Ben Brittrolff, who writes an excellent blog entitled, Financial Ninja, posted the following comments on the financial crisis: "A lot of people have been asking and wondering, what will work? What can prevent a massive recession? What can prevent a depression? How are our policy makers and political leaders going to ‘fix’ this mess?
The answer is actually a simple one and was very carefully and neatly articulated in the 1920’s.
The Original:
“Es gibt keinen Weg, den finalen Kollaps eines Booms durch Kreditexpansion zu vermeiden. Die Frage ist nur ob die Krise früher durch freiwillige Aufgabe der Kreditexpansion kommen soll, oder später zusammen mit einer finalen und totalen Katastrophe des Währungssystems kommen soll.” - Ludwig von Mises
The Translation:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” –Ludwig von Mises
Well, we all know which route was chosen for us. One more final, massive, desperate push in credit expansion should do us it.
Those of you that have never read Ludwig von Mises, I highly recommend you do. Check out the Mises Institute.
Mises figured out in the 1920’s what our current economic leaders still haven’t figured out. He enraged all the communists and socialists, proving mathematically that non-factor-market (NFM) socialism could never work. This was called the economic calculation problem. All statist regimes face this problem to varying degrees including our own mixed economy. The evidence is plain to see in our history of booms, bubbles and busts.
Market interferences via tax policies, subsidies, tariffs, regulation and ridiculous fiscal and monetary policy result in the constant misallocation of scarce resources because they distort market prices and market signals."
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