The problem is not that government is "wicked", it's that you cannot just baldly assume, as you have done, that the problem cannot have anything to do with government's direct and indirect control of the money supply.

Obviously if you make an irrebutable presumption that the problem is not enough government regulation, you're just arguing in a circle.

The problem is not that my argument is not 'well-informed' it's that your argument has been refuted.

The point is this:
1. We already know that total government control of the economy doesn't work.

2. The issue is whether the current economic crisis has been caused by not enough government regulation, or not enough market regulation.

3. Government already takes up fifty percent of what western societies produce, and has an entire arsenal of instruments and institutions of 'monetary policy', which all have in common a uniform tendency that they promote inflation - the sneak tax.

4. Any remedy by way of further government intervention, is to *increase* the tendency to approach a final state that we already know is unworkable because it ends in economic chaos, not to mention fascism. So what makes you assume it's not the source of the problem?

5. Those asserting the problem is unfettered markets have a number of major problems to explain:
firstly to reach their conclusion they must assume that the entire arsenal of inflationary institutions and policies, and lowering interest rates, has nothing to do with the inflated demand for money and money substitutes that characterises the boom, which necessarily leads to the bust.

secondly, if the original problem is the ignorance or immorality of individuals in general, *government cannot be argued to be an improvement, because government is constituted by these same individuals.* You need to deal with this point, Geoff. There is simply no ground for assuming that government has the knowledge or the selflesness it would need to have to justify the expectation that it can be any improvement on the problem.

thirdly, the knowledge set available to markets is astronomically greater than the knowledge set available to any central planning authority. Notwithstanding all their pretensions to knowledge based on complicated mathematical models, central planners have no more access to knowledge of the market’s optimal or equilibrium points than Joe Blow has.

6. Under market regulation of the money supply, loss and bankruptcy serve to take resources out of the hands of entrepreneurs who do not satisfy the needs and wants that the broad mass of the people consider most urgent; while the much-reviled 'profit' is the direct result of the behaviour of the broad mass of the people, by their everyday dollar-votes in buying or abstaining from buying, in demonstrating their preferences as to what goods and services satisfy the wants and needs that the consumers themselves consider most urgent.

These effective feedback mechanisms are absent from government regulation. As such regulation is specifically intended to change the outcomes that would result from profit and loss, it has no means of economic calculation, and must fall back to preferences based on political favouritism, and rules and regulations. That's it. Partial government control has no way of supplying the economic competence that total government control lacks; except by reference to the remaining markets.

7. On the other hand, those asserting the problem is government face only the mere bald assumption that the problem cannot be government, without addressing both the reasons and the evidnce to show that it is indeed government manipulation of the money supply that is causing both the boom and the bust.

I challenge you to show the intellectual honesty either to admit, or to refute these point for point without evasion.

Wing Ah Ling-
I'm not going to answer this in detail because you clearly haven't even read what I've written in the article and in my previous comments, let alone attempted to find out my views in more detail.

Government management of markets is not total government control of the economy. I'm not an advocate of centralised communism. READ my previous comments.

Quote from my article: "Markets are clearly powerful, and they do have the considerable merit of distributing the processing of economic information, as Hayek pointed out." (Refers to your point 5/three.)

You seem to be stuck on inflation and money supply. I have much to say about the money supply, and I think it may be possible for it to be privately supplied, but not in our present fractional reserve, interest bearing (and yes, centralised) monetary system. It's just not the topic I addressed in this article.

No more debate with you, you don't even read what I've written here.

Wing, sorry, should have said look up Lombard (banking) in Wikipedia.
You may also be interested in the reference:

"How Venice Rigged the First, And Worst, Global Financial Collapse"
http://www.schillerinstitute.org/fid_91-96/954_Gallagher_Venice_rig.html

Although admittedly the source (schiller institute) is suspect. The historical similarities between then -1340s- and now are striking; particularly concerning the Australian wheat to Iraq controversy.

Dear Grim,

You stated “Although admittedly the source (schiller institute) is suspect.” I looked up the institute and found the info below. I agree the source is suspect.

http://en.wikipedia.org/wiki/Schiller_Institute

The Schiller Institute is an international political and economic thinktank, one of the primary organizations of the LaRouche movement, with headquarters in Germany and the United States, and supporters in Australia, Canada, Russia, and South America, among others, according to its website.

The Institute's stated aim is to apply the ideas of the philosopher Friedrich Schiller to what it calls the "contemporary world crisis." It was founded at a conference in Wiesbaden, Germany, in 1984 by Helga Zepp LaRouche, the German-born wife of American political activist Lyndon LaRouche. The American branch of the Institute publishes a quarterly magazine, Fidelio, which it describes as a "Journal of Poetry, Science, and Statecraft." The German branch publishes a similar magazine called Ibykus, named after Schiller's poem "The Cranes of Ibykus."

The Institute has been described by the London Metropolitan Police as a "political cult with sinister and dangerous connections."

Dr Davies, you seem to be under the misapprehension that neoclassical (or classical - you appear confused on this distinction) economics predicts no big companies for some reason. Competitive markets - that is, ones where barriers to entry are not inflated by government intervention - do work against monopolies and the like, but they don't guarantee an economy of sole traders or small business.

"If free(er) markets are superior then the evidence I cite should show it, and it doesn't."

The 'evidence' you cite is not useful in any sense. You keep trying to claim that only one variable changed over 50 years (the introduction of 'neoliberal' policies, which you refuse to define). This is preposterous, and is quite unscientific. This is not a good start for someone claiming that they are able to introduce scientific rigour into economics.

I've provided substantial evidence that freer markets give better societal outcomes, but you're not willing to engage with it. I bet you never followed the links!

You don't provide a "full account of your work" here, so you can't expect me or anyone else on this forum to counter it fully. To say we simply don't understand you might be true, but it appears weak and defensive, like you don't actually have the arguments to back up your assertions. Feel free to send me a copy of your book. Drop in to my blog ( www.jarrahjob.net ) and post a comment. It asks for your email address (not visible to anyone else), and I'll email you with my home address. That is, if you have the cojones ;-)

You also hide from the central objection to your thesis (ie that we can "manage" the economy), which is that governments do not have the requisite information to do so appropriately. You claim neoclassical theory assumes perfect information (not true, by the way), but then ignore the established problems with government information-gathering and processing, simply assuming that someone (technocrats, scientists, fringe economists, maybe even you?) can simply guide and control markets and always improve outcomes. History is emphatically against you in this.