richardhutnik said:
On the first point, I am a critic of the Fed. I am informed by Austrian Economics, and have issues with Fed. Heck, I have issues with the entire financial/economic system and it being entirely debt based for that batter. I deviate from pure Austrian economics, because I believe that bubbles seen aren't only by government intervention, but can happen on their own to. I am of the belief that the debt being run is a core part of the problem. And this debt issue is why theren't isn't deflation, as it would kill the economy as people wouldn't be able to service the debt. On the second point, that is part of the core of the problem, and you can connect it with the first. One can go, "Well, these natural economic corrections, and people blindly following self-interest without any degree of coordinating, or putting into law lessons learned from the past is the best way." can be seen as fine, but then what happens when you effectively have the unemployment rate getting to 25%, and there are mass amounts of people sliding to the bottom. People aren't allowed to do Hoovervilles, and so on. When small things go large scale, people expect the problems to go away. The social contract calls for this. And this is where government gets involved. When you have idiots who mad bad decisions and have lots of money, they affect people who have far less control. And in this is another question: What is the optimal level of punishment for failure? Should like 1/3 of the population have its life savings wiped out? Should such things cause a spiral to happen that people die? Is there a call for society as a whole, or society having the government step in to provide a safety net? Or does the failure call for people actually dying in sufficient numbers, so that future generations learn not to go there? And who says that such would be learned? All these questions in the end are what is being asked, and do link to this election. |
A lot of good points brought up here and questions that are impossible to answer really. A lot of the problem is that there is no accountability, bankers aren't going to jail, they are getting bailed out. We have seen nothing more than slaps on the wrist, and that just encourages the same behavior to keep continuing forever. Chairman Volker showed that he was independent, and raised interest rates against the wishes of politicians and investors, but Bernanke and Greenspan have done the opposite put us in a corner that we can't get out of anymore. Before you even blame the politicians, you have to understand that none of the spending done by congress or the president would be possible if the fed would allow interest rates to rise.
Bubbles can happen naturally, I would say that something like the internet bubble would have happened regardless because nobody had any idea how big future revenues would be, you can see the same type of thing happening with things like facebook. The housing bubble on the other hand was due to government policy, and has still not been allowed to pop as much as it should. These distortions in the market are killing the productivity of the country. Eventually rates are gonna have to go up, and there are gonna be millions more empty houses before the market can reach equilibrium and rates can get to a reasonable level. Most people dont' have the savings to put a big enough downpayment to buy a house anymore.
If you want to argue that scaling things down slower and assisting people to smooth out the busts is a good idea i understand, but the government has not shown that they are capable of doing that. If you want to argue that the fed could be capable of making things a little easy by managing interest rates in a way that won't bust the economy as fast it sounds ok in principle but they haven't shown me anything of the sort. Instead i see the fed, government, and corporations working together to screw over the rest of the country for their own self interest. They have far too much power and far too little accountability.
currently playing: Skyward Sword, Mario Sunshine, Xenoblade Chronicles X
