Been Too Long!

Well, since I have thoroughly neglected this blog for almost 6 months now, I suppose it's time to add something.

I had my day made this afternoon by Contessa Brewer of MSNBC. Twice. The first time she was trying to implicate the private sector as being the root cause of the economic downturn (something Paul Krugman has trumpeted repeatedly), and one of her guests actually had the guts to stand up and explain to her that the government's regulation and influence played a huge role in the build up of the sub-prime bubble.

The Clinton administration pressured Fannie Mae and Freddie Mac to buy more sub-prime mortgages in order to help more Americans enjoy the "American Dream." Sounded good at the time - but we know better now. The two mortgage giants bought a LOT of risky debt and a bubble developed. Before anyone attacks me for being a partisan hack, I will also gladly hold the Bush administration responsible for not clamping down on this.

The second occurence came when Contessa was interviewing Steve Forbes. He was explaining how Japan tried to use government stimulus and failed miserably, just as is happening now. Contessa cut across him and regurgitated Paul Krugman's all-too-often-used call to action that Japan had failed because they hadn't done enough stimulus, and hadn't done it quickly enough! Steve Forbes politely responded with the facts that are often ignored by proponents of government intervention: Japan actually began stimulus early in the 1990s, and actually passed fiscal stimulus legislation 10 times. They succeeded in tripling their national debt, and plowing through the 90s with abysmal economic growth. Is there any reason to believe our experiment will go any differently?

Poor Contessa didn't have an answer for this. Fiscal stimulus leads inexorably to several things, not the least of which is misallocation of capital that the economy has to sort out over a longer period of time than a natural economic downturn. The government also ends up with a massive debt load. On top of that, inflation runs rampant, and the dollar (or domestic currency) loses value against its competition.

I was delighted because in the space of an hour of live news broadcast, two of Paul Krugman's liberal rallying cries were swatted away by well-informed and intelligent members of society. Consider this my formal request for politicians to educate themselves in the field of economics - we the People desperately need educated fiscal policy, taxation, and public policy decisions - not political showmanship and demagoguery.