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“Stimulus Packages” or “Economic Nightmares”?

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July 07, 2009 – Comments (32)

It’s hard to not go gaga over the ideas and intentions of “stimulus packages” and ramped up government programs. After all, won’t it create a lot of jobs, boost the economy, and lift us out of a rough spot? This is what we’ve constantly heard from politicians and the media especially over the past couple years. “Government needs to do something.”

Never forget how government gets its money. It does not earn it. It does not work for it. Every penny that goes to government must come forcefully from a productive area of the economy. Government can’t take money from a failing business or struggling individual, it must forcefully take money from wealthier (i.e. productive) businesses and individuals.

This brings us to the first problem with “stimulus projects” in the form of increased government programs, public works, and public spending in general. The only way any government can afford to spend billions and trillions of dollars “stimulating” the economy is to either tax, borrow, or print that money. In other words, people will either directly lose more money to government through taxes, the effect may be felt in the longer-term through debt and borrowing, or the currency will depreciate and prices will rise through the process of monetary inflation. Pick your poison; all three options for government to increase spending will inevitably pinch people the most either directly or indirectly.

“Stimulus packages” aim to boost the economy in the short-term. If government can provide jobs to build public entities (such as transportation options, buildings, etc.) the economy will correct quicker than if the market could work, right? The problem with this theory is people always ignore where that money comes from. Taking money from productive sources in the economy and throwing it to unproductive and expensive projects does not set the economy on a sustainable foundation.

Strong economies are not build on artificial spending. The more that government takes from productive sources in the economy and pumps it into unproductive government projects, the longer the correction and recession will be. Consider some of the projects being funded under Obama’s massive spending plan. One is building a light rail track. This is all well and good, but how is spending billions of dollars on a train track and system going to increase long-term productivity? Few people use government-operated trains as it is (witness Amtrak and its black hole of wasted money), it will simply require more funds sucked out of productive sources to survive.

People buy into the illusion that as long as people have jobs, regardless of productivity, it is good for the economy. Unproductive jobs do no good for the economy and will not expand sustainability and prosperity. Napoleon tried to create jobs and work just by paying people to dig up ditches and fill them back in. It’s a nice idea, but it won’t do a thing to improve the economic picture. It is when labor is efficiently and sustainably used that an economy will expand on a strong foundation.

Today we are seeing government promote and prop up unproductive entities like nothing else. First, we bail out companies who lived beyond their means, made terrible business decisions, and recklessly spent money. These companies were unproductive and hurting the economy. Second, we have the ongoing “stimulus package” pumping money into pork projects that will not be productive in the least. It may sound great to build roads and infrastructure to stimulate the economy, but it won’t create wealth and expand productivity. It is not beneficial to use productivity to fund nonproductive goals. It is a bogus and failed theory that we continue to follow. It will not help the long-term economic picture.

One does not need to look very hard to see how terribly these government shenanigans have failed in the past. The Great Depression is the first obvious example. Hoover and Roosevelt both increased taxes, public projects, and expanded government with hopes of curing economic ills. Subsidies, public works projects, and many other government programs were created and expanded in the 1930s. Roads were built, prices were propped up, and government would not let the market organize labor and money on its own. Despite the intervention and spending efforts from government, unemployment was higher in 1939 than in 1931. The New Deal cost billions of dollars and expanded the federal government like never before, but unemployment and productivity still did not improve.

Let’s take a brief detour to the recession of 1921. Few people have heard of this recession because government actually decreased its size, spending, and taxes during the rough economic period. The government and Federal Reserve did next to nothing as the economy began to correct after the government’s market intervention during World War 1. The government (to the disappointment of some interventionist politicians), rather than increase its role as it would do disastrously just eight years later, ended up sitting this recession out. Prices fell, unproductive businesses failed and reorganized, and the economy was back on its feet after no more than 18 months. The pain was brief, the correction and reorganization was quick, and it all happened largely because government reduced its size and let the market shift money and labor to productive areas of the economy.

