the Great Lands

The Mises Institute has posted a list of articles by subject area that will help anyone trying to understand the current ecnomic situation.  It’s available at The Bailout Reader.

Ron Paul in July 2002 spoke to the house when he presented his bill, the Free Housing Market Enhancement Act.  His speech, Government Mortgage Schemes Distort the Housing Market, can be read in full on his congressional website.  Ron Paul predicted the crash in the housing market:

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

He then went on to explain what the government just might do to make it worse:

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

We are now having the beginnings of a crash in the housing market and the Federal Reserve has stepped in to delay the final day of reckoning.  As Ron Paul points out, “postponing the necessary but painful market corrections will only deepen the inevitable fall.”  That last part hasn’t happened yet but should be down the road soon.

I just finished Vernor Vinge’s book A Deepness in the Sky.  It is a loose prequel to his former novel A Fire Upon The Deep.  Both of these are great science fiction books with characters that you will love.  These people are surrounded by far future technologies, and they are living in the middle of galaxy changing events.

A Deepness in the Sky won the Prometheus Award for best novel.  This award is given out by the Libertarian Futurist Society on a yearly basis.  A major theme of the story involves a main character who struggles against his desire to make a “great society” while at the same time realizing the necessity of freedom for everyone.  This and the many other ideas throughout the book will keep you reading to the end as quicky as possible.

Ron Paul has a new article, The Creation of the Second Great Depression, at LewRockwell.com pointing out some of the problems with the proposed economic bailout.  Go read the article for yourself and then contact your congressman and senators.  A couple of interesting quotes follow:

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

And the problem with our current two party system:

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind – another example of the big choice we’re supposedly presented with this November: yes or yes. Now, with a backlash brewing, they’re not quite sure what their views are. A sad display, really.

I would also recommend that you buy Dr. Paul’s latest book, The Revolution: A Manifesto, and read it if you haven’t already.

The Mises Institute has just republished Murray Rothbard’s book The Mystery of Banking.  I hope to get this soon and add it to my reading list.  This book in addition to America’s Great Depression, The Case Against the Fed, A History of Money and Banking in the United States, and What Has Government Done to Our Money? should help anyone to have a better understanding of the current crisis and the government bailouts.  The problem is that many of our congressmen and senators don’t seem to understand basic economics or they do understand and are trying to use this crisis to nationalize as many industries as possible.

You can also read The Mystery of Banking for free at the Mises website by downloading the pdf of the book.

In case you missed it, Ron Paul endorsed Chuck Baldwin of the Constitution Party yesterday.  Dr. Paul’s excellent article, A New Alliance - By Dr. Ron Paul,  is available at the Campaign for Liberty.  It seems that Bob Barr of the Libertarian Party helped make sure that Ron Paul would endorse someone and it wouldn’t be Bob Barr.

The current economic crises involving Fannie Mae, Freddie Mac, AIG, and the government has caused a host of activity by the federal reserve and the treasury.  Most people are looking to the government to solve the problem.  If only the government would step in to “save” us from the evils of capitalism.  We are led to believe that the government has nothing but good intentions at heart and is also omniscient to solve the problem.  Unfortunately government and those in it are not even able to look back less than 100 years to see that their solutions have been tried before and failed.  Murray Rothbard concludes his book America’s Great Depression with this condemnation of the policies of the Hoover administration:

Mr. Hoover met the challenge of the Great Depression by acting quickly and decisively, indeed almost continuously throughout his term of office, putting into effect “the greatest program of offense and defense” against depression ever attempted in America. Bravely he used every modern economic “tool,” every device of progressive and “enlightened” economics, every facet of government planning, to combat the depression. For the first time, laissez-faire was boldly thrown overboard and every governmental weapon thrown into the breach. America had awakened, and was now ready to use the State to the hilt, unhampered by the supposed shibboleths of laissez-faire. President Hoover was a bold and audacious leader in this awakening. By every “progressive” tenet of our day, he should have ended his term a conquering hero; instead he left America in utter and complete ruin—a ruin unprecedented in length and intensity.

What was the trouble? Economic theory demonstrates that only governmental inflation can generate a boom-and-bust cycle, and that the depression will be prolonged and aggravated by inflationist and other interventionary measures. In contrast to the myth of laissez-faire, we have shown in this book how government intervention generated the unsound boom of the 1920s, and how Hoover’s new departure aggravated the Great Depression by massive measures of interference. The guilt for the Great Depression must, at long last, be lifted from the shoulders of the free-market economy, and placed where it properly belongs: at the doors of politicians, bureaucrats, and the mass of “enlightened” economists. And in any other depression, past or future, the story will be the same.

Unfortunately in the 30s Roosevelt continued to follow and expand upon the policies that Hoover had started.  If government and the fed had left the economy alone the great depression would probably have never happened.  If they decided to not try and “fix” the problem it would have ended quicker.  Too bad most of our current crop of politicians and unelected buerocrats have not learned anything from history.

At the Mises Institute you can download or read online America’s Great Depression for free.  Many of the other books I mentioned yesterday are available for free at the Mises website.

All kinds of theories and ideas are being thrown around on the news and talk radio about how the government should solve the current crisis. Over the years I have become convinced that the government caused the problem and that the more the government does the longer the problem will go. Read America’s Great Depression to see how the government helped cause and extend the great depression. The Case Against the Fed is an excellent source of arguments and evidence showing the destructiveness of fractional reserve banking. Economics in One Lesson explains economics in an informative way that shows how government intervention and taxes hurt the economy. How Capitalism Saved America gives many historical examples of unfettered capitalism in United States history that helped to produce the prosperity that generations past started and we continue to experience today. It will also help to see that what we have today isn’t really capitalism and that the supposedly deregulated businesses suffer under much government control.

There are some additional books that I plan to read soon that should also be worthy of recommendation.  What Has Government Done to Our Money?, A History of Money and Banking in the United States, and Prices and Production to name a few.  For a good work of fiction I really enjoyed An Enemy of the State.  It is a science fiction novel examing the takeover of a totalitarian intergalactic society through purely economic means.  I found it helpful to see these economic concepts worked out in fiction to get a glimpse of how it might work.