I wrote an initial draft of what is shown below as a comment to the interesting article on interest rates: The Zero Sum Game Of Lower Interest Rates And Why Mortgage Rates Will Rise.
Great article congratulations! You had it spot on in 2009, and will probably be right again. Deductive reasoning is your edge. Government interference just spoils the economy making it worse than what it would be without it. I would even go further and say that government interference is worse than a zero sum gain, it is a negative sum game and would change the title of the article accordingly. It reaches an even worse state than what it would have reached if left alone. Keynes had it wrong, that’s why we are in the current mess. The Austrian Economists warned us. Phil Carret, a legendary investor highly admired by Buffett, introduced me to Ludwig Von Mises the father of those economists. No wonder Phil Carret did so well, he had a motivational framework to investing. Similar to Charlie Munger’s, both understood very well the power of incentives and how the economy really worked. As Austrian Economists they had a very practical view on the economy, a view based on human motivations that explains well how the economy really works, unfortunately not how it should work. Moral aside, it shows why the economy is based on incentives, good or bad, and becomes inefficient when government interferes with the market.
Every governmental act of market interference has as consequence the transfer of capital from the able to the unable; often from rich to poor; from savers to creditors; or from common working people to feed inefficient parasitical politicians. Common people, non government members, are robbed via a combination of taxes and hidden taxes (by using the printing machine). Government should leave the economy aside and worry about other things like protection of private capital, security, basic health and education. Instead they do the contrary by legalizing the theft of private property via taxes and money dilution, by printing dollars, which are just hidden indirect taxes, used to rob citizens in a less unpopular way than with taxes. They do the contrary of their moral goal, by making a business out of basic education and health.
Special interest groups are legally benefited. Social security should be reduced to a minimum, except health and education. Give the minimum to survive and you’ll have people go back working. Increase the working age limit, reduce taxes and social benefits to a minimum, eliminate unions.
Taxes and money dilution is legalized theft. Reduction of the government and the military, specially of the size of the government, should be done. Have more working people and less parasites.
Current government should stop interfering in all aspects of our lives or it will fall by its own weight by becoming an unsustainable gigantic socialist system. Even though politicians do not like to admit it, that’s what they have become, a socialist society, a central planned system, reaching every single corner of our lives. As a consequence a sub-optimal economical state is reached. A state that is doomed to collapse if not changed on time.
US of A. is not the country it was and that made it possible to reach its peak. It’s not the small government and free market system that impulsed it to the top. It now has become, since already quite some time, a socialist monster, with a gigantic state machine, inefficient, trying to control way more than what they should or are able to. The only thing that remains non socialist is the name of its political parties and the false illusion of being a free market.