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Author: mishedlo Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 465239  
Subject: Re: Market theology Date: 11/29/2006 4:52 PM
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If the Market was as efficient as Mish believes it to be, investing would be helluva lot easier.

The market is more effecient than central planners.
How many times does that have to be proven?
That does not mean there will not be booms or busts in a free market economy, only that they would be smaller and self correcting.

Furthermore one does not necessarily need a gold standard to have sound money. Just getting rid of the Fed, letting the market set interest rates, requiring 100% reserves on checking deposits and getting rid of fractional reserve lending would do wonders whether or not we had a gold standard or not.

Finally I am not a strict libretarian anything goes person. The government has a role - safety, the envirnoment, police investigations, national defense, are some examples where government can play a positive role (although on national defense there is a line between defense and offense and we have way too many times crossed it). Vietnam, Iraq, and Korea come to mind, and on the stupidest theories too (like the domino principle) or the belief that we can force democracy on a nation, blow up the place and they will shower us with flowers.

But putting faith in central planners and war mongers is silly. That is what has happened with the Fed and with all sorts of legislation promoting "ownership societies", GSEs, protectionist legislation, etc, etc. If the government had to raise taxes to fight that war it never would have been fought. Some how we have gotten to the point where year in and year out we can spend more money than we take in. Yet you defend the government.

Piss poor government policies in conjunction with central planning at the Fed is why both the dot com bubble and the houisng bubble got as huge as they did. Piss poor policies got us into Vietnam, Korea, Iraq, and WWI. All needless government sponsored wars. The one defensible war was WWII but that was largely a result of stupid government decisions in the wake of WWI.

In the wake of a bust, keynesian logic says to throw more money at it.
It is a logically failed policy. Trying to "fix" the dot com bust created an even bigger housing bubble. The cause of the great depression was too loose credit, too much speculation, etc. The cure simply can not be more of the same.

If you insist that central planning is better than the market at deciding what is needed then I can not stop you from believing in that fantasy. It is your fantasy and you are entitled to it.

Mish

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