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.

Wow Mr. Carmody , what a Scribe !

Made me think "Who is the most successful Terrorist so far in the "New Millennium" , Asama or George ?

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.

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.

I think wat u are saying is the world is overdue for a war.

"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.

Wing Ah Ling, a sustainable population and economy does not have to be run by “Totalitarian Dictators”.
Democracies can make the correct decisions for example we could get rid of the baby bonus. We could stop welfare payments to families with more than two children. Policy decisions that could help reduce our population and boost the economy.
We could use the money saved to provide a better education to the reduced number of children.
What principles of economics apply whether I like it or not?
I prefer the hard sciences myself such as physics there is a limit to the resources on the planet and there is a limit to the amount of C02 we can pump into the atmosphere before we cause catastrophic climate change. I think it is fantasy to think we can have continuous growth that is against all laws of physics.
It seems to me that the baby bonus and welfare payment to have more babies is in fact central planning, I am arguing for less government interference not more.

Surely the real political problem at the moment is that the standard of living of the average person has to be LOWERED. In addition, the lowering cannot be masked by inflation, indexation, spin, lying, humbug, or anything else, it will be brought about by the LOWERING of wages. This is likely to cause considerable social unrest (mounted policeman firing into the crowd of demonstrators, etc. ) The thing I like about deflation is that it takes all the masks away, something that politicians obviously hate. As one who has lived all their life under the principles of Macawberism (living within your means), I find it hard to understand those who have let themselves be seduced into borrowing, but unfortunately now is the time that they will have to pay the piper. The sooner we move to an honest financial system, such as the gold standard, the better off the world will be. The only thing that worries me about that is that in history every time the gold standard would have required the politicians to do something inimical to their re-election prospects, thet suspended the gold standard.

Wing Ah Ling, and the lefts, Calathumpian greens, enraptured in their utopian models of last resort, dissolve into being and nothingness ideals to save the planet when they don't know how to save themselves as mothers government milk dries up. Human Individuality is an endangered species hunted by the lefts mob, baying to blame someone else for their misplaced ignorance.

Why! are you drinking at all? Is this the ten rats in a box?

But you need more evidence! Do you remember, A time that's corrales with the speed of the minds.

Tell you what. Drink a lot of water, a belly full! Then get back to your studies in the morning..

All The best.

EVO

Oh! The song to listen too, is the ones called the killers!

And the big question is?

ARE WE HUMAN? or are we dances.

That's a great piece of music.

Now thats a great piece of thinking!

All the best.

EVO

That is very lazily structured essay, firing off one bizarre article of laissez faire faith after another, leavened with some more or less compatible pieces of other monetarist dogma (e.g., Keynes and Keating). Then the hokey aside about "mother always told me"...

The classic line from Carmody's latest: "What role can politicians play? Mainly, shut up. Please! Confidence is both crucial and shattered at present. Your blathering about the sky falling in is making things worse." Echoing Jim Cramer after Bear Stearns fully nosedived (see: http://www.youtube.com/watch?v=rOVXh4xM-Ww&feature=related) - good for a laugh at least.

It's exactly that kind of "confidence" (a la massive "confidence trick" or con job) that ensured this systemic disaster in the first place. Like the entire ship of fools in the finance sector and government: bereft of ideas, imagination, intellectual clarity, moral principle, openness or integrity of character; just more and more of the same ol'-same ol'.

No surprise too that Carmody avoids entirely the need to declare bankruptcy for the entire range of toxic funds under their even dodgier derivatives exposure.

A con artist? Nah, couldn't be! Carmody is one of the main backers for a new-fangled fart bubble in ETS/CRTS!

John Pratt
Physics, being a hard science, does not supply the value judgments. It does not, by itself, justify any policy argument.

Policy does not necessarily mean being run by totalitarian dictators, but it does necessarily mean using police to force people to do what they otherwise wouldn't do.

I'm all for getting rid of the baby bonus and welfare payments to families with more than two children. But not because they are the 'right' decision: because "we" are not justified in using police to force people into complying with "our" opinion, when, left to their own devices, they are not hurting anyone.

Democracies are no guarantee of correct decisions. Majorities can be just as wrong as individuals.

"What principles of economics apply whether I like it or not?"
All of them. For example:
- principle of self-ownership: you own yourself
- action: you take action
- action consists of preferring A to B, C, D etc.
- division of labour: labour in co-operation is more productive than labour in isolation
- law of marginal utility: you sacrifice the least valuable satisfaction when deciding which of a series of similar units of a thing to sacrifice when you exchange it for something more valuable
- time preference: your time on earth is limited. Other things being equal, you prefer a given satisfaction earlier than later; if I offer you $100 now or in 50 years' time, which do you choose?
- etc. etc. etc.

It is from these axioms, and conclusions logically derived from them, that the entire body of economic theory is built up, which goes on to explain capital, interest, prices, profit, loss, wages, etc.

The principles of economic science, like the principles of physical science, describe particular limitations on human action owing to the scarcity of resources.

"I am arguing for less government interference not more."

To that extent, I completely agree with you. Just as you don't want government interference being use to *promote* population growth, I don't want it to be used *either* to promote it, or to reduce it. I say the use of police, and therefore policy, to settle the question is not justified.

Let me ask you a question of ethics. Suppose 100 percent of the human population would die if they continue on their current course, but we could save 50 percent by killing the other 50. Could it be ethically justified?

Remember, there is up down and left and right, and a whole lot more I can not release.

I can not say what I have found, but we must wait. Faith maybe the conclusion.

lets just back off for a while and clean up this planet!

What have you got to loose.

EVO