Government is the problem, not the solution, when it comes to the economy
December 2, 2008
To the Editor:
I must take issue with some of the statements in Felicia Muftic’s column “Heeding lessons from the Great Depression” that appeared in the Dec. 1 Sky-Hi Daily News.
The implicit assumption that it will require government action to solve the economic problems the nation is now facing is dead wrong ” as will be proven by the actions being taken.
“Many economists” may feel that the actions taken by Franklin D. Roosevelt in 1933 brought us out of the Great Depression but probably far more would agree that it was Word War II that ended the depression and that the antics of FDR and Herbert Hoover before him actually made things worse and prolonged the misery.
Her column also buys into the myth that Hoover sat around and did nothing. In fact that would have been better than the aggressive steps his administration took to counter the economic events, steps that were continued and expanded by Roosevelt.
The point is that it is government action that magnifies and prolongs economic corrections and the more such action, the worse things will become. The natural economic cycle is excess followed by correction and so on and all government does by trying to eliminate the correction aspect is to make the inevitable correction worse when it comes.
Since politicians today are almost entirely incapable of saying “there is nothing we can or should be doing” about anything conceivable, they insist on doing something to prove they’re in control and know what they’re doing. In fact neither is true.
The excesses brought on by the over-extended period of extremely low interest rates allowed by the Fed must be corrected. The notion that they will be corrected by more of the same is literally insane: trying the same thing repeatedly and hoping it will work out differently.
This will play out and, when it’s over, the landscape will be different. The good news is that our children will find land and housing far more affordable than they were before this correction started. The bad news is that with governmental meddling at an extreme level, it will take much longer than necessary for the correction to happen and the experience while it is happening will be unpleasant, to say the least.
Our government is most certainly NOT “on top of the crisis;” it is pretending to be so while unwittingly fanning the flames and dousing them with gasoline. It will likely be bad but it didn’t have to be as bad as the government ” and both parties get credit ” is making it.