Comments on: Why the efforts to rescue the economy may fail

By: Raymond

Raymond — Tue, 25 Nov 2008 08:21:25 +0000

Scene from the ER, Act 2

Nurse : Dr. Ben, what happens if the patient still doesn’t recover?

Dr Ben: Nurse I’ve made up my mind so don’t confuse me with facts.

By: Raymond

Raymond — Tue, 25 Nov 2008 05:28:38 +0000

Scene for the ER:

Nurse: But Dr Ben, you are prescribing the very medicine that made the patient violently sick!

Dr Ben: Nonsense. Nurse inject the patient with our new liquifying elixir, TARP, pronto. And who told you Dr Keynes
had a stunted training in economic theory —one course in economics?

By: Dirk

Dirk — Mon, 24 Nov 2008 04:11:09 +0000

One of the actual enumerated powers (and responsibilities) of the Federal government is to PRINT MONEY. Given the massive growth in population, technology, and trade, not to mention an entire cyberspace universe crying to be monetized, it should have been a major alarm that the money supply was constrained the past three years until very recent Fed easing.

And when money is constrained, economic activity soon falls. First, because those with money have more incentive to hoard it instead of spend or invest it. Second, because as asset values fall, a negative wealth effect causes the kind of downward spiral we’re seeing.

There is no way out of this current malaise without a major increase in money and credit. The ultimate effect will be inflation, but this is not necessarily bad. Higher inflation will mean more incentive to innovate (think solar for oil). Higher inflation will mean more incentive to spend, invest, and hire. Higher inflation will mean a reduction in the unemployment amongst underqualified workers created by a higher minimum wage.

By: MannyfromNYC

MannyfromNYC — Sat, 15 Nov 2008 06:11:14 +0000

In my view, the real “root cause” is massive government intervention in the economy. Until the American people get it into their heads that big government tends to make things worse in the long-run, we will again revisit these same problems in the future. I think we would be better off if we allow market-forces based mainly on individual decision-making-to work things out rather than to use another form of “government stimulus.”

How many more billions of dollars of tax-payer money must we waste before we realize these mistakes?

Somebody once said, “If we subsidize failure, we will get more of it.”

I hope you folks don’t mind. I’d like to direct you to an essay on price controls which I wrote for microeconomics class last semester.

I placed it on my blog:

http://expandingyourknowledge.com/2008/10/23/economic-fallacy-price-controls/

I haven’t updated the site in awhile because I have tons of school work, but there are some interesting tidbits including my personal review of economist Ha-joon Chang’s “Bad Samaritans”-which is a book critical of free trade. A number of other economists-such as Joseph Stiglitz (Columbia University), Edward Glaeser (Harvard), and Ann Kreuger (Johns Hopkins) have also reviewed this book.

http://expandingyourknowledge.com/2008/10/23/bad-samaritans/