I think there has been a miscommunication, and perhaps it is my fault for not being sufficiently clear. 

When I say the government is the only one that can intervene in the private markets, that does not actually contradict your position that it SHOULD NOT intervene.  Given the choice between "gov't do something" and "gov't do nothing" about it beyond interest rate manipulation, you would have them choose the latter.  Fine. 

But I believe that your comment about the Dust Bowl is completely incorrect.  The seeds of destruction in that case were sown many years before the crash, and in fact part of Roosevelt's famous first 100 days were focused on repairing the ecological damage.  1929-1933 is not enough time for those farmers to seriously ass-rape the topsoil the way they did. 

Or did you mean they were encouraged to abuse the land before then?  Wikipedia indicates, and this agrees with my dim recollection of research years ago for school, that vast areas had been overfarmed and/or poorly farmed for decades and the Dust Bowl was a more or less inevitable result; the problem was already happening but was turned into a sudden catastrophe because of a severe drought.  If that is what you meant I would ask you to show that the government was the primary factor in this sort of behavior. 

The result of all this was improved (ecologically sound, more sustainable) farming techniques and land usage tactics (not sure if there is better terminology) which was in large part mandated by the government, and at the LEAST the government played a key role in educating the farmers as to these methods.  As opposed to letting them figure it out on their own a la laissez faire. 

On the other hand, there is something to be said for "patching things up".  It may not fix the problem, but we agree that the situation will correct itself; and the government is in a position to, by hiding some of the negative symptoms, alleviate lots of the pain. 

After all, half* of diseases are treated by simply treating the symptoms.  If a man had dysentery, you'd make sure he got fluids etc. so he doesn't shit to death before his body recovers "all by itself". 

[edit:  On the other hand, the gov't ought to be paying for its "treatment" (to continue the analogy) while the economy is healthy -- which it hasn't been doing.  But that's a different issue.]

*[edit2:  completely made up number]

Or I could just... make the interest rate whatever I want it to be to make a profit.

No, I'd spend that money elsewhere in smart investments.  For example, I actually know a guy who's brother infact owns a factory, some apartment buildings and some other buisnesses.

You know what he's doing right now?   Buying up a bunch of warehouses for pennies on the dollar becuase it's way cheaper then buying warehouses.

He's going to use them in the short term, then once the markets go up he plans to make a killing on them.  He's also investing in other things that are pretty much always in demand. 

Find where demand has dropped even more, and buy... and then make a killing when the demand comes back... which it always will because... people want stuff.

Things like housing and warehouses are cheap right now... but buisnesses are always going to need warehouses and people are always going to want to own houses/live in houses... and this is where the smart people swoop in and buy stuff, also keeping the demand from hitting rock bottom.

If those people don't have the money to do so it just drops more.

Blah. I lost all of what I put. I'll try to explain it again :-p

If you research about farming in the locations of the dust bowl - the prime culprits of who over-farmed, and caused the dust bowl - you will find out why they were there in the first place.. The government gave the land away for people to farm there. It wasn't a free market exchange of land - it was given to people for free. That is where I take issue with the causes of the dust bowl. Had the government not of intentionally incentivized the farming of these areas, I don't believe that the dust bowl would of happened...If not severely diminished from what we saw, as better ecological practices would of been in place later on, when it may have reached farming levels like we saw in the 20's.

That's where my beef with a lot of federal practices are - they cause a problem (Community Reinvestment Act of 1999, Smoot-Hawley, ect) then have to fix it using our money - essentially screwing us both ways. You can argue that laissez faire caused problems in the dust bowl, but the truth was that intervention caused it...Thus negating the ability for typical laissez faire means to rectify the problem, because government has the power to royally screw things up more than individual people...Which is why I'm not a big fan of them handling stimulus funding.

Ultimately, I believe that the governmental powers should lie primarily with local and state governments, and not federal powers. America is a big freaking country - 300 million and an area larger than almost anywhere else in the world. Trusting one entity in Washington DC is not the way to solve Americas problems. If Ohio has a problem, I want an Ohioan to fix it. Federal powers should only exist in areas that are consequential to everyone, and not simply where the federal government decides that it should be involved in. Comparatively, I think thats why you have rugged government efficiency in areas of Europe - small federal governments in small nations where people are closer to their politicians. For anyone to agree in the United States (like a president), you have to have ~50% of every American interested in the candidate....How often can you find a good agreeable candidate for those many people? Thats why we get retards like the past few presidents we've had.

What part of government intervention has told people to do credit default obligations or drive the current leveraging in the derivative market to around 10 times the value of the world economy?  These markets are not regulated, and there was no indication of any government bailout.  So, anyone want to argue how the government is a source of moral hazzard or hindering the free market from making needed corrections?

Consider other things also like:

* Charles Ponzi nearly taking down the banking system in the northeastern United States.

* What part of government regulations causes credit rating services to get stupid and falsely value risk during the most recent meltdown?

* What part of government involvement caused Long-Term Capital Management to nearly take down the financial markets in the United States: http://en.wikipedia.org/wiki/Long-Term_Capital_Management

I was informed in a prior thread that at NO TIME has government involvement help save the financial markets from collapse.  Well, look at LTCM here.  The Federal Reserve brokered a deal to have other firms pool together and prevent the financial markest from collapsing.

To say government involvement is responsible for every ill is to be VERY short sighted and to live under the belief that if Ayn Rand were followed to the letter, we would end up have flowers and rainbows every day.

Yes because private market would never do anything like flood millions of gallons of oil into our oceans, or let us drive around in cars without functioning brakes.

Stick, yeah today they just used other dumb methods of making our economy spiral out of control.

Richard, things would be far worse without government intervention

Correct me if I'm wrong, but didn't the credit default come as a result of packaging toxic mortgage assets to look better than they were? Weren't most of these toxic assets a result of government intervention in the mortgage market via the Community Reinvestment Act of 1999?

This is a nice clarification of my point.  My thanks to you mrtickball for explaining that as well as you did.