In the last 60 days or so, the government has put something like $7 trillion (that it doesn't have) at risk to "save the economy". The problem is that none of it CREATES any wealth by Chuck Angier
(libertarian)
Wednesday, December 3, 2008
In the last 60 days or so, the government has put something like $7 trillion (that it doesn't have) at risk to "save the economy". Many consider the "$7 trillion" number "exaggerated", but when you also consider (as just one example) that deposits covered by the FDIC were increased 150% to $250,000 and that there was a mad rush for unstable brokerage houses to qualify as "banks" so that their investors would be covered by FDIC, then the $7 trillion becomes very plausible.
Oh, and the FDIC in its last annual report of September 30, 2007 (2008 isn't out yet) showed only about $6 billion of cash or cash equivalent reserves insuring over $4 trillion in deposits! The rest of its $53 billion in assets was in "government securities". Can we say "duped". Don't Count on the FDIC!
On November 23rd, the government authorized guarantees of $300 billion to our largest bank! Isn't it interesting that these backroom deals we find so offensive seem to take place in the wee hours of the weekend when no one is watching? On the following Tuesday, another $600 was authorized to buy up troubled mortgages. What happened to the $700 billion October bailout passed against the will of the people?
I understand that the state governments are proposing a $130+ billion Federal bailout package to relieve them of their anticipated shortfalls.
Now President-Elect Obama is talking about a $500 - $700 billion economic stimulus package to create 2.5 million jobs providing services to the government ala Mr. Roosevelt. I am discouraged to find more and more (what I thought were) level-headed "persons of influence" supporting this nonsense.
The flaw in all this is that we fail to create wealth. We strive as individuals and as a society to be prosperous. Wealth creates prosperity but freedom creates wealth. To be prosperous, we must have the freedom to gain or lose wealth. That freedom, given to us by our Constitution, in 200 years, created more prosperity (AND respect AND charity) than the previous 5,000 years combined! Now, we find ourselves in a position where we are about to forfeit that freedom and prosperity.
Government has the obligation and authority to relieve us of a bit of our wealth, WITH OUR PERMISSION, to provide services for us. In doing so, it creates no wealth, which, by the way, is why the "service economy" is a myth.
Wealth is created when one purchases a good or service with his or her own resources and free-will, not when it is done under force of law or with resources of another. Simply put, over time, government has created trillions of dollars of false prosperity under force of law and creation of debt, both public and private.
Many say that we must stabilize housing. How do we create wealth in a housing market driven by easy, irrational debt? The only solutions are to 1) create more easy, irrational debt or 2) let the market determine its value unadulterated by government.
How do we create wealth in an automobile industry whose consumers were funded by easy, irrational debt?
How do we create wealth in a stock market driven by tax incentives and easy, irrational debt?
Many say we must create jobs. How do we create jobs that don't create wealth?
Many say debt drives capitalism. NOT! Profit drives capitalism, plain and simple, however when debt is encouraged or sponsored under force of law, well, you get the picture. When profit becomes subject to confiscation, then capitalism, wealth and prosperity grind to a halt. Many say we are witnessing the end and failure of capitalism. This is possible, but not without the fatal intrusion of socialism.
"A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy."
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Posted By: Jake, the champion of the constitution
Date: 2008-12-03 17:31:11
Re: "Let's Maybe CREATE Some Wealth"
that's devil talk, sir! :)
if you haven't tried Hazlitt's Economics in One Lesson, he has a great section on this exact same topic. I can email you the pdf if need be. thanks for catching my typo in my secstate article! Jake
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