February 12, 2009

Oh, Ezra - Echoing New Talking Points/Memes

From Ezra Klein, The Columbia Dispatch, and most leftist blogs who just parrot their talking points: "U.S. Rep. Steve Austria said he supports a scaled-down federal economic-stimulus proposal, but the Beavercreek Republican told The Dispatch editorial board that the huge influx of money into the economy could have a negative effect.

"When (President Franklin) Roosevelt did this, he put our country into a Great Depression," Austria said. "He tried to borrow and spend, he tried to use the Keynesian approach, and our country ended up in a Great Depression. That's just history."

Most historians date the beginning of the Great Depression at or shortly after the stock-market crash of 1929; Roosevelt took office in 1933.

Followed by whatever snark or silliness the blogger in question wants to add. First of all, Steve Austria doesn't know what he's talking about. This is not a huge influx of money INTO the economy - this is taking money out of your purse and putting it into your pocket. Or more accurately, a behemoth taking money out of everyone's pockets at the point of a sword and putting it willy-nilly wherever they see fit according to Porkulus. This is not an "influx" of money, this hasn't been created or produced - it's stolen, it's fiat money.

In the American context of the Great Depression, one book captures the whole onset and response. It is Murray Rothbard's America's Great Depression. He shows that it wasn't the 1929 crash that was the problem; it was the response to the crash that created the Depression. Bailouts. Price controls. Wage controls. Government programs. Trade restrictions. Crackdowns on the capital markets. And who did all this? It originated not with FDR but with Herbert Hoover — clear echoes of today. There is no understanding the present crisis without this book.

There was a massive crash (equal to or greater than 1929) that occurred during the massive Reagan boom. The response? Nothing. The press squawked for a day or two that we were going to sink into a massive depression, but there was nary a blip. Bad companies folded and new ones sprang up immediately; bad debt disappeared and good investors filled the gaps. No one got bailed out, and the market adjusted pretty much overnight. Had they been distorting the market consistently as in recent years with interventions by government, trying to stave off possible recession (which is just the name of the period when the market adjusts from distortions, on its own), there might have been some temporary ill effects, as postponing the inevitable makes the eventual reality worse each time. But society was quite upwardly mobile at the time, and no such thing happened.

This time, we are going the Hoover/Roosevelt route. First bailouts, then caps, controls, and finally, the monster with a trillion heads - Porkulus Maximus. The same Keynesian route Roosevelt took that deepened and prolonged the Great Depression into permanent proper noun status. We can eventually recover, but only with an eventual return to a free market, a period of adjustment (which will NOW, due to massive intervention and distortion, be longer and more painful than it need have been) and a reversal of these absolutely destructive and unconstitutional plans. I'll include a layman's explanation below, but buy the book so you can get a handle on the reality here and not just buy into these ludicrous talking points that really, make no economic sense.


nerd said...

Instead of applying Keynesian methods to this situation, perhaps we should embrace the philosophy of Thomas Robert Malthus.

AnnieMcPhee said...

Scroll down a few posts; they're preaching that one too. So long as they start by eliminating themselves, I guess I have no objection.

phthaloblu said...

Annie, this is a great post and your suggestion to read that book is wonderful. Now if only those who say they have open minds would actually practice it and read the book. It would give everyone a better understanding of not only economics, but the Great Depression also.

AnnieMcPhee said...

Thanks, phthaloblu; truthfully, it's my favorite subject; and despite my love of ranting, raving, venting, and mocking the left, my real passion is expounding upon the basics of civil rights, civics, our founding, and above all economics. It's not that difficult, it's endlessly fascinating, and it explains far more than people ever imagine it could. If they'd get over their fear of it (or in the case of the left, their closed-mindedness and willingness to listen to shit-stirrers like Paul Krugman) and just tackle the subject a little, they'd find the whole world opening up, and cobwebs clearing. I want to help that happen as much as I can. :) This IS a labor of love, believe it or not.

phthaloblu said...

Oh, I understand completely! I'm teaching my boys from a wonderful textbook I found thru FEE.org. One of the benefits of homeschooling is that you can follow your child and they wanted to learn. I've got books galore on the subject, and you're right. It's only a mystery becaue people think they won't understand it, but anybody can. Yes, we're big on history and the subjects of civil liberties. It's great to find people with like minded interests. I just find the subjects fascinating myself, and I hope I'm passing that interest on to my sons. I like to rant to, but it mostly comes from the frustration of others refusal to listen. I don't consider myself smarter than anyone else, so I don't understand why others don't try to educate themselves before spewing illogical arguments.