By Chris Rossini
What if the government passed a law mandating that all automobile fuel gauges were to be fixed at 50% full. By law, the gas gauge would be prohibited from moving up or down. The reading would be fixed at 50% at all times. Don't question the government as to why. They have "studies".
How would that change everyone's behavior?
Well, first of all, a key indicator that determines whether or not we buy gas, and how much of it to buy, now distorts our decision making. We'd make decisions based on this distortion. In this case, people would probably "fill it up" all the time, just to be safe.
Government, would in essence, completely ruin automotive travel.
Next question: What if the government passed a law fixing each person's body temperature to 98.6 degrees fahrenheit? Congress passes the "Body Heat Equality Act For Freedom". Each and every time that you visit a doctor, he is not to take your temperature, because it has been fixed to 98.6. In fact, he can't take your temperature because all known thermometers have been confiscated and destroyed. Do not question government. They have "studies" that show thermometers are bad for the environment.
How would this change things?
Well, first of all, your doctor would not be able to get a good reading of your condition. A key indicator now distorts his decision making. He'd make decisions based on this distortion. His diagnosis and prescription will likely be way off.
Government, would in essence, completely ruin healthcare.
Final question. And this one is not a "What if?" This one is a "Why?"
Why do we allow a central bank to price fix interest rates? They distort a tremendously important indicator for everyone in the economy. Loans are made that shouldn't be made. Businesses are started that shouldn't be started. People are hired that shouldn't be hired. Houses are built that shouldn't be built. Shopping Centers....Skyscrapers....Wars are fought that shouldn't be fought. The government is bigger than it ever could because of its central bank. Resources are malinvested as a policy!
Government and The Federal Reserve are ruining the economy. This isn't an imagination game. This is the real thing, and it's happening.
Why?
Why do they get away with it?
Here's a major reason....In the first two examples (gas gauge & temperature) everyone would know the source of the problems right away. The government would never be able to get away with either one. Their mischief would be so easy to detect.
This same cannot be said about the price fixing of interest rates. One of the champions of our albatross was John Maynard Keynes. He bragged that the whole process "engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose." (emphasis added)
The source for so much unnecessary economic pain is not so easy to detect. If you give a gang of thieves what appears to be a sure thing, they'll take it in a heartbeat.
Fortunately, times are changing, and it's no longer a sure thing. That doesn't mean the gang of thieves won't continue to ruin the economy. They most certainly will. That's what gangs of thieves do.
But that "one in a million" number is shrinking. And that's certainly a very good thing.
Chris Rossini is on Twitter, Facebook & Google+
Real US diplomats from real civil society (not the NGO version)
ReplyDeletestepping in to do real diplomacy.
http://mindbodypolitic.com/2014/01/12/real-us-diplomats-take-over-from-us-state-dept/
so, public choice theory explains the stupidity of Americans w.r.t the Fed? concentrated benefits and distributed costs?
ReplyDeleteWhy do they price fix interest rates? Because they can.
ReplyDeleteBanks can engage in practically risk-free gambling, privatizing profits and socializing losses. Uncle Sam can spend "money" it doesn't have buying votes and enriching their cronies.
Meanwhile, the poor get poorer and the middle class shrinks. Eventually the parasite kills the host.
or, What The Fed Gets Away With It?
ReplyDelete“On that note, and I’m obviously digressing, let’s return to Germany’s situation: I think Germany has 3,300 metric tons (of gold) in total, most of which is at the New York Fed or in Paris or some place other than Frankfurt. And they asked for a meaningful portion of that (gold) back. And you might recall that they didn’t get it back.
So the reports, none of which wind up in the mainstream media, are that they got something in the order of 37 tons back. And what’s interesting about the 37 tons that Germany got back is that it’s not the gold they had placed at places like the Fed for safekeeping. It’s not the same gold. It’s new gold that had been melted down, kind of like the gold that we would get from our refiners in Hong Kong, gold that had been recast and delivered to the Bundesbank.
Thrity-seven tons out of a much larger stash that had been placed out and requested for repatriation -- just 37 tons. That’s a small fraction of just one day’s LBMA (trading) volume. So about all you can conclude from this is two things:
First of all, the German gold is gone. The gold that had been placed for safekeeping at the Fed had long ago been sold into the market and was no longer available.
Those serial numbers (on what was supposed to be Germany’s gold stored at the Fed) had long ago been erased.
And someone, probably the Fed, had to go out and buy gold in the market, which with a digital printing press is cab fare, and had it melted down and recast into bars that apparently were different from what the Germans expected. But good delivery bars, and delivered to Germany.
And there’s been a bit of a buzz in the German press about it, but you don’t see anything in the Western press, outside of Germany, which is pretty interesting.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/11_Absolutely_Shocking_Developments_In_The_War_On_Gold.html