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Stop the insanity

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As we observe Washington politics, many may want to scream "Stop the insanity." We see paralysis on securing our borders, deficit spending beyond comprehension, financial regulatory reforms developed by the people largely responsible for the financial meltdown.

Consider this scenario: If the Federal Reserve Board had not dramatically increased the money supply in a few short years, our nation could have had a limited supply of real money with the following consequences:

1) Everyone seeking a mortgage, business or personal loan would have had to compete for a limited pool of dollars based on his credit standing and the merits of "his" deal.

2) As the competition for those dollars intensified, interest rates would rise to ration demand.

3) In that atmosphere, there would have been relatively few bad mortgages funded. The "credit default swaps" (in this case serving as unfunded mortgage insurance) which brought down corporate giants would not have been a significant factor because the underlying mortgages would have been sound.

4) The housing market would have proceeded at a sustainable pace rather than developing into an inflationary real estate "bubble".

5) Fannie Mae and Freddie Mac would have continued to behave irresponsibly BUT with less opportunity to damage the economy.

Convoluted international trade principles helped drive the situation. Lowering the dollar’s value relative to foreign currencies made our goods cheaper to other countries. Our politicians loved this because it created economic stimulus, even if it was illusory.

Seriously, who wants his goods and services devalued? It is perverse for regulators to adopt policies that insure that we receive less for the goods we produce.

Manipulating the money supply to delay recessions (as the Federal Reserve Board has done) is dubious. Delay makes the eventual recession worse. This policy fosters the notion that recessions are unnecessary and are therefore politically unacceptable.

To the contrary, recessions are periods when everyone (including politicians) must face up to his own economic report card and make appropriate adjustments. They teach the young lessons of frugality and saving for a rainy day and remind us of economic lessons forgotten.

In our midst are collectivists who would trade freedom for the false promise of security while ignoring the attendant moral hazards. Recent immigrants have joined the alliance that would derail the very system which provided the economic opportunities that attracted them to our shores.

We must learn the correct lessons from history: Freedom is the Mainspring of Human Progress. It is economic freedom that propelled our country from last place to first in less than 200 years. Our president said during the campaign that "this is a great country…and we’re going to change it." If he is successful, he may kill the goose that laid the golden egg as he implements his party’s collectivist agenda.

Contrast that with the words of George Washington: "Government is not reason, it is not eloquence, it is force; like fire, a dangerous servant and a fearful master."

Respectfully,

Kenneth Haskovec

texx008@gmail.com


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Nelson Propane

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