Before I begin, I need to pass along to you some wonderful news from the Ludwig von Mises Institute. Most of the books and seminars offered by the Institute are now available online for your education and enjoyment free of charge. Please see http://www.mises.org.
Last year's (2008) essay left off with Man, Economy and State, so this year I will begin with its sequel, Power and Market.
In Man, Economy and State, Dr. Rothbard said a few things about interest rates. I believe what he said was key. Since my essay was posted, we did indeed enter a major recession. You have seen some major spectacles on TV. People are out of work. People are losing their homes. We are in a terrible way now, in late November, 2008, as I begin writing this (and still are in spring, 2009. Ed).
All kinds of reasons are being given for the problems. Ron Paul is the only one who is making sense, but nobody is listening to him (1). All the talking heads are discussing is “corporate greed.”
The government is throwing out money by the bushel basket, mostly in the direction of the bankers and big corporations, the same people who are being raked over the coals for being greedy and messing up the entire economy.
My own opinion is that artificially low interest rates set by the Federal Reserve are the main culprit. When interest rates are lowered, the money supply is increased, or inflated, resulting in higher prices. Lower interest rates also encourage borrowing. The Clinton administration imposed regulations that forced banks to lend to people who might not really have been qualified to borrow. According to some news reports, on average today people are thousands of dollars in debt. People embarked on projects the consuming public did not really want. That is, people were embarking on business ventures that the bad market signals had indicated were wanted by the consuming public, but actually were not wanted. Businesspeople were getting wrong signals. Now their chickens have come home to roost and businesses are having to close their doors, throwing people out of work. You see TV news stories about plants closing and you see the suffering of laid-off employees who find themselves looking for jobs that simply are not there.
Everybody feels their pain and wants to help. People are generous but people who need help themselves cannot help others.
Since I can, I am determined to take food to the food banks and increase my donations to the church which is reaching out to feed, clothe, and shelter the homeless, the numbers of whom are increasing. I hope you can give too, since this government of ours seems determined to make things worse.
Actually, this is really what the establishment has been waiting for. More centralization of wealth and power leading to world government is the New World Order they have dreamed of. Another benefit to the powers-that-be is that, as the economy gets worse, recruitment to the armed forces might grow.
President Obama seems determined to out-Bush Bush, even to be freedom-enemy FDR all over again.
Ron Paul is ballistic, as is everyone who understands economics. The wise are stocking up on non-perishable food, guns, ammunition, and gold.
So, once I finish Power and Market (this is really to finish the work I started last winter), I will turn to some of Murray Rothbard's works on monetary economics and the Great Depression, which seems about to be re-run.
(1)http://www.mises.org/literature.aspx?action=author&id=392, Paul, Dr. Ron, “Mises and Austrian Economics: A Personal View” and other works.