Praising the man
More than two centuries ago, Adam Smith figured out why a decentralized market economy was the pathway to prosperity, demolishing the prevailing theory, mercantilism, which held that the way to prosperity was to be self-sufficient as much as possible and collect as much gold as possible within a nation's borders.
One hundred and sixty years ago today, Karl Marx published a book that argued there was a different way to prosperity and one-upped Smith by claiming that his theory would lead to something akin to utopia. Seven decades later, his ideas were put into effect. With disastrous results. Seven decades after that, it fell apart.
Since then, actually beginning slightly before that event, most of the nations on the planet have returned to the insights of Adam Smith and increased their prosperity at an unprecedented rate, lifting hundreds of millions of people out of abject, grinding poverty. And one distinguished economist at Harvard argues that the last quarter of the twentieth century should be named after the man who is responsible for bringing market economic principles back to the forefront of economic and political discourse.
History will call the period you are referring to as "The Age Of Greenspan" not as tribute -- but as a curse.
You claim to like the free market -- really??? The "what bubble?" FED is not central planning? Trillions to gov contractors is a free market? Money that is not a storehouse of value is a free market? De-industrialization is OK with you? A $50T credit bubble is what the "free market" brings?
What is unfortunate is that our current "Consumption without production, imports without exports, growth on credit -- these are all things that can't last in this world" (*) Our Bubble Economy is operating under the "Free Market" brand name -- so when it collapses -- people will say: oh, we tried that "free market" -- we won't make that mistake again!
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"be self-sufficient as much as possible and collect as much gold as possible within a nation's borders"
Is the OPPOSITE of this working? You think our trade deficits are sustainable? What is going to happen to our debt payments when long term interest rates rise as we debase the dollar?
How about a China vs US comparison? They are suppressing consumption and forcing savings that allows investment of their own capital -- we are running on credit expansion and borrowing ~80% of the worlds savings -- who is going to prevail?
As for the last quarter century -- let's quote another economist: "Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump" -Mises (.org)
I can understand a regular middle class citizen not being aware that the US economy is running on borrowed time and borrowed money -- but economists?
Economic cycles are LONG -- before you and Greg pat yourselves on the back: WAIT 2 YEARS !
(*http://www.spiegel.de/international/0,1518,440054,00.html)
Posted by: Edward Charles Ponzi Jr | February 22, 2008 at 10:07 AM