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The Forum > Article Comments > Will more drinks cure a hangover? > Comments

Will more drinks cure a hangover? : Comments

By Geoff Carmody, published 13/3/2009

Observations about the global financial and economic 'correction' (a.k.a. crisis).

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This is all very good as far as it goes, but it doesn’t go far enough.

There is no point searching for interventionist ‘policy responses’ of governmental ‘economic management’. They are what caused the whole problem in the first place.

The elephant in the living room is government’s manipulation of the money supply. According to Keynesian theory, this has nothing to do with the financial crisis – in other words, manipulating the price of money has got nothing to do with the demand for it. The crisis just mysteriously arises out of an excess of confidence that has nothing to do with government increasing the money supply, and for which the solution is more governmental meddling because government presumptively knows best. This is not economics, it’s voodoo.

The slide back to Keynesian policies bespeaks the intellectual and moral bankruptcy of the perpetrators. These policies are nothing but quackery. The idea that taking money from A and giving it to B will ‘stimulate’ the economy is what caused the original problem. And now their cure is more of the poison that caused the disease!

The utility of a road or other infrastructure is all the argument it needs. If we are doing it to create ‘jobs’, all it means is that the ignorant are willing to destroy more than one job to create one.

All government policies are attempts to keep prices at the level they were during an artificial boom created by government monetary policies. This is just more voodoo. You can’t repeal the law of gravity by throwing stuff up into the air.

The fact is, there is nothing governments can do to manipulate a better economic outcome, other than to shrink tax and government by about two-thirds. They could start by abolishing all payroll tax, income tax, and stamp duties; abolish all laws illegalise consensual productive activity (they have just smugly passed a new raft of them), and stop parasitising productive people to pay for a welter of programs of redistributionist privileges that make society both poorer and unfairer.
Posted by Peter Hume, Friday, 13 March 2009 9:46:51 AM
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Wow Mr. Carmody , what a Scribe !

Made me think "Who is the most successful Terrorist so far in the "New Millennium" , Asama or George ?
Posted by ShazBaz001, Friday, 13 March 2009 12:57:43 PM
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Peter Hume, Yes, and also labor state governments and their local councils rejection of competition policy reforms, except for their own regulatory empire building, while over regulation housing supply, which is the tangible asset which the banks financed at the unaffordable values to suit the lefts, nimby green government revenue gathering streams.

How many of these government employees live in prescriptive high density,housing clusters?,if they want them, make it a requirement of their employment in the public service. Then we will see the value of their decisions.
Posted by Dallas, Friday, 13 March 2009 3:42:35 PM
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Interesting article Geoff, I think one of main problems with the global economy is the expectation for continuous growth.

Since WWII we have managed to grow the economy by continually adding more workers to the production line, these workers were women and then eventually workers in the developing countries. Each new worker creating more and more demand. The new workers were willing to work for less and so real wages were constantly driven down. At the same time lifestyle expectations were increasing.

Once the majority of people who could work were employed. The only way to continue growth in the developed world was to employ more cheap labour in the developing world putting more downward pressure on real wages. More and more products were produced, so that these additional products could be sold it was necessary to increase debt levels to finance the growth. More money made available by allowing risk laden debt. This debt meant asset prices,including shares and property began to skyrocket. Eventually a point was reached where no one was able to service the massive debt and the bottom fell out of shares and property.

The governments that are trying to borrow more money to make the global economy grow will only delay the inevitable. We will end up with massive government debt, as well as massive private sector debt.

We need to come to grips with reality we live on a finite planet with finite resources. We cannot have continual growth in population or in the global economy. We are reaching Peak everything and we are on the verge of destroying the planet.

We need to move to sustainable a population and a sustainable economy.
The old economic ideas no longer apply and the sooner we enter this brave new world the better.
Posted by John Pratt, Saturday, 14 March 2009 12:21:52 PM
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I think wat u are saying is the world is overdue for a war.
Posted by slug, Saturday, 14 March 2009 3:08:25 PM
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"We need to move to sustainable a population and a sustainable economy."

Translation: John Pratt would like to be a totalitarian dictator.

"The old economic ideas no longer apply and the sooner we enter this brave new world the better."

The principles of economics apply whether anyone likes it or not. They cannot be made to disappear by socialists forcibly re-arranging property titles, which is what caused the whole problem in the first place. You don't even *understand* the old economic ideas, and it is people like you, acting on the fantasy that we can make the economic problem of natural scarcity disappear by changing our 'ideology' and adopting centralised planning that has cause the problem you are trying to fix with more of the same nonsense.
Posted by Wing Ah Ling, Saturday, 14 March 2009 5:36:23 PM
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