"However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick."

A Doomsayer in the WSJ:

"By PETER SCHIFF

As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits( THIS IS TRUE. THAT'S WHY WE DON'T WANT THEM GENIUS ), one searches in vain for debate worthy of the moment( WE CAN HAVE THE DEBATE LATER, RIGHT NOW WE NEED ACTION. THE TWO AREN'T SYNONYMOUS ). Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug( DON'T BE DAFT. YOU'RE WRITING IN THE WSJ AND YOU'VE BEEN ALL OVER THE TELLY AND BLOGS. THERE ARE PLENTY OF DISSENTING VIEWS. THEY'RE SIMPLY NOT CONVINCING TO MANY OF US ).

With faith in the free markets now taking a back seat to fear and expediency( SILLY ), nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible( TRUE ). The few who maintain free-market views have been largely marginalized( THEIR VIEWS WON'T WORK. WE DON'T HAVE A FREE MARKET. WE HAVE A HYBRID ).

Taking the theories of economist John Maynard Keynes as gospel( IT'S MORE LIKE A NARRATIVE, BUT YOU OBVIOUSLY FAVOR PEJORATIVES AND OVERSTATEMENTS. YOU'VE BEEN READING MENCKEN, PERHAPS. HE WAS ONE OF A KIND ), our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws( LAWS? LIKE NEWTONIAN MECHANICS? ) far different from those in effect at the national level.

Individuals, companies or cities with heavy debt and shrinking revenues instinctively( THEN WHY HAVEN'T THEY BEEN DOING THAT UNTIL NOW? ) know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system( IT CAN. AN ECONOMY ISN'T A HOUSEHOLD. BY THE WAY SCIENTIST, THE LAWS OF NATURE ALSO APPLY DIFFERENTLY AT DIFFERENT LEVELS OF EXPLANATION, OTHERWISE WE'D HAVE KEYNE'S CAT OR SOME SUCH MONSTROSITY ). In their view, absent the stimuli of the New Deal and World War II, the Depression would never have ended( MORE LIKE TOTALITARIANISM MIGHT HAVE WON ).

On a gut level( IS THAT A DIFFERENT LEVEL THAN THE NATIONAL? WHAT ARE ITS LAWS? ), we have a hard time with this concept( WHAT IS IT AGAIN? ). There is a vague sense( QUITE SPECIFIC AREN'T YOU GALILEO ) of smoke and mirrors, of something being magically created out of nothing( LIKE THE BIG BANG? ). But economics, we are told, is complicated( MORE LIKE OF LIMITED USE ).

It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid( ACTUALLY, MANY PEOPLE HAVE MAXED OUT THERE CREDIT CARDS, GONE BUST, AND THEN STARTED OVER AGAIN. PRESUMABLY, ON THIS MODEL, COUNTRIES COULD THIS AS WELL. IT DOES APPLY TO CITIES. ). However, this is precisely what we are planning on a national level.( IT'S A SILLY ARGUMENT )

I believe these ideas hold sway largely because they promise happy, pain-free solutions( ARE THOSE NOT TO BE DESIRED? ). They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise( ENOUGH OF THE ANALOGIES ). The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice( MAYBE THEY'D LIKE MUTUAL SACRIFICE ).

As a follower of the Austrian School of economics I believe that market forces apply equally to people and nations( I'VE POSTED ON THE PHILOSOPHY OF THE AUSTRIAN SCHOOL. IT HAS SOME VERY USEFUL INSIGHTS, BUT THIS ISN'T ONE OF THEM. ). The problems we face collectively are no different from those we face individually( OF COURSE THEY ARE ). Belt tightening is required by all, including government( FOR A SCIENTIST, YOU THROW AROUND A LOT OF CLICHES ).

Governments cannot create but merely redirect( IS THIS LIKE THE DEBATE ABOUT WHETHER GOD CREATED THE WORLD FROM NOTHING, OR JUST REARRANGED MATTER? ). When the government spends, the money has to come from somewhere( SAME THING WHEN I SPEND ). If the government doesn't have a surplus, then it must come from taxes( THE GOVERNMENT CAN INVEST. YOU'VE JUST GIVEN A WHOLE TREATISE TELLING US THAT THE NATION AND PEOPLE ARE THE SAME ). If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed( I SHOULD HOPE SO ). But each additional dollar printed diminishes the value those already in circulation ( AND? ). Something cannot be effortlessly( HOW MUCH EFFORT DOES IT TAKE? ) created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector( MORE OR LESS ). And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others( THERE'S NO WAY TO KNOW THAT A PRIORI. IT'S CONCEIVABLE THAT THE PRIVATE ECONOMY COULD CREATE EVEN LESS EFFICIENT JOBS ). As more factors of production come under government control, the more inefficient our entire economy becomes( OVER THE LONG RUN THAT IS TRUE ). Inefficiency lowers productivity, stifles competitiveness and lowers living standards( TRUE ).

If we look at government market interventions through this pragmatic lens( WHAT'S PRAGMATIC ABOUT WHAT YOU JUST SAID? IT'S