Walter E. Williams, The Free Market Is Not Allowed To Work.

From the video, “When H.L. Mencken was asked what is the definition of an election he said, and I quote,”Government is a broker in pillage, and every election is an advance auction on the sale of stolen goods”.”

If the intervention of Government into the market could be limited to the theft of our production through taxation, our economy wouldn’t be in as bad a condition as it is. Government couldn’t have grown as intrusive as it has, if it was limited to spending only what it steals in taxes, and because it would be exchanging what had actually been produced, even though it had been stolen, for something that had been produced in the market, there wouldn’t be as many malinvestments and dislocations in the economy as there are today. When Government spending comes from borrowing, at artificially low-interest rates, and counterfeiting, it is not an exchange of production for production, it is an exchange of production for nothing.

These printed certificates (dollars) can be exchanged in the market as if they actually represent real production. Whoever gets these certificates first, usually banks, Government, and receivers of Government largess whether big businesses or welfare recipients, should be considered thieves who are stealing someones production in exchange for these counterfeit certificates. These certificates create a false demand that can’t be sustained unless the counterfeiting continues. Once the counterfeiting stops, the demand goes away because it was not real. It was an exchange of nothing for something, and what we are left with are resources, capital and labor that have to be liquidated or scraped, and put toward more productive uses, uses that were brought about by real demand not printed demand.

These malinvestments of scarce resources, brought about by borrowing counterfeited money at artificially low-interest rates, grow exponentially as more fake certificates keep being injected into the economy by the Federal Reserve. This is not the free market system being allowed to work. It is crony capitalism, central planning, democratic socialism, or whatever other name you want to use for Government intervention into the market system.

Read previous post, “What Comes First Production or Consumption”

Read previous post, “Currency Debasement Unleashes More Than The Economic Forces of Correction.”

Read “Why is Capitalism so Unpopular? by Art Carden at Mises.org.

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Explore posts in the same categories: Econ. 201, Government and Politics

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