The Beast Is On The Prowl

Thursday, February 21, 2013
By Paul Martin

Monty Pelerin
Feb 21 2013

As the economic collapse approaches, be aware that government will become more desperate and resort to measure(s) that will enable it to survive. The myth of government as a good, necessary and positive force in society is coming unraveled. To understand how we got to this point, it is useful to review some economic history..

The US has gone through many boom-bust cycles in its history. In every case excessive liquidity has triggered a boom which inevitably ended in a bust. Ludwig von Mises expressed the relationship thusly:

Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.

In the 1960s the arrogance of government led it to believe that it had obsoleted the business cycle. Keynesian economics provided the means to manage the economy in a way that would prevent downturns. Government convinced the population of this fallacy.

Initially government’s belief was sincere but based on an incorrect economic theory. The naive belief didn’t hold for long, but it was never renounced. Politicians liked the new-found power it afforded them. As a result, they promoted this new tool and role for government. A wrong theory can still be valuable if it furthers other aims, like the accumulation of additional power.

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