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Source link: http://archive.mises.org/8734/political-power-and-economic-ignorance/

Political Power and Economic Ignorance

October 9, 2008 by

Georges Bush’s recent speech, writes Jeremie T.A. Rostan, in defense of his bailout plan was quite a tour de force. Indeed, it managed to explain the pending recession of the US economy by a previous situation of “easy credit” without mentioning the monstrously inflationist policy of the Federal Reserve — which reached its climax in 2003 and 2004, when it lent dollars at a negative short-term interest rate, and resulted in the creation of more dollars in a seven-year period (2000-2007) than had been created cumulatively in the two centuries since the founding of the United States. FULL ARTICLE

{ 13 comments }

Milena Thomas October 9, 2008 at 8:52 am

“Nevertheless, if some grasped the connection between these present effects and that past cause, few of them seem to have grasped that resorting to the same policies at present will necessarily have the same consequences in the future: to delay the recession, and worsen it.”

This, to me, is the most frightening aspect of this debacle. No one seems to be learning. Or how about then-Governor Bernanke’s speech and apology to Mr. Greenspan, “Regarding the Great Depression. You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

He should have added, “Unless we feel political motives are more important…”

Book 'em Danno October 9, 2008 at 8:58 am

“According to the 43rd President, the fault rests entirely on “foreign investors” willing to profit from the competitiveness of the US economy.”

When in doubt, blame it on foreigners. Didn’t Hoover campaign on raising tariff’s on agricultural products? And this was before the stock market crash of 1929. Apparently, farming was contracting during the ’20s. He certainly got more than he bargained for with Smoot-Hawley. Hoover argued for lower tariff rates but signed the bill anyway.

James Korman October 9, 2008 at 9:25 am

“Those that refuse to study History are condemned to repeat it.”
Georges Santyana

Catallactic Ignorance reigns supreme.

‘Ignoramus et Ignorbimus’

James Korman October 9, 2008 at 9:26 am

“Those that refuse to study History are condemned to repeat it.”
Georges Santyana

Catallactic Ignorance reigns supreme.

‘Ignoramus et Ignorbimus’

Michael A. Clem October 9, 2008 at 9:46 am

Even given the current state of mainstream economics, I’m not so sure it’s a matter of economic ignorance as it is political arrogance: the fallacious idea that nothing is impervious to the coercive power of government. Nothing will be more baffling to Bush than to see that the bailout will NOT fix the problems. The underlying message of libertarianism: the immorality and impracticality of coercion, is more important and more timely than ever before.

Mark Medinnus October 9, 2008 at 10:28 am

coercive adj.: corrosive; corrupting

The November math behind the bailout package is more cosmetic than a kabuki hooker. Among the laws of chemical economics, red ink does not dissolve in hot air.

Fine article, thoughtful comments. Thanks.

David Spellman October 9, 2008 at 11:09 am

The comments are as good as the article. It is refreshing to see intelligent blogging.

hz October 9, 2008 at 12:25 pm

Bernanke was actually referring to Friedman and Schwartz when he said “you were right.” The occasion was Friedman’s 90th birthday.

Carlos Romero October 9, 2008 at 12:26 pm

I agree with Michael Clem, however, I think its a bit of both, political arrogance and on behalf of the American people political ignorance. A powerful man once said, “give me control over a country’s currency and I care not who makes its laws”. The name of the game is, who is indebted to whom? And who is in control of our currency or monetary system? Surely not us. This creation of new money has immediate debt attached to it. Nice article.

Ohhh Henry October 9, 2008 at 7:41 pm

I don’t think GWB is ignorant of the harm that his policies will cause. There is a story out there in the media in which one of his professors was interviewed. The professor, presumably as lefty as most professors, was tut-tutting because in their history class GWB had very strongly and stubbornly defended the idea that the FDR’s interventions in the 1930s harmed the country instead of helping it. Call him anything you want, but “ignorant” does not describe GWB. It may be a good description of many members of the public however (especially the ones who vote).

The reason why politicians can sit there with a straight face advocating what they know to be bad policies is because it is not in their interest to “do right” by the country, but instead it is in their interest to wreck the country as much as possible so that they can use the disasters they caused as the excuse to seize more money and power. Short of complete disaster leading to rebellion or invasion, nothing that politicians and bureaucrats do, no matter how harmful, will result in any harm coming to the political or the bureaucratic class, but will only enhance their position as “leaders”.

Politicians are wreckers, like the people of old who would make false signal fires on the rocks of the coast near their village so they could lure ships onto the rocks and then get rich off the salvage. They are not ignorant of the laws of navigation, nor are they pro-shipwreck as a general rule. But they’re perfectly content to give out false information when it is to their material benefit.

The same principle at work in the War on Drugs, the War on Terror, HUD, etc. has been described by Catherine Austin Fitts who calls it the “tapeworm economy”.

Uncle B October 13, 2008 at 11:45 am

We appear to be having problems with our capitalist controlled democratic system, right after the U.S.S.R. vomited its socialistic system for anarchy. Any chance for a new, more enlightened politics in the near future? Is Anarchy the answer? Canada has a social-democratic, multi-party, minority rule system that works very well. Do Americans need more than two parties? Are we doomed to boom or bust economies throughout the world, or can mankind devise better? Can Oil be declared the new gold? Do we actually enjoy the drama of government upheaval and seek it out to brighten our otherwise dull existence? Get out and vote, it won’t make any difference, McCain’s goons have a fix in with diebold and the next government will be a republican buy-out, but vote anyway, just to be part of the game!

Tom Rapheal October 13, 2008 at 1:13 pm

I recently took and passed both the ap micro and macro econ tests and believed about half the stuff I wrote down. Macroeconomics is majorly focused on what happens tomorrow and is not that bothered about any other day… in other words extremly shortsighted.

Uncle B:
Advocating Canada’s system of social democracy is in direct opposition on this blog??

tuss May 30, 2009 at 12:40 pm

Keynes was a queer who liked little boys.

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