In more modern times, Japan’s “Lost Decade” can be another example of the botched intervention of government and the central bank. Some believe that Japan did too little to “stimulate” the economy, when the government and central bank actually took a nearly identical road to the U.S. today. Failed businesses were propped up by government, the central bank lowered interest rates to 0% for a time and pumped cheap money and credit into the economy, and huge amounts of Yen were spent on unproductive and essentially worthless public projects. All of this did nothing but lead to huge government debt and a devastated economy.

It’s hard to understand how much money Keynesians want to spend on “stimulating” the economy. Paul Krugman, the front-runner of the Keynesian crowd, is calling for a second and larger stimulus package. The trillions of dollars already pumped into unproductive businesses and projects wasn’t enough? How much do these guys think we need to spend to bring about their Keynesian Utopia? Rather than realize that government intervention and central manipulation have done more to agitate the economy than help, people are crying for more of the same that historically has done more damage than good.

Government is great at managing the time, labor, and money of other people. It also guarantees that politicians won’t manage that time, labor, and money more efficiently than the people who own that time, labor, and money. The very concept that by taking from productive parts of the economy and spreading it to various unproductive jobs and projects is downright silly. The worst recessions and depressions have come in many countries when government prevents the market from reallocating funds from unproductive businesses and sectors to the strong and productive areas of the economy.

Preventing the failure of a large corporation because jobs would be lost is the equivalent of saying that government should have propped up horse and buggies and the many jobs in the industry regardless of its uselessness to society. The natural order of a free market is to shift funds to the strongest, smartest, and most productive businesses and industries. When government gets in the way with bailouts, “stimulus plans,” and countless other intervention methods, it only guarantees inefficiency, unsustainable activities, and prolonged suffering.

The answer to our economic problems does not lie in government spending as Paul Krugman and many other Keynesians would like, but in more freedom for the market and people to reallocate money and labor to the productive and sustainable portions of the economy.

DavidKretzmann.com

32 Comments – Post Your Own

#1) On July 07, 2009 at 11:16 AM, Dale119 (< 20) wrote:

I am starting to think that the American people get what they deserve and vote for.  Sometimes people have to learn the lesson the hard way.  Any free market economy country that we can move to if this gets a lot worse.  Most of us did not cause this problem, and we are not part of the governing class creating solutions that make this problem worse.

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#2) On July 07, 2009 at 11:29 AM, davejh23 (< 20) wrote:

Thank you for posting this. I hope the guy that said "we should be praising Obama" for the stimulus will read this. I think that many in government actually understand this, but they fear that taking this stance will be politically unpopular. It's a shame that our president, and those in Congress are more interested in being re-elected than in acting in the best interest of the nation.

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#3) On July 07, 2009 at 11:31 AM, Entrepreneur58 (36.68) wrote:

"The answer to our economic problems does not lie in government spending ... but in more freedom for the market and people to reallocate money and labor to the productive and sustainable portions of the economy."

Was it the government who made liar and subprime loans to people who couldn't pay the money back?

Was it the government who paid 200 times assets for tech stocks during the tech boom?

Was it the government who built millions of McMansions and luxury condos which nobody can now afford to buy?

I think your theory needs some work.  Both government and the free markets tend to make huge mistakes in allocation of capital.

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#4) On July 07, 2009 at 11:39 AM, abitare (87.76) wrote:

FYSA

 

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#5) On July 07, 2009 at 11:48 AM, Trentbridge (63.28) wrote:

So private enterprise automatically equals productive but public spending equals waste? How long is this sad, sad argument going to continue?

Flying corporate titans to Aspen is productive but providing public transportation in major cities isn't? Why don't you close national parks, make interstates toll-roads and charge for air-traffic control.

Tourists come to this country and laugh at our infrastructure - pathetic railroads, worn-out highways, collapsing bridges, broken down schools and 50 million citizens without healthcare. 

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#6) On July 07, 2009 at 11:56 AM, TMFPencils (99.81) wrote:

Entrepreneur58:

Was it the government who made liar and subprime loans to people who couldn't pay the money back?

