Central banks stifling the business cycle and the consequences of their own action feed financial insanity. From MN Gordon at economicprism.com:
Bad ideas are flourishing like Washington lobbyists. Just look around. It’s near impossible to blink without countless crackpot ideas coming into view. What’s more, the worse an idea is, the more popular it becomes.
Take Mickey’s Fine Malt Liquor. It’s almost as destructive as doctor prescribed pain killers. Yet people chug down Big Mouths as if their lives depend on it.
Or consider central banking. Has any other single idea extracted more wealth from the lowly wage earner? The Federal Reserve’s backdoor taxation program has snookered honest hard-working Americans for over 100 years.
Why is it that bad ideas are so warmly received? Perhaps, it’s because they generally promise something for nothing. That one can live off the forced philanthropy of their neighbors. That one can get more out of their retirement fund than they put in.
Promises of fruits without labors are fantastical. They’re also the reliable way for politicians to get reelected. How can it possibly be a good idea to spend more and tax less, and fill the gap with more and more debt?
From a sound fiscal and currency management perspective this is a terrible idea. Certainly, a policy to spend less and tax less would be much sounder. But for a politician looking to win votes, promising something for nothing is the only way to go.
Politicians know Americans generally do the exact opposite of what they say. They may say they’re against bigger government. But they will always vote in their self-interest, especially if they think they’ll get something for nothing.
They’ll always vote for promises of government handouts if they believe they won’t have to pay for them.
