Be on guard against “New Deal 2″ and useless stimulus packages

January 23, 2008

The fallout over this economic crisis may include disastrous impulsive reactions against free market capitalism. The enemies of freedom will argue that greed caused the subprime mess, therefore we need a new system that punishes those disgusting greedy corporations to benefit suffering innocent working poor families. I have already seen several editorials blaming a lack of regulation and demanding the government reign in the evil bastards on Wall Street.

Here’s the problem — free market greed is not the cause of this crisis. The true culprit is government greed and interference in the markets. Central banks are the problem and they’re part of the government. Central planning of anything inevitably results in its destruction, including money.

This catastrophe is not the result of any deficiency of money in Washington, it’s the result of an addiction to spending money that should never have been available in the first place, both in Washington and in your own home. The last thing we need is more money heading towards the idiots that caused this mess in the first place, including you, that’s how we got here!

Governments should not be able to create money at will and neither should you. Check cards and debit cards are great, credit cards are bankruptcies waiting to happen. While I recognize that new forms of payment can help lubricate the bearings of capitalism, borrowing money from your own future earnings to exhaust on consumption is just stupid.

Consumer credit results in scarce savings being squandered on useless junk. You don’t become wealthy by borrowing at interest to consume, you become wealthy by spending less than you earn and investing what’s left in income producing assets.

And don’t tell me about your uncle who never paid a penny of interest his whole life, let’s face it, some of us are more responsible than others. That’s why you need a license to drive and there’s an age restriction on alcohol consumption. Maybe we need a minimum net worth for credit card approvals.

None of this would have been possible if not for a fractional reserve system that allows banks to lend debt money based on the amount of other debt money already on deposit — another example of failed government regulation that distorts the market and causes catastrophe.

The responsibility of government is to protect your freedom, not to insure against your own stupidity. We need to resist calls for more regulation and instead call for an end to the fiat empire.