
Gone.
Happily, all is not lost. Fanny Mae is able to re-purchase these homes for a song, and resell them to the next in line. Meanwhile, as they corner the market on these foreclosed houses, they are able to further entrench themselves as the government created monopoly (as if there is any other kind) that they are.... you know, for "the good of the low income consumer" (*wink*wink*)
So now that the tech bubble has popped, and the housing bubble has burst, what do the hapless bureaucrats, and overlord central bankers decide to fix this time? They decide to turn their all-benevolent knowingness toward fixing the banks who now have a metric truckload of bad mortgages. Bad mortgages which were only approved by these banks after a series of Federal Government and FRS interventions.
Make no mistake, this whole mess would not have been possible without government meddling .... errr.... action.
And now you want more stimulus? Our economy is being stimulated to death. Sending Washington and the FRS to "fix" the problem is the equivalent of sending the arsonist who just started the fire that will destroy your house- to put it out. For every blaze that these financial arsonists "put out," they set another, bigger one. This process will continue to happen the public demands an end to the empire. More likely, it will end when the world stops accepting our money, and we as private citizens choose a comon currency which cannot be politicized. Until that time, DC will continue to grow its monopoly power, and it will continue to create monopolies in the "private sector" through the use of regulatory law (Before you even argue that point, bear in mind that regulations are ALWAYS ultimately written by the regulated. Regulations are not written as a "benefit to the public", but as a tool to keep other businesses out of the sector. To reduce competition).
#4: Inflation is a natural outgrowth of the state-created Boom-Bust cycle. As bubbles pop, and markets readjust- deflation is, likewise, a natural part of that correction. If you are worried about the dangers of a "deflationary spiral," you might want to concern yourself with the government monopoly empowered banking entities which created the oft unmentioned "inflationary spiral." All the "bank panics" through the years have been caused by banks who had monopoly powers of money creation.
#5 You cling to many Keynesian economic myths which where debunked as they appeared by the likes of Mises, Hayek, Hazlitt, and earlier liberal anti-statist thinkers such as Bastiat and others. These myths continue to be debunked to this day, but I wouldn't expect bureaucrats, member banks of the FRS cartel, most politicians, nor any business who have entered into a "public-private" partnership to listen to these invalidations. To actually follow sound (read: free market) economic principles would diminish their powers of monopoly.
In the free market, individuals trade value in exchange for value. It does this just as naturally as a plant trades the carbon dioxide, nutrients, cultivation, and sunlight, that it values for the oxygen, beauty, and food that others living things desire from them. This happens automatically. It happens perpetually, even as governments and other coercive agents try to obstruct and deflect the flow of commerce.
In clinging to these demonstrably failed models which support central economic planning, you ignore the fact that "The broken window" is fallacy.
Bummer.
In an extension of Bastiat's parable: What if the state took up the practice of breaking windows in order to stimulate the economy? Would the practice of governments breaking windows generate an exchange of money between the shop keeper and the glazier? Yes, but it would also deflect that same money that would normally have been exchanged with the cobbler or the blacksmith. What's more, and far worse, the type of government intervention presented here creates an artificially high demand for the glazier's business, while the supply of the glazier's work remains the same. As such, the glazier can greatly increase his rates, wealth, and power within the economy. Since he has already entered into a public-private partnership of sorts with the town's government, why would he not encourage the town to write laws in order to protect the consumer from the "inferior quality" of other glaziers (*wink*wink*)? [Even though consumers in a free market are always free to choose the level of quality, and price points which meet their needs. If a business does shoddy work, and charges too much for it, he will not be in business for long. If that shoddy work causes real injury to someone else's life, liberty, or property, he is guilty of a crime and should be dealt with accordingly.... unless, of course the business who performs the shoddy work in question is sanctioned by the state.]
Having eliminated competition in the market, the owner of the glazier company would then need to hire laborers for his company to keep up with the added artificial demand. Having increased power in the market place, the glazier would have leverage to pay his laborers what he saw fit, this would naturally and predictably be less than they would be able to negotiate for in the open, unfettered job market.
This is how monopolies are granted.
Now let's say that the people of the town realize that they are suddenly paying much more than they would like for their window repair needs. Let's say that the townspeople decide that instead of repairing the glass with glass, they would just assume repair the glass with plywood, or use the new material that has just been invented called lexan. It's cheaper, won't break, and (because it has not yet regulated by the state) has several available sources. In this event, the glazier business would be put out of work. And what of all his employees? They would be out of a job, and since there are no longer any other glaziers in town, they would have no place to ply their trade. Horrors! The glazier is "too big to fail!!!!1!11!!!!1eleventy!!!11!" Measures would be needed to regulate the lexan and plywood businesses ... you know, to protect consumers from "inferior quality" (*wink*wink*). Ultimately, of course, these protectionists measures would be used to protect the glass trust.
In reality, it was the government intervention that artificially forced business to the glazier, squashed competition, and kept laborers from easily starting their own glazieries due to regulation designed to make it more difficult to start new businesses. Not to mention, if the glass sector had not been so greatly impacted by government intervention, much of the glass sector would have reallocated their resources to the emerging new products long ago
In a truly free-market economy, unemployment rates approach zero. This is because under such a system, every person has some sort of capital to exchange for other capital. This may be in the form of labor, or capital wealth. This only possible if the state allows for free exchange between free people. Government intervention into this trade disrupts the balance between supply and demand. These interventions typically favor industry (regulations are written by the regulated) creating the need for labor unions, and hurting the consumer through elevated pricing. If needs change within a market forcing a market adjustment, capital is easily redirected towards those products and services to which the market now values.
