Collectivist fantasy versus Reality

Suggestions by President Obama that achievements are the outcome of collective action rather than individual action (“if you achieve something, you didn’t do it; others made it happen”) reveals a deep confusion about reality!!!

Businesses are not successful because government provides bridges. Bridges can be built because businesses succeed & contribute to the commonwealth!!!

All wealth is created in the private sector. Indeed, jobs can only be created by the private sector since governments pay salaries based on taxes taken from private individuals that are not employed in the public sector.

The Importance of Inevitable Ignorance

“The model of a rational person with abundant access to information & seemingly in equality with others does not exist”.
~Voltaire: ‘Candide’~

Indeed, this is why Austrian economists reject the model of “perfect” competition that provides an excuse for govt intervention when reality fails to match up with this unreasonably utopian notion of market processes.

Europeans Balk at Price Stability, Fiscal Sobriety & Loyalty to Formal Agreements

Judging from this comments, mainstream economics can be faulted for inviting a lack of probity & sanity:

Germany is caricatured for clinging to antique preoccupations: price stability, fiscal sobriety, loyalty to formal agreements. The fear is that Berlin’s martinets will take Europe to the brink before they’ll dare bend their precious rules.

And so Europeans are bemused by “antique preoccupations” for caring about preserving material value or being restrained about imposing burdens on future generations & hewing to agreements…?

Why is this? Well, they are being told by “credible authorities” (that, alas, constitutes perhaps 95% of economists) to run larger deficits, accept larger public-sector debt burdens. In short, do ANYTHING but fix the fundamental imbalances created on the back of decades of lousy economic policy advice from the same economists.

Central bankers dangerous construction of a “house of cards”

Central bankers used novel monetary policies (QE, Operation Twist) to force interest rates below “market-based” levels so that commercial banks can access artificially-cheap funds to lend to governments (by buying government securities) at artificially-low rates.

In the middle, savers that wish to act prudently by compiling a nest-egg see their plans thwarted by punishingly-low deposit or money-market rates.

Central bankers & many economic advisers insist that policies that depress interest rates will “stimulate” the economy by making it cheaper for businesses to borrow are being disingenuous.

But banks find that the costs associated with lending to private-sector actors (e.g., hiring personnel to carry out due diligence, risk of default, evaluating value of collateral, etc) are higher than buying “risk less” government bonds.

Rewarding government profligacy while punishing thrift can only exacerbate economics imbalances while encouraging/allowing the accumulation of excessive public-sector debt.

The house of cards is becoming increasingly unstable. Were interest rates to rise to what would be a historically-low rate of, say 3%, servicing costs of government debt would force either a massive decrease in spending, a massive increase in taxation or default.