Friday, September 16, 2011

Reality Bites Us on the Ass Again

For the past 100 years we've been going through a series of boom/bust cycles.  Monetary policy and fiscal restraint will push the economy up, mostly fueled by speculative bubbles (the cause of which we've discussed before, and will again shortly).  Those bubbles can't last, then reality will bite us in the ass and we come tumbling back down.  Our monetary and fiscal policy again shift, interest rates depressed money supply inflated, regulations tweaked, taxes subsidized or eliminated in certain corners and economic activity once more takes the path of lease resistance and forms a new bubble. 

And we ride that bubble like it's solid ground, until it too is forced to face reality and pops. 

We've been riding these boom/burst bubbles for a century or better.  So much so that we've even allowed ourselves to believe that this is just the natural order of things.  We call it part of the business cycle.  Things go up, then they come down, then they go up again.  The roller coaster ride is created by artificial ups, which cause plunging downs. 

And now, here we are.  A major bubble has burst, a bubble caused by federal incentives to lower mortgage standards, the federal reserve artificially keeping interest rates too low, and banks with no fear for the consequences of their actions because they're too big to fail.  Reality has taken a huge chunk out of our asses.  What are we doing.  Well, interest rates are being forced artificially to ZERO.  Banks and businesses who failed were bailed out.  A new layer of regulation is in place, and our government is trying desperately to create a new bubble in "green technology."  Something that is too far from prime time and not being encouraged to innovate.  What do you mean???  The government is pouring money into those companies for R&D.  Exactly.  Why innovate if the government is just going to give you what you should be earning?  But, I digress...

The point here is that we're trying to do once more the same thing we've been doing for years, we're trying to blow up a bubble so we can again justify the combination corporatist/socialist system that has been foisted on us. 

I say we strip the regulations.  We can't though, because we have to ensure that the banks behave.  Survival instincts would help them behave as well, except for one thing.  We've classified them as too big to fail.  If we let them fail, the survivors will behave, without the need of over-burdensome regulation.  The same can be said for other areas of over-regulation.  The regulations are self sustaining.  Their very existence makes their existence necessary.

Reality will continue to be a problem.  It's taking larger and larger bites out of our collective asses.  Until we realize that the Collective Ass does not exist and that as individuals we must be free to set our own agendas, make our own decisions, fail and succeed on our own decisions then the bites will be more and more painful, causing more and more harm to our nation.  We didn't become a great nation by strangling individual liberties.  We won't get back to being one until we stop.

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