QotD: The cost of bad policies

Politicians and their disgusting, fawning, sycophantic pilot fish — the media — want us all to believe that economic ups and downs are a natural phenomenon, similar to earthquakes, meteor strikes, or the weather.

The simple fact that nobody ever mentions is that the economy itself is an artifact, a human invention, and while natural events do affect it in various ways — floods, drought, storms, and so on — most of whatever happens within it is as man-made as the computer I'm using to write this. Human beings shape the economy through all of their acivities. They find, make, buy, and sell innumerable goods and services. Unfortunately if they have political power, along with the evil will to use it, they can distort an economy in ways that conceal, destroy, steal, and force other folks to accept their products and practices, that have changed little since the walls of Babylon were erected.

That's what happened with the price of gasoline.

We've already discussed the way that the administration of Jimmy Carter (who worked in inflation the way artists work in watercolors) forced lenders — businesses that, like everything else in a truly free country, would have been immune to such an abuse of power — to offer mortgages to individuals who, by any reasonable market test were unable to pay them off. This, in effect, created money out of thin air — call it "fiat credit" — in a process only differing from actual counterfeiting because no printing press was involved. Clinton's administration piled this fraud higher and deeper until the "housing bubble" — an enormous market based solely on imaginary wealth — was created.

All that's required for a bubble to burst is a number of lenders who can't get their money back and can't sell the houses they've had to repossess. Companies the lenders owe money to don't get paid, and have to lay people off or go bankrupt. More disasters follow in a horrifying cascade of unpaid bills, fired workers, and rapidly dying businesses.

Who says there's no such thing as "trickle down"?

L. Neil Smith, "The Unnecessary Depression", Libertarian Enterprise, 2009-02-01