Thursday, October 16, 2008

I'm from the Government and I'm here to help.

President Reagan said these are the 9 scariest words in the English language. I can definitely agree. When ever the government tries to stick it's hand in the markets and "make things better," the common man on the street, like you and I, tend to pay for it. History has shown that too much government meddling in the markets leads to economic trouble.

Recently, two economists completed a study looking at the Great Depression. In particular, the economists studies the effects of FDR's policies on the Depression. Their findings? Roosevelt's price and wage fixing policies PROLONGED the Great Depression BY 10 YEARS! I'm not making this up. See the research for yourselves.

Now, we find ourselves in another serious economic down turn. We're not in a recession yet (let alone a depression), but the economy has definitely started downward. Evidence shows that the troubles are tied to the collapse in the housing market, which can be tracked back to increased sub-prime lending. Now, why would banks and mortgage companies want to increase lending to risky, low-income borrowers? Because the CRA "encouraged" banks to make these sub-prime loans. Clinton signed legislation strengthening this push.

So, because of a push to "balance" lending to "low-income" groups, we now have the Federal Government spending my money to bail out the banking industry who took risks they were encouraged to take by... wait for it... the Federal Government. Wow!

Of course, the most obvious example of government interference leading to economic problems is the fall of the Soviet Union. This collapse was not because of military attacks on the country. Instead, through micro-managing the economy and removing real market forces, the Russian Socialist system managed to take a resource rich nation and drive the economy into the ground.

Looking at this, it should be obvious that I think free markets are better for our economy. The less interference the better. I think this is an occasion where both of our presidential candidates are not serving us well.