A Quote by Doug Casey
Government intervention in the economy - through taxes, regulation and, most importantly, currency inflation - causes distortions and misallocations of capital that must eventually be unwound. The distortions degrade the general standard of living, and the economy goes into a recession (call that an incomplete cleansing). Or it goes into a depression - wherein the entire sickly structure comes unglued.
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The trade deficit always goes up when the economy is strong and plummets when the economy sinks, as it did during both the Great Depression of the 1930s and the Great Recession of 2008-09.
Vanity, fear, desire, competition - all such distortions within our own egos - condition our vision of those in relation to us. Add to those distortions to our own egos the corresponding distortions in the egos of others, and you see how cloudy the glass must become through which we look at each other.
The most sinister of all taxes is the inflation tax and it is the most regressive. It hits the poor and the middle class. When you destroy a currency by creating money out of thin air to pay the bills, the value of the dollar goes down, and people get hit with a higher cost of living. It's the middle class that's being wiped out. It is most evil of all taxes.
They talk about the economy this year. Hey, my hairline is in recession, my waistline is in inflation. Altogether, I'm in a depression.
In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives.
An overheating economy, characterized by accelerating inflation and rising interest rates, is another precondition for recession. This doesn't describe today's economy.
[Carl Gustav] Jung was not right when he said that the unconscious message is always written clearly and so there is no need to seek to discover the distortions, because one must recognize that many dreams are more or less distortions.
All taxes, except a 'lump-sum tax,' introduce distortions in the economy. But no government can impose a lump-sum tax - the same amount for everyone regardless of their income or expenditures - because it would fall heaviest on those with less income, and it would grind the poor, who might be unable to pay it at all.
It has become fashionable to rail against government intervention in the economy, and the FHA is a favorite example by those trying to show the government's overreach. In reality, the FHA shows how government action during the Great Recession forestalled a much worse economic fate.
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident.
What is worrisome about that is the U.S. standard of living. I think it is very difficult to envision our standard of living being preserved if we are in an economy where all people do is flip hamburgers, wait on people in stores, and sue each other. It’s not much of a basis for an economy.
The difference between recession and depression is simple. Recession, goes the saying, is when you lose your job; depression is when I lose mine.
We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.
The FHA's success provides strong evidence that government can and should play a role in the nation's mortgage finance system. It also demonstrates that although government intervention in the economy during the Great Recession was messy, things would have been a lot messier without it.
There are winners and there are losers. And as much as we would like to help the losers, if we do it in the way that directs the limited capital of the society to support the low-productivity parts of the economy, it means that the rest of the economy - our overall standard of living - will not rise as much as it could.
Only the federal government has the power to spend beyond its current revenue. It shouldn't do that when the economy is at full employment. But it's an essential step for an economy mired in recession.
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