No, but it was through the Federal Reserve's interest rate manipulation that banks suddenly could give out billions of dollars to customers who clearly couldn't afford it. Without the central bank (NOT a free market entity) subprime would not have been possible. Greenspan's interest rates of 1% in 2003-04 artificially pumped money and credit into the economy, making an unsustainable boom such as housing possible. 

And yes, government did pressure businesses to lower standards in order to get "affordable housing" for everyone. Through the Federal Housing Administration, Fannie Mae, Freddie Mac, government highly supported subprime and riskier loans. Don't give me that baloney about "deregulation." Government was pushing riskier loans so poor people could own a house. Under Clinton and Bush it was all the same with housing standards. 

Was it the government who paid 200 times assets for tech stocks during the tech boom?

Again, look at artificially low interest rates from the Federal Reserve. Cheap money and credit pumped into the economy to improve the economic picture, people get excited and optimistic, and then reality kicks in. Bubbles of these sort are a symptom of central manipulation, not the free market. The irrationality would not have been possible without the Fed, an entity created by government with ongoing government protections that would never be remotely possible in a true free market. 

Was it the government who built millions of McMansions and luxury condos which nobody can now afford to buy?

Look at the Federal Reserve. Through artificially low interest rates the Fed made the bubble possible. Everyone called housing a great investment, called it a "permanent" boom, and pumped the cheap money and credit into the economy giving banks the illusion that people had money to pay for ridiculous houses. 

I think your theory needs some work.  Both government and the free markets tend to make huge mistakes in allocation of capital.

True, it is not all directly from government. But the central bank plays a major role in allowing unsustainable practices to sustain for longer amounts of time than in a free market. In other words, the central bank's manipulation gives a bricklayer the impression that he has 20% more bricks than he actually does. The bricklayer begins to build a different house than he would have had he known how many bricks he really had. The longer he goes without realizing his mistake, the worse off he will be (i.e. the correction). This analogy represents what we had with the housing and tech bubbles.

Through the government and central bank, the market does not have a chance to freely work. We have not had a free market for a long time considering "capital" is in the control of seven central bankers at the Federal Reserve. 

You ask good questions but ignore the role that the Fed has in creating this bubbles and busts. I highly encourage you to read "Meltdown" by Thomas Woods to understand this process. 

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#7) On July 07, 2009 at 12:06 PM, portefeuille (99.60) wrote:












redeker on stimulus.

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#8) On July 07, 2009 at 12:08 PM, Entrepreneur58 (36.68) wrote:

Pencils2,

OK, look.  You go to a party and drink too much and pass out.  When you wake up, you find that someone took your car keys, stole your car, drove to your house, robbed your home, and raped your daughter.  According to your theory, you are 100% responible for the crimes committed because you made it easy for the criminal.  You should go to jail rather than the scumbag who took your keys.  It's just that simple in your world.

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#9) On July 07, 2009 at 12:41 PM, TMFPencils (99.81) wrote:

Entrepreneur58:

So you want to ignore the root causes and instead try to patch bandaids on a dying cancer patient? If you ignore the root cause (the Fed) we are destined to have another bubble period, high optimism, just as the tech and house bubbles, only to be followed by another crash. 

The problem was not lack of regulation, the problem was not deregulation, it was the Fed who made everything possible. Certainly fraud should be punished, but don't blame the effects of monetary manipulation on the free market. Ignoring the cause will guarantee a more devastating crash several years down the road. 

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#10) On July 07, 2009 at 12:53 PM, TMFPencils (99.81) wrote:

So private enterprise automatically equals productive but public spending equals waste? How long is this sad, sad argument going to continue?

It's funny how many of the companies flying executives around in corporate jets get bailed out by government in the name of "jobs." Let those businesses fail! Clearly you understand they weren't productive, the market showed the signs that they weren't productive, yet government continues to pump billions of dollars into the unproductive businesses. 

A case could be made for public works spending if we had money. Going deeper in debt to fund projects that are not productive will not "stimulate" the economy. As Peter Schiff said, it's like a homeowner in deep debt taking out a loan and remodeling his house. 

