Bubbles, Not Government

While driving today a caller on some radio show was ranting about how the stock market went from 3000 to 9000 in the nineties and then attributed tax increases legislated by government as the REASON for huge stock gains. Asinine thinking. However, that got me to thinking about the events since November 1994 (a start of dot com craziness). Let’s be frank: we had two massive bubbles in a row. Stocks and then real estate (with stocks to some degree again).

No politician on the right or left started those. No party fixed either situation. Politicians were irrelevant. Animal spirits, human behavior drove it all. We had two massive speculative manias and both sides want to find a way to explain them to their advantage, but they are all con men.

Bottom line, if you can find yourself coming around to the realization that politicians are full of shit hucksters pushing insane amounts of white noise who simply want to get elected (or reelected) — you will be on the path to success.

3 thoughts on “Bubbles, Not Government

  1. Indeed…and how does this “shit huckster” get reelected?

    He is blaming the debacle on everyone except himself!

    Please voters in his state…kick him out!!

  2. Print some monopoly money.
    Allow, in effect, lobbyists to legislate, selectively.
    Watch bubbles grow & bust, as suckers take bait.
    Print more monopoly money.
    Wait for money’s value (buying power) to drop, once political donors get their windfalls.
    Let social pain intensify: no jobs, price rises for essentials, whatever.
    Blame whomever, especially what’s left of free markets.
    Repeat above steps – new bubbles distract.
    Political popularity drops?
    Announce salvation via (final) political takeovers of whatever’s still “private.”
    All else still fails, of course – start new war, crank up any old one, pretend not notice internal threats/violence, keep subjects passive.
    But mostly, keep printing that make-believe “money.”
    Pays for permanent political careers + various social enforcers.
    And fuels those exciting bubbles.

  3. Michael, You say in your post “No politician on the right or left started those. No party fixed either situation. Politicians were irrelevant. Animal spirits, human behavior drove it all”.

    But it was MUCH MORE than animal spirits. It was the systematic manipulation of our currency to create bubbles by the FED. When the typical American was pushed by artificially NEGATIVE real interest rates to overconsume he was simply being “rational” – on an after inflation basis he was being PAID to borrow. The US Government and financial elites are the ones that most benefit from artificially low rates. Meanwhile the middle class is unable to get fair returns from its savings and is forced to speculate to get acceptable returns (to the benefit of Wall Street of course).

    In what other part of the US economy does anyone consider price controls appropriate? Everyone remembers the failure of price controls in the 1970’s. But no one seems to care about the price controls (i.e. artificially set interest rates) on our most valuable commodity – OUR MONEY!


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