Interventionism

It may be difficult to understand at first why the members of the Texas Board of Education consider Aquinas, Calvin, and Blackstone more worthy of study than Thomas Jefferson.

The European experience, in fact, suggests that governments play absolutely no role in stabilization.

Fake booms and their consequent busts are directly linked to financial cycles, which in turn reflect the swings in money creation.

"This myopic focus on 'price stability' made policymakers blind to other possible pitfalls, such as the surge in credit and the rapid growth in asset prices, and the concomitant misallocation of resources led on by distorted price signals."

On the contrary, free enterprise and limited government have a proven track record and sound theoretical underpinnings.

The true tragedy of a fiat money regime is that bogus economic growth by way of monetary and fiscal stimulus can go on only until either the collapse of hyperinflation brings an end to the artificial boom or the amount of accumulated debt makes state bankruptcy inevitable.

Whether or not the US economy is "turning Japanese" is still an open question, but is becoming ever more likely as fake fixes are delaying painful economic adjustments.

Deflationary policy is costly for the treasury and unpopular with the masses. But inflationary policy is a boon for the treasury and very popular with the ignorant. Practically, the danger of deflation is but slight and the danger of inflation tremendous.

Bubbles, as we have seen, result from deliberate "expansionary" policies by government authorities, yet Krugman always seems to treat them as being solely the products of private enterprise.

The world already has the Great Depression as a warning. But governments and the bureaucrats who run them have decided to ignore the lesson. The new crisis of interventionism is fast approaching, and the market will not wait for governments to realize their errors.