Private enterprise doesn't "automatically equal productive" but it does reward the productive in the long run. Government does not. Unproductive projects can't survive in the free market, but they can survive under government.

The bottom line is that we don't have the money, we're already in huge amounts of debt, and there is absolutely no way we can afford taking billions from the market and spreading it around government projects. If we had the money, weren't in debt, and fiscally sensible, it'd be a much more attractive option. 

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#11) On July 07, 2009 at 4:01 PM, 4everlost (29.47) wrote:

Entrepreneur58

In your analogy there are three entities; the party host, the guest and the criminal.  Let's assign them this way:  the party host is the Fed, the guest is a mortgage originator/banker and the criminal is an unqualified home buyer.  In addition, let's say that the drink at the party is easy money and the crime(s) is/are buying the house then defaulting on the loan. 

The party host invites the originator to the party with claims of dreams coming true, wealth beyond wildest expectations and fantasies being fulfilled if, and only if, he drinks alot (takes the money).  The banker says "oh, yeah, I like the sound of that" and comes to the party.  Just like you said, he drinks too much (takes the easy money).  The criminal, just like you said, takes advantage of the banker being unconcious and commits the crime (buys the house, defaults.).  To make the story even more intriguing we could add a fourth entity, an enabler.  In this case the enabler would be the Federal Government.  The enabler is an exotic dancer that slips GhB into the banker's drinks (pressures the industry to lower lending standards).  The dancer says "go ahead, have another drink" (take more money).   Here is what should happen next.  The criminal goes to jail for the crime(s) (default); the banker suffers because of the crime(s) (goes bankrupt) and the party host loses the right to throw parties (is shut down). I don't think that you can absolve any of the three entities in this analogy.  Plus, the enabler should go to therapy (change policies) for their hand in this mess.

Keep in mind that there are some who received invitations and declined to attend the party.  They did not pass out and protected themselves from the crimes.  

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#12) On July 07, 2009 at 5:05 PM, SkepticalOx (99.46) wrote:

It is far more complex than just one country's government's action. Without free-trade, and without the promise that other countries won't bailout their companies, the playing field isn't level globally.

How would you approach a situation where you have two global companies, one based locally, and another one a foreign competitor, that are both running through some really hard times? Example: Boeing (USA), and Airbus/EADS (EU). If both are near collapse, but the EU is willing to bailout Airbus, what would you do as the US government?

 

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#13) On July 07, 2009 at 8:50 PM, PacificGatePost (< 20) wrote:

Don’t look to China for a recue from this deepening recession.  It’s not up to the challenge.  China has created a massive middle class in a single generation, but it has yet to empower it.

 

http://pacificgatepost.blogspot.com/2009/07/dont-believe-pundits-on-chinas-century.html

 

The world still waits on the American consumer.

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#14) On July 08, 2009 at 12:37 AM, tonylogan1 (28.17) wrote:

The government bailing out failing free market businesses caused them to no longer be "free market" businesses.

They should have failed, and would have been replaced by some business that is productive.

The government's role should have been to prevent fraud. They should have been posecuting both lenders and borrowers that were clearly committing mortgage fraud all through this nonsense.

The government failed the free market. It was not the other way around.

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#15) On July 08, 2009 at 12:39 AM, tonylogan1 (28.17) wrote:

*prosecuting. (not to be confused with persecuting)

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#16) On July 08, 2009 at 1:06 AM, whereaminow (30.29) wrote:

Great post David.

I would like to add that the businesses that failed were not "free market."

The mortgage industry has tremendous government involvement and regulation.

The banking industry is a government regulated cartel.

And on and on.

There are no truly "free" markets. Some are under less control than others.  The ones under the most control seem to fail quite a bit more, don't they?

David in Qatar

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#17) On July 08, 2009 at 1:27 AM, HansHauge (32.36) wrote:

4everlost: Very well put.

Pencils: Keep up the good work, you are remarkably wise for your age.

Entrepreneur 58: Pencils is talking about the FED here. Why have you not adressed this issue? No one is innocent, but the man behind the curtain can indeed press buttons from his hidden chamber.

