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Source link: http://archive.mises.org/10070/the-age-of-folly/

The Age of Folly

June 4, 2009 by

How about a bit of reality? Not the ridiculous promises from Washington: the absurd talk of “green shoots” while unemployment soars and investment falls; the silly guarantees that GM has a bright future, even as its stock price falls to less than the price of a Snickers bar; the nonsense about how if we spend more and inflate more, recovery will come tomorrow morning. The war on recession is a flop. Fail, fail, fail. FULL ARTICLE

{ 6 comments }

Dennis June 4, 2009 at 8:58 am

Mr. Rockwell,

Thank you for another excellent article. I found the last paragraph especially insightful:

“We are a generation that proudly shows off its accomplishments in all areas of science, and we preen about our love of facts and our detachment from mythology. Yet our culture is imbued with the most ridiculous faith in government to turn stones into bread, to accomplish miracles with a printing press before our very eyes. This is the age of folly.”

Gerd June 4, 2009 at 9:22 am
greg June 4, 2009 at 10:31 am

While I agree with your position on the manipulation of the money supply, it is not the only cause of our current economic situation.

The free market would have worked fine if our property rights were protected. Because of the lack of protection (inforcement of laws) the system was ripe for abuse. And the politicians failed to act because these abusers carry political clout with votes and money.

I am for a free market economy and everyone has rights to freely act. But these actions must not infringe on the rights of others. And those that do infringe must be held accountable and totally liable.

fundamentalist June 4, 2009 at 12:12 pm

greg, The odd thing is that one of the best ways to protect property rights is through honest money. Hayek came to that conclusion after years of struggling with it. The abuse of the financial system was made possible by the Feds forcing interest rates below the market rate. At higher rates of interest, no company or investment bank could afford to take on the enormous amounts of debt that they had. Housing prices would not have soared and there would have been little demand for the advanced derivatives that made the problem worse. Higher interest rates also dampen speculation.

Sound money forces people to be more honest against their will. It also forces the state to raise money by taxation or do less, because it can’t afford the high interest rates. Since people resent taxation, sound money would force the state to shrink.

gene June 4, 2009 at 6:55 pm

another thing higher interest rates would have done is eliminate much of the demand for the mortgage backed security.

when mortgage interest rates are high, bankers have no reason to sell the mortgages as they are paying good return. If they do sell the mortgage, they of course, want more for it.

also, investors hesitate to buy the higher interest MBSs because homeowners tend to shop for lower rates when they possess a high interest mortgage. the price of the mortgages in a MBS always exceeds the sale price of the house, so if many owners refinance, the investor loses out.

natural interest rates seem to solve many problems!

2nd Amendment June 5, 2009 at 7:31 pm

Fundamentalist,

“The odd thing is that one of the best ways to protect property rights is through honest money. ”

The best way to protect private property wrights is by packing heat.

Do you accept US dollars as payment ? Then don’t complain about it being a dishonest money.

If you believe the US dollar is toilet paper, and it is, and you still accept it, then you are being dishonest yourself.

You are the one to blame, not the government. After all, you accept this money as payment.

As long as you will accept US dollars, shut the fuck up !

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