Bureaucracies which are set up to regulate businesses are inherently ineffective at protecting the consumer from "inferior quality" (*wink*wink*) - because the market automatically "votes with their feet." And bureaucracies must be funded somehow. Funding these bureaucracies naturally siphons capital out of the economy where it would ordinarily be used to create the need for more employment. Instead, the money is used to fund someone sitting at a desk who is trying to do the job that was previously being better handled by the market itself.
This bureaucracy produces nothing of value (unless you are a business owner hoping to reduce competition), siphons capital from the market place, creates monopolies, and destroys jobs in the process. Now we are being told that this same bureaucracy is going to create jobs. What's more we are told that this bureaucracy will somehow create jobs with money it doesn't have. How will it do this? By printing money, and borrowing. By creating debt. Again, debt is wealth destruction. Wealth destruction means a decrease in capital. A decrease in capital means less employment opportunities for all.
While I appreciate your concern for the unemployed person, and the fact that he can no longer afford his house payment. But it seems to me that what an unemployed person truly needs and desires is not an unemployment benefit, but rather employment. He desires making something of value. If the person were naturally a good builder, s/he could build houses on a construction site, either working for himself or for a construction company. But that would require licensing and fees, all of which designed to keep new players out. If s/he had a car, he could become a taxi driver. But again, that would also require unnecessary start up costs in the form of licensing and other fees. If s/he were a great cook, s/he could produce food out of the home for willing customers who know full well that the food is being prepared inside the home's kitchen. However, if DHEC caught wind of this, they would put the kibosh on this faster than you can say "regula..."
Try to start a commercial radio station for a few hundred bucks on an unused frequency, and see how fast the FCC rap-tap-taps upon your door.
It seems to me, that if you were concerned at all with the plight of the unemployed, you'd be more in favor of removing the aforementioned barriers of regulation, and capital theft which keep people from using their own capital to produce things which the market actually values.
But you do wring your hands, fret, and give appearances. Vanity counts for something, I suppose. Keep up the good work there!
#6: You cite Hoover as a do-nothing president? Really? Hoover, the avowed progressive. Hoover, who's market interventions in '29 and '30 actually kept the market from finding its floor and recovering more quickly? Hoover who would have caused the same prolonged misery in 1921, if anyone had cared to listen to his boneheaded advice? That one?
Really?
If you wanted to make a serious argument regarding a true "do-nothing president" during a depression crisis, you should point to none other than Warren G Harding. The problem with pointing out Warren G Harding, is that you would then have to explain away the fact while that the depression of 1920-21 was every bit as severe as the first year of the '29-'45 depression, Harding ignored the advice of his Secretary of Commerce, Herbert Hoover who wanted to intervene in the economy. Harding's solution was simple, cut government spending and taxes, and let the market find its bottom, and sort itself out naturally. This started a trend which continued after Harding's death, and for the rest of the decade. The result? The market found its floor, and recovered quickly, which lead us to what we now know as "The roaring '20's." Another side benefit to this sort of inaction is that the federal government was able to pay down it's debt until 1930.
Keynesians can't explain how it was that an economy can fix itself without their oversight. So, they ignore this depression, and focus on touting their involvement in all the other ones....like the Great Depression of '29-45. You know, the one that was fixed through the cunning use of market interventions....and still it lasted 16 years. The other ones which their hallowed macroeconomics were allegedly able to ward off....only ....not
Somehow they have convinced a great number of people, through the use of Doublespeak, and a great deal of linguistic acrobatics, that their system is the only way to keep the economy stable, and to keep people employed. That somehow it is "greed" that has screwed everything up. That if we just give them just one more shot, they can fix all the variables, punish the "greedy" for not playing by their set of rules, and they can finally create the stable utopian financial system where everything is in economic technicolor.
[cue sounds of birds chirping]
They've had damn near a century to get it right. I'm not holding my breath that they will anytime soon.
As I've stated before, free people automatically, and perpetually exchange value for value. Not because any government office has instructed, or encouraged, or coerced them to do so. They do it because of their innate need to gain the capital which enables them to live. If the practice of free individuals wanting to trade this for that is a sign of greed, is it not also true that a flower who trades beauty for a sunny garden, and cultivation is also greedy? Of course not!
The surest sign that the free market works, and that Keynesianism is a non-workable abject failure is the fact that the market constantly backlashes against it. Keynesianism is as natural to a healthy economy as a person being held down in a bath tub full of water. Since the body desires to live, it fights against what it knows to be an unsustainable condition.
Keynesianism ultimately destroys capital for everyone within the economy, except for keynesians themselves. Washington desk jockeys, will never be poor when there are so many sectors of the economy to centrally control...incompetently. In fact, they are getting richer! This is evidenced by the fact that the Washington DC area is the only economy in the nation which is actually growing. Now, while capital from other economies are being siphoned away, and regulations criminalize people for voluntary engaging in mutually beneficial commerce, and we are all seeing the buying power of our money being eroded away through hidden regressive taxation, and wealth is ultimate being transferred from bottom to top, from the many to the few, and all of these conditions hurt the most impoverished among- us first and foremost, this all begs one question:
Why do you hate the poor?