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#18) On July 08, 2009 at 9:52 AM, anticitrade (99.65) wrote:

This is a good post.  I really like the concept that it doesn't help the economy to take productive money and give it to the unproductive.  However, I have two small problems with what you said. 

1st  If availability of financing is essential to the growth of our economy, then these banks that were propped up DO serve a valuable purpose (although I totally agree that they acted irresponsably).

2nd We got into this mess because of both poor government and excessive SHORT TERM thinking of the private sector.  The government certainly provided the means for poor decision making, but it was the businesses who actually pulled the trigger.  The problem with capitalism is it does not adequatly address short term thinking.  This is why government has to regulate things like the environment, bank debt leverage, financial statement reporting, etc. etc.... 

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#19) On July 08, 2009 at 10:22 AM, SkepticalOx (99.46) wrote:

anticitrade hits it on the nail with comment his second point. They should regulate and constantly keep it updated (by removing obsolete regulations and installing new ones). Stimulus is a whole other story.

Anyways, interesting article on state capitalism by McKinsey here (Zerohedge). Worth the read. 

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#20) On July 08, 2009 at 11:21 AM, TMFPencils (99.81) wrote:

anticitrade:

If availability of financing is essential to the growth of our economy, then these banks that were propped up DO serve a valuable purpose (although I totally agree that they acted irresponsably).

Spending and borrowing is not the heart of the economy as politicians and the media would have you think. The economy needed to slow down, take a break from the excessive spending, take a break from the reckless lending. But moronic government officials who call credit the "lifeblood of the economy" actually believe we need spending to stay strong. 

You think capitalism is short sighted? Enter government. These guys care about the next quarter of growth regardless of the long-term consequences of a weaker dollar, higher prices, and excessive malinvestment. 

We got into this mess because of both poor government and excessive SHORT TERM thinking of the private sector.

Again, look to the Fed. If a teacher passes out bowls of ice cream in a first grade class, tells kids "Don't eat it for another two hours," leaves the room, and the kids eat the ice cream after five minutes, you're really going to ignore the teacher's (the Fed's) role? 

I don't want to keep repeating myself with these comments, but without the Fed's pumping of money into the economy through artificially low interest rates these projects would not have been possible. In a true free market where people set interest rates, not central bankers, it never could have gotten so reckless. If we only look at the effects and not the cause as politicians do we'll be dealing with the same problems several years from now. 

The problem with capitalism is it does not adequatly address short term thinking.  This is why government has to regulate things like the environment, bank debt leverage, financial statement reporting, etc. etc.... 

Ah, because the SEC has done such a great job in the past. The whole banking sector is controlled by government indirectly, there are other systems that would require little government intervention and would be much more beneficial. The FDIC's job is essentially to bail out risky behavior. Why is it that people do more research buying a toaster than opening a bank account? The whole banking system is set up on the idea that you will get bailed out if something goes wrong. Hmmm....

With regulations you must also deal with the Constitution. So many regulations today on the federal level are ridiculous when you consider that they don't have the power to get that involved. General regulations must be dealt with on a state level. But anyway, this is another conversation. 

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#21) On July 08, 2009 at 11:59 AM, anticitrade (99.65) wrote:

Pencils,

I mostly agree with you.  But I think you are a little too willing to pass the blame onto the government.  I think we have too significant and seperate problems.  The government is definatly one of them.

The other problem really begins with the average dude on the street who expects immediate excessive returns for little work.  As an investor he only buys stocks that provide these returns.  As an employee he jumps from job to job for the next big raise.  His incentive as an employee is to make a big splash in the short term and get out before it all hits the fan.  This employee fills our businesses from the very top to the very bottom.  The government also provided means and incentives for this type of thinking.  Consequently, sectors of our economy experienced explosive growth and then died out.  Long term thinking was a characteristic of our grandparents...  They learned it from the great depression.  It takes a a lot of suffering to learn a lesson like that.  I worry that putting too much blame on the government will blind us from this other crucial problem.

