Friday, August 25, 2006

Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946

Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946, Benjamin M. Anderson, available at Mises.org, is a wonderful exposition on government interventionism during that 30-year period. The book captures the litany of policies, laws, regulations, etc., that proved to be folly; an evil folly at that.

As I read about the financial machinations committed by various governments, I couldn't help wonder if those holding political power even recognized that the average American simply wanted to trade goods and services for money in order to purchase desired items. Let's face it, people want to trade, and they will trade despite governmental attempts to stop them - witness the black market in the former Soviet Union.

The farmer raises eggs but needs shoes while the cobbler makes shoes but needs bread, so they can only trade goods and services in an indirect manner; they need money. Or, stated correctly; they need money that will hold its value.

Federal Reserve inflation causes the farmer to fear letting his eggs go for the paper dollar. The reason being that he has no way of knowing the value that the dollar will hold tomorrow when he heads to the market to purchase the shoes he desires. This is most obvious during periods of high inflation and loose money, such as The Great Depression.[1] Had the US simply held to the gold standard and stopped inflating, people would have quickly adjusted to the situation and begun trading once again. The decade-long financial downturn would have ended much earlier, as previous depressions reveal.

Get government out of the financial markets and allow us to trade as we desire. The result will certainly be an improving economy and a brighter future.

I highly recommend Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946.


[1] We are currently in a period of high inflation that is beginning to manifest itself in the real estate market, similar to the technology stock market in the 1990's.

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