How to Avoid Another Depression
In the absence of all these government interventions, it is likely that the corrective phase of the business cycle would already be over and we would be in recovery mode. To be sure, housing would remain in a slump for some time to come, but restorative market forces would already be at work creating the next generation of companies and jobs.
If we want to avoid the next great depression, all such government interventions should cease. The Treasury Department should revise their recent action and turn their proposed conservatorship of Fannie and Freddie into a bankruptcy receivership that would ultimately liquidate the corporation and their liabilities. Meanwhile the Fed should announce its intent to stop Term Auction Facilities and close the discount window to all but its traditional customers. To reduce the negative impact of the recession, government should cease foreign hostilities, reduce military spending, balance the budget, and cut taxes and regulations. FULL ARTICLE
Comments (9)
Fephisto
"To reduce the negative impact of the recession, government should cease foreign hostilities, reduce military spending, balance the budget, and cut taxes and regulations."
Don't forget that pigs should fly.
Published: September 10, 2008 12:31 PM
Curt Howland
Right you are, Fephisto. In a couple of months we will be able to look at that last sentence and know that it's a list of all the things Leviathan is _NOT_ going to do.
Re-elect Martin van Buren!
Published: September 10, 2008 1:35 PM
Al
I like comparing this article to The Nation's, http://www.thenation.com/doc/20080922/howl2.
I like Thornton's recommendations better, though.
Published: September 10, 2008 2:34 PM
Paul
I think a depression is unavoidable, considering the gigantic asset & debt bubbles (derivatives being one of them) that took decades to form. It's not if, but when. And I think the "when" is just around the corner. Libertarians from even 30 years ago were alarming the public about this. I have a book written by Doug Casey in 1980 predicting an economic collapse because of large government debt and the real estate bubble. Big back then but enormous today.
The one thing we do have control over is not making a depression worse. Don't fight it and let it do it's thing. Of course, based on past history, we know that politicians aren't about to sit still.
Published: September 10, 2008 7:07 PM
Walt D.
This has got to make the FED jealous!
It is the final humiliation for Zimbabwe's battered currency, which was worth more than the US greenback at independence in 1980.
Even after two revaluations that have knocked a total of 13 zeros off it, it was trading on the black market on Wednesday at around 6,000 to the USD – or 60,000,000,000,000,000 to one in terms of the original Zimbabwe dollar.
Published: September 10, 2008 7:24 PM
Charles Landesman
The articles by Thornton and Rockwell present us with an experimental situation. If they are correct, then the recent interventions should produce something like the great depression. If, on the other hand, the economy tends to recover and not fall backwards in the next couple of years, then their claims are mistaken and the theories need to be revised.
Published: September 11, 2008 3:48 PM
Charles Landesman
The articles my Thornton and Rockwell present us with a crucial experiment. If their theories are correct, then we should soon be confronted with something like the great depression. If, on the other, hand, the economy recovers without a great depression, then their theories are mistaken and need to be revised.
Published: September 11, 2008 3:53 PM
Patrick Barron
There is no one in a position of power, either inside or outside government, who proposes doing anything that will put America's financial system on the road to recovery. Our monetary system is being destroyed by each government intervention. Furthermore, our citizenry seem prepared to sacrifice their freedoms rather than tolerate any reduction in their so-called entitlements, from Social Security to Medicare.
Published: September 12, 2008 11:31 PM
David Stowell
The unfortunate truth is that human greed is boundless and we have seen that characteristic of human nature become predominant in our society. Perhaps a "silver lining" of the coming economic disaster will be our realization that a society that values monetary wealth over all is
not a functioning society at all, merely the pretense of one.
Published: September 21, 2008 10:23 PM