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Source link: http://archive.mises.org/8168/beware-the-moral-hazard-trivializers/

Beware the Moral Hazard Trivializers

June 3, 2008 by

The current financial crisis is the result of longstanding political interventionism. In what follows we argue that our monetary system creates incentives for irresponsible behavior (moral hazard) and is therefore an important cause of recurrent crises. Then we discuss two recent articles purporting to downplay the significance of this fact. The true cause of moral hazard in the financial sector is to be seen in monetary policy and especially in the current monetary system. FULL ARTICLE

{ 8 comments }

Deacon June 3, 2008 at 10:25 am

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While searching for moral hazards, the enemies of
ETHICAL CAPITALISM – Marxian socialists/
communists – are very busy trashing the idea of
free-market capitalism, and blaming current
financial crises and this looming food shortage
on a lack of government controls; that is, someone
ought to point out to those dolts how SOCIALISM/
COMMUNISM is failing around the globe, and
taking free-market capitalism with it, as I explain
below:

============================
============================

Dear Salon.Com Editor,

You’ll not get any closer to
the truth about what’s afoot with
Bush’s GLOBALIZATION and
and this LOOMING FOOD CRISIS
than my below thoughts and links
((copy and send to friends and colleagues;
and note that I REPEAT MY PREMISE
OVER AND OVER AGAIN, TO DRIVE
HOME THE POINT)):

The Third-Way push of
socialism/capitalism to
equalize the world’s
economies has caused
this looming food
crisis, NOT CAPITALISM.

Socialist/communist leftists
have captured capitalism
and enslaved it to EQUAL/
“FAIR” outcomes.

Of course, you’ll have to
think more deeply to find
the truth.

Read and learn the truth:

What we are facing in 2008
is a Third-Way (socialist-
communist/capitalist)
conspiracy to equalize the
world’s economies, as preface
to installing one-world
government; a plan hatched
during the 1940s GATT
formulations, which were
socialist/communist, in
effect.

Keep in mind that there is
no PEAK OIL crisis, only a
decades-long, purposeful
cap on searching and drilling
and refining for oil, in order
to put the world in crisis-mode.

Using food to produce fuel
is part of the conspiracy to
generate food riots, in order
to destabilize governments;
and this so-called “war on
terror” is also part of the
secret plan, although its
primary beneficially is Israel
in the exchange of blood
and treasury for oil–as
payoff for protecting Israel
from an ever-threatening,
encircling Islamic Arabism.

The secret plan?: to create
one-world government under
GLOBAL ECONOMIC SOCIALISM.

This is a conspiracy-driven
dismantlement of the West’s
financial underpinnings,
for a certain purpose: TO
EQUALIZE GLOBAL ECONOMIES,
for future installation of
one-world government.

I’ve provided all the details
in my essay, “Planned
Destruction of America”
(linked below), which is my
report on Lt. Col. Archibald
Roberts’ 1968 booklet: “The
Anatomy of a Revolution”.

Planned Destruction of America
http://planneddestructionofamerica.blogspot.com/

Corporate America: What Went Wrong?
http://corporateamericawhatwentwrong.blogspot.com/

This one helps to confirm efforts to PURPOSELY trash America’s
financial underpinnings:

http://www.321gold.com/editorials/engdahl/engdahl031808.html

Study my essay, then write as
if we’re all being led down
a path to hell on Earth by
secretive, elite movers and
shakers on the Left and Right
(path to hell aka “Third-Way
Global Economic Socialism”).
Read and learn and teach:

The EU and the coming North
America Union are products of
the 1940s GATT formulations,
and very few analysts are
aware of it ((GATT, NAFTA,
and CAFTA are socialistic
attempts at equalizing global
economies, in order to in-
stall one-world government
under THIRD-WAY Global
Economic Socialism)).

-Deacon

#######
#######

Brad June 3, 2008 at 11:58 am

If someone (or group of someones) pays for the penecillin, many people will feel free to sleep around.

It may be bad enough when an insurance pool is entered into voluntarily, though one can always exit the pool when the cost benefit of insuring against possible mishaps is less and less. In this case, it is bureaucrats forcing people into the pool because we all use money, but then money was stolen by the government itself.

Somewhat an aside, I find it amazing how many people argue we need socialized money but rail against socialized health, and those that blanche at the idea of socialized health but trumpet the idea of socialized money. Of course there are those who champion both, many more so than those who consistently and logically reject both.

Also, I don’t see how one insures against a contagian. Either you become sick or you don’t. Becoming sick and having someone convince you are well doesn’t seem all that logical. Deception isn’t insurance.

N. Joseph Potts June 3, 2008 at 12:13 pm

The discussion regarding fire insurance doesn’t square with my experience and impressions, based in the United States (Hülsmann writes from Europe, where these things MIGHT be different).

Fire & casualty insurance does NOT insure against losses suffered by third parties from spread of a fire FROM the insured property. Liability insurance COULD insure against this, but that’s a different type of insurance from what was being discussed.

Now, fire PREVENTION (which can also cost quite a lot in industrial settings) CAN yield benefits like those discussed, but it wasn’t explicitly mentioned.

Liability for damages to third parties varies from one culture to another. It is, for example, very high in Japan. There, one is expected to APOLOGIZE to one’s neighbors if one experiences a fire.

Florida Economist June 3, 2008 at 3:39 pm

Love the article. Absolutely correct in every sense. And lets not forget that Fed bailouts are a form of control.

Bill, Crappy Poker Player June 3, 2008 at 4:55 pm

Moral Hazard seems like a nice way to say when the chips are down go all in. The Fed is always there to bail you out. If the Fed fails then there is the rest of government and their agents to help.

You see the same behavior in high stakes poker.

Paul Marks June 3, 2008 at 5:01 pm

A very good (and important) article.

Bill, Crappy Poker Player June 3, 2008 at 5:04 pm

I want to change the statement from:
You see the same behavior in high stakes poker.

To:
You see the same behavior in poker games when the players get in the game for free.

Donald June 4, 2008 at 10:41 am

I thought the Fed coordinated the LTCM bailout but the Wall St. banks provided the money. In that case, there was no increase in the money supply.

Is this an error on the author’s part?

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