Capitol Hill Blue Forums Political Issues Constitutional Issues The Self-Destructive Habits Of Politics

Ardy:
Ah, the misconception is yours, for what I am saying is that despite all efforts to regulate and manipulate the economy that those forces cannot continue to restrain economic laws over an extended period of time without disrupting the natural forces of the self-regulating economic laws. In other words, how can the government regulate the most important and most influential force behind the economy, which is the emotions, desires, needs and physical requirements of people. Try as they might, the government, through the agency of the Federal Reserve, has attempted to control business cycles for the last 95 years and if you view the results of their efforts you will quickly see a long and consistent record of failures. What I am saying is that not only is the economy self-regulating, but that the results of this self-regulation will always contradict the intervention of government to direct the economy in a way that suits its political goals.

For instance, look at inflation in this country, what do you see? I personally see a relatively flat rate of inflation until 1913 when the rate began to creep up because the Federal Reserve began to interject a fractional system into the country monetary unit, then in 1933, there is another hike in inflation when the government debases the value of coin in this country by 50%, then again in 1971 when Nixon released the dollar/gold peg on the foreign exchange inflation shot through the roof and has continued to rise to the point that our dollar is now essentially valued at 0.05 cents to the 100 cent 1913 dollar.

Self-regulating economies don’t have a bad track record, unlike government regulated economies. In self-regulated economies you will find the natural cycles, up and downturns, but they were relatively short in length and not nearly as disruptive as those found in the government regulated economies, as we have seen since 1920. Those self-regulating economies never lead to chaotic conditions, even when there were economic dislocations and none ever came close to the economic dislocation of the 1930s in this country under the highly government regulated economy of the 20s that led up to the Great Depression.

Let’s face it, the government is neither productive nor creative, nor can it induce, by intervening into areas that it is not equipped to deal with, any positive result in our society. We have falsely come to believe that the government is the foundation of our society and that is not only erroneous, but dangerously erroneous. We now have a government that completely operates on the premise that deficit spending is beneficial to both the economy and eventually government debt, but those who advocate such ridiculous premises since it only continues to aggravate the underlying problems facing this economy. Similarly, corporations don’t favor free-markets, but regulated markets since they allow for far less competitiveness to enter markets.

The point is that regulation; government regulation is a device that seems to limit the economic activities of people in markets. I have read all the books upon which you seem to base your premise on and in everyone that I have read the implication that without government regulation in the sphere of economics that the economy would devolve into chaos, that is simply not true and it has been proven in several economies, even some of the most primitive. First, there is a very distinct different between law and regulation, law tends to deal with general subjects while regulations are far more specific. You will note that long before the government began to intervene and regulate the economy that there were still cases brought before the court for fraud, it was not a matter of government regulation, but the efficiency of the law to deal with such cases. Thus there has always been oversight in matters of the economy even without government regulation and intervention. So too, the economy operated with far greater efficiency without nearly as many dislocations prior to government regulatory intervention.

It is impossible to ignore that there are self-regulating forces involved with personal decisions in the market place economy. It is an absurdity to state that the government can regulate the primary force within the economy as it attempts to regulate the economy in general. Since human behavior is the primary force behind all economies in the world, the governments attempt to regulate the economy while it is impossible to regulate the primary moving force behind the economy does little but hinder the complete action involved in economic cycles. Since private enterprise operates on a completely voluntary basis, it is, if left to the natural laws of economics, not only self-policing, but also self-regulating and, as you said, it is self-correcting. The problems we see is a government that seeks to avert these economic corrections when it’s own policies helped create the mal-investment in the first place with its intervention into economic management.

Even with all the morass of government regulation and intervention, the fact is that despite it all the economy cannot operate outside of economic law. It will self-regulate despite the efforts of government to impose a regulatory mandate upon it, and at times the very imposition upon the economy by government intervention will exacerbate periods of normal corrections ending in massive and deep corrections we now call recessions. By the way, an interesting fact is that our definition of both depression and recession has been conveniently changed over the years, can you guess why? The change of definitions allows the government to maintain a degree of control over human actions regarding the economy. Have you noticed that the government and its agencies have been extremely hesitant in calling this latest “slow-down” a recession; there is a very good reason for that.

The truth of the matter is that you could complete close the government down today and the economy would, after a period of adjustment, reshape and reconstitute itself even without government. The fact is that the economy is not dependent upon government, but government is dependent upon the economy. The only reason that either inflation or regulation persist in this country is that someone [the influential] is benefiting from both, otherwise there would be neither. You will also find the most avid advocates of both regulation and to a degree inflation, will always seek to portray them in the best possible light by declaring that without them we would not have nearly as prosperous of a society without them. That is a blatant and despicable lie.

Have you noticed that politicians and corporatist in particular are extremely favorable toward “easy-money” policies of the Federal Reserve even though those very policies generally are not favorable to the majority of people in this country over the long-term? They will never admit the consequences of such “loose-credit” policies under a fiat monetary system because if they did they would reveal the primary source of both their power and wealth: Inflationary confiscation of the wealth of this country.

Another interesting fact about government regulation can be found in the way small businesses are affected by such regulations. As I said, regulations favor the large, politically connected corporations, but the brunt force of these regulations are felt intimately by small business owners and entrepreneurs. If you take a look at the Colonies and then our early history as a country, you will find that prosperity increased five-fold in this country during that period because, unlike the European countries, our government didn’t involve itself in over regulating the economy. There were no favored monopolies as there were in England, France, Italy, Spain and Portugal. I maintain the same outlook found by the Founders and that is: “the best government governs least, that society is self-regulating and should be left alone, and that the unhampered market economy and free trade are part of liberty and are keys to economic prosperity.”

Have you ever read Cantillon, if not I would enthusiastically recommend his “Essay on the Nature of Commerce in General”, he is credited with the “discovery” of economic laws. Also, some interesting reads can be found in the story of John Law and the Mississippi Bubble, which sounds eerily familiar.

For decades, our government has entered into the economy with regulations that have promoted some of the most dangerous financial instruments in the world, all of which are based solely upon fiat. Take for instance the “Derivatives Market”, at close to $500 Trillion Dollars in estimated value, it is over 5 times the global GDP, this one fact should raise some interesting questions in the minds of not only the politicians, but everyone. Many of these Derivative Contracts are bought and sold without an underlying instrument of support, in other words, there are contracts that are being bought and sold that don’t have one thing backing them except a promise. This whole industry is extremely complicated but also extremely popular and it has been made possible because of regulatory intervention into the markets. It has been said that this single market could bring down the entire economy of the world with minor effort and it would only take one of these dominos falling against another to start a massive chain reaction that would affect every single sector in every economy around the world.

The thing is that legislatures are constantly crafting new regulations and reforming the systems they are intended to regulate. They have a tendency of recycling old regulations with newer face-lifts that few of them seem to understand in terms of the consequences of such regulatory action.

One need not look far to see the effects of a government whose hands are loaded with either misdirected or conflicting policies. I find it mind-boggling to hear people actually defend this morass of government regulation when all they need do is look at the government’s management of just about any area of government to see that they are all idiots. Hell, the government can’t even wage a war without mismanagement, massive waste, and irrational destruction.

My opinion is that the government can only cause disruptions in the economy because it operates, or seeks to operate in ways that are contrary to the natural laws of economics. It has absolutely no power to intervene in the primary force that moves the economy, which is the people in their voluntary association in markets and it constantly misjudges the consequences of its own actions.