Break it down for me GC

There is one option.

1. Government must stay out of the economy totally. They have to stop interfering with interest rates and must stop pumping anymore money into the system. They also must cut government spending drastically. Once they cut spending they will be able to lower taxes tremendously.

2. Interest rates will naturally rise to the market equilibrium level once the Fed stops keeping it artificially low.

3. A reallocation of resources must take place. The housing bubble concentrated far too many resources into housing that no one could afford. Interest raise will go up and housing prices will continue to fall. This must happen. There are far too many houses and the prices are artificially high. Prices must drop like a rock and in order to meet real demand.

4. When housing prices fall there will be many more foreclosures and all of the banks that were bailed out will fail again. This also must happen. The free market must be allowed to work by getting rid of insolvent banks that made horrible decisions. That is how the market functions, it punishes malinvestment and rewards sound practices. The insolvent banks have to be allowed to fail so that new, sound banks will take their place.

5. High interest rates will encourage saving. Americans don't save anymore because there is no incentive to do so. High interest rates will make loans hard to get and so more people will save. Savings encourages capital investment.

6. Our economy must switch from a consumer based one to a production based one. We have to restructure and start producing things. We don't produce anything right now, we simply consume. We borrow money from the Chinese and then give it back to them by buying Chinese goods. Our trade balance is horrid. Money means nothing in itself. It's simply a representation of goods and services. We don't produce things or provide services, we simply borrow money and spend it. So we take goods from other countries and give them dollars in return. That can't continue. We have to produce things so that when we trade with other countries it's a balanced trade on both sides. We can only consume like we do now because the dollar is the reserve currency of the world, but that is ending soon, and once that happens our economy will crash much harder than it has already. China will no longer lend to us, at least not at an interest rate that would be feasible. Chinese goods will become much more expensive and they would start selling to their own citizens instead of exporting them to us. This is why trade balance is important.

That isn't one of the solutions, it's the only solution. And once you understand that you understand why we are still in our recession. Obama is doing exactly the opposite of what is needed. Instead of helping, the stimulus that government does only serves to dig us in a deeper hole. Obama's stimulus plans absolutely can't work. There is no possibility of it happening.

If we followed the real solution, we would be in a deeper recession, but it would be totally over in about a year and we would be back on the road to being a prosperous nation again, but with government intervention it simply keeps us in a very long drawn out recession that could potentially go on for many years to come.

These are the teachings of Austrian economics, the REAL economics.

 

A wonderful little video about how right Paul Krugman is
[ame=http://www.youtube.com/watch?v=SQFhm4s_-Pk]Disastrous Economic Fallacies - Terror as Stimulus? - YouTube[/ame]

 

Who said? You can make a difference.

 

Ron Paul is only the start. So many things need to happen. The whole government needs to be rebuilt, and people need to wake up. The debt is a huge problem, but in retrospective its a small issue.

If a government is in debt. It basically means every citizen is in debt, since we "the people" fund the government. And the worse it gets, the worse the economy gets. Which is going to effect your day to day life.

The only way i see the government working is a true democracy. IMO a true demcoracy is where every government decision is made from the people by the people. Not from representatives. I know that its almost impossible since there are so many decisicons to be made, but we the people need to play a bigger role in these decisions. And with todays technology it can be a lot easier.

We don`t even live in a democracy. But it seems you tell the public we have rights and live in a democracy they`ll believe it. Which shows no one knows the definition of a true democracy, or don't care about government at all.

Why does the government have the right to keep shit confidential from the public. They aren't doing us a favor. The definition of government is twisted these days. They are no more special than a person that makes 10k a year. politicians are not celebrities.


If you think about it we pay for politicians salaries, we pay for the buildings they work in, were paying for all the jets and tanks in the middle east. Every single penny the government spends is ours, but all we get to do is vote for what party leads.

I just think the line that separates the government and the public is to big. You have to blame society as well because it happened under our noses. We were too distracted with our fancy lifestyles. We need to start from the bottom up.


I`m canadian so I don`t understand all the US stuff, i do follow ron paul though. canada is influenced so much by the US. Everything i said is about most governments around the world and im high so it may not even make sense.

 

Most things i have heard from Friedman indicate a strong belief in free markets and minimal government involvement. I just kinda thought that since Austrian economics fits so nicely with those concepts, he likely accepted it as sound.

After learning what i did i researched a little to see what he has actually said about ABCT and all i could find was him saying he did not like how it influenced people to do nothing at all about economy. I found nothing of him saying it was incorrect so im kind of stumped.

 

Austrians are the free market, laissez faire economists. Friedman was not. He is called a free market economist by Keynesians, but that's because anything seems like free market compared to them. He also called himself a Libertarian, so that would make people think that he was in line with the Austrians, but it's not true.

From wiki.

Obviously this isn't free market economics.

To really hammer this point home, guess who says that they model their theory of booms and busts based on Friedman's work? Ben Bernanke.

This is what Bernanke said.

Friedman was also in favor of a negative income tax. That means that everyone is guaranteed a certain income no matter what. Say for example we set that income level at $20,000 a year. Anything someone made under that would be supplemented by the government in order to bring that up to 20,000, and if you didn't have a job at all you would simply be given the entire 20,000 since you are not making any money.

All of this is the total opposite of free market economics. Friedman was also against a gold standard because it doesn't allow the government to control the supply of money, and controlling the supply of money is central to his views.

"And so, as we examine Milton Friedman's credentials to be the leader of free-market economics, we arrive at the chilling conclusion that it is difficult to consider him a free-market economist at all."

- Murray Rothbard

Do not look to Friedman if you are for a free market economy. Look to the Austrians, Ludwig von Mises and more currently Murray Rothbard (Also Ron Paul and Peter Schiff).

 

Sure the PRS is easy, but our current system doesn't negate votes.