I also think your analogy about the icecream is unfair.  I would propose replacing the icecream with cocaine would better represent the situation.  Since cocaine has much more negative long term consequences than icecream.

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#22) On July 10, 2009 at 9:48 AM, devoish (97.60) wrote:

There are no truly "free" markets. Some are under less control than others.  The ones under the most control seem to fail quite a bit more, don't they?

David in Qatar

And there you have it David.

The free market failed, and then Government intervened. And that is why there are NO succesful free market countries.

Take farming. Government intervention means price distortion.

Price distortion is a blessing compared to depending on "supply and demand" when demand is starvation.

 

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#23) On July 10, 2009 at 4:47 PM, TMFPencils (99.81) wrote:

Price distortion is a blessing compared to depending on "supply and demand" when demand is starvation.

Right, the same "blessing" that led to worldwide grain shortages in 2007. The same "blessing" that skyrocketed corn costs because of federal ethanol subsidies. 

How in the world did the Agriculture Adjustment Act of 1933, the first U.S. farm subsidy, help anything except large farmers? The federal government paid farmers to plow under crops and kill cattle. This kept prices high when people needed them low, it destroyed small farmers (jobs, incomes, etc.), and large farms took over those farms for cheap labor. Great "blessing" indeed! 

And you miss the point: we've never had a free market. In the 1800s the government protected risky bank practices (as they do today) and didn't protect individual property rights in the form of deposits. We had two national banks in the 1800s. We had an income tax during the Civil War era, as well as a worthless paper currency. 

The problem is not lack of government intrusion, but government force restriciting the market from freely operating. 

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#24) On July 11, 2009 at 12:18 AM, devoish (97.60) wrote:

Right, the same "blessing" that led to worldwide grain shortages in 2007. The same "blessing" that skyrocketed corn costs because of federal ethanol subsidies. 

For you, food has been cheap all your life. Many Governments outperformed Bush and the Republicans. No "small Government" ever has. Free markets never have. Go left, young man.

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#25) On July 11, 2009 at 12:56 AM, whereaminow (30.29) wrote:

devoish.

It's always nice to see you around, blathering on the subject of economics, something you have no familiarity with.

I love the argument though. So basically it goes like this: George Bush said he loved free markets, therefore America under Bush was a free market, and so it follows that the resulting economic disaster was a product of the free market. That's your position right?  I don't want to misrepresent you.  I don't have to lower myself to your level.

David in Qatar

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#26) On July 11, 2009 at 1:55 AM, TMFPencils (99.81) wrote:

devoish,

If you think the general Republican Party represents the free market, do your research. They've been just as bad as Democrats in many cases. They were just as gaga as the Democrats for throwing taxpayer dollars around to bail out a failed system of government and central intervention. 

Sure, I've had food my whole life. How does that justify the federal government spending taxpayer dollars to fund inefficient fuels, thereby raising corn prices to record levels, hurting the poorer people in Mexico who rely on corn and could no longer afford it? 

You know what we've had in the U.S.? Freedom to choose food. All we felt from higher corn prices was higher meat and cattle feed prices, and that made no impact to me because I don't raise cattle and I don't eat meat. But in Mexico, corn is a staple food. Federal subsidies did a lot of harm not necessarily in this country, but recent actions have hurt poorer countries pretty hard. 

The worst disasters in food throughout history have precisely occurred because of government rationing, price fixing, and other unnatural practices. It hurt people in the Great Depression and it hurt people worldwide a couple years ago with record high corn and rice prices (two staple foods especially in foreign countries). 

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#27) On July 12, 2009 at 12:18 PM, devoish (97.60) wrote:

Pencils,

The worst disasters in food throughout history have precisely occurred because of government rationing, price fixing, and other unnatural practices.

Oh. And here I was thinking floods, droughts, pests and disease.

David (in Qatar),

No, thats not my argument. It's yours. My argument is simple. There is no successful free market country.

The fact that GWB and Alan Greenspan both claimed to be free market disciples and their results simply reflects badly on all who claim to be free market disciples.

Especially you. Because you claimed Qatar, after nationalizing its oil industry like Venezuela, was your best example of "free markets".

Apparently you are more like GWB than you want me to think.

 

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#28) On July 12, 2009 at 12:27 PM, Dividends4ever (< 20) wrote:

Well Washington keeps saying that the stimulus package is only now just starting to roll out onto the market place.

 

I will be curious to see what the next 6 months holds for investors and citiszens.

 

www.compdivplan.com 

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#29) On July 12, 2009 at 1:55 PM, whereaminow (30.29) wrote:

devoish,

Sometimes I forget that I'm arguing with a teenager.  Look kid, Qatar is a monarchy. I know it's not a concept that you can not easily understand, but a monarchy means the resources belong to a private family.  I was hoping you'd look that up one day and see this:

A monarchy is a form of government in which supreme power is absolutely or nominally lodged with an individual, who is the head of state, often for life or until abdication, and "is wholly set apart from all other members of the state."

Wikipedia

I'm sorry that I have to embarrass you like this, but you just never got the point.  Monarchies are about as far away from socialism as you can find on this planet.  Any welfare that the Emir gives to his people in the form of health care or education, comes out of his own pocket.  That is called charity.  Perhaps you like monarchy more than Socialism.  I don't know.  But to continue to refer to Qatar as big government, is not only dumb, it shows that you care more about winning an argument than being careful not to make a fool out of yourself.

You need to grow up.

David in Qatar

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#30) On July 30, 2009 at 9:18 AM, devoish (97.60) wrote:

David, (in Qatar)

YOU offered Qatar as your example of a successful "free market" model.

YOUR example Nationalized its oil industry, an action you describe as stealing.

I described YOUR example as a "benevolent Monarchy" before you did.

I called it benevolent because your current Monarch uses its oil money to subsidize healthcare, transportation and almost all of Qatar's economy.

Before oil, Qatar's largest industry was pearl diving.

Your next Monarch may not be benevolent.

The next will not have oil money.

Would you prefer to depend upon the charity of a President, rather than the blend of industry influenced Gov't we have?

Would it matter if the charity depended upon the benevolence of Dick Cheney, Barack Obama, FDR, The Emir of Qatar or King James of England?

For anyone who finds this post if you are interested in what was actually said, here is the link to the post that contains David's claim that Qatar is small government and the ensuing dicussion.

Here is my post asking for "small" gov't models and the results offered. It also contains a link to to David's follow up post.

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#31) On July 30, 2009 at 9:36 AM, devoish (97.60) wrote:

Pencils,

I would also like to reply to your post #26...

devoish,

If you think the general Republican Party represents the free market, do your research. They've been just as bad as Democrats in many cases. They were just as gaga as the Democrats for throwing taxpayer dollars around to bail out a failed system of government and central intervention. 

In my adult lifetime supporters of "small" government have given us Ronald Reagan who exploded spending while gutting gov't income, and replacing it with gov't borrowing.

The "small" gov't people then gave us Bush senior, and then Bush jr.

This small Gov't foolishness was only able to last more than the decade it lasted in 1920, because interest rates were 17% when Reagan was elected and people were able to roll their debt over as interest declined down to Greenspans 1%. Then it would have ended had not five investment banks lobbied for and been handed the right to produce 10 times more debt, by being exempted from leveraging requirements, as Bernanke tried to reign in debt with increased rates beginning in 2004.

If you abandon Democratic Gov't you will only be left with Goldman Sachs and no defense except violence.

One reason I support HR676 is because it removes 16% of our economy from the manipulation of investment banks, with Taxpayer guarantees if the investment banks mismanage that money while paying themselves huge salaries and bonuses.

David in Qatar wishes to remove the Gov't backing and control,  to acomplish the same end, or so he claims. But it is a method that has NEVER worked, for the majority of the citizens of any Nation ever.

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#32) On July 30, 2009 at 10:53 AM, beatnik11 (< 20) wrote:

People dont remember the brief recession in 21 because it was followed just 10 years later by a major world wide depression.  Its a terrible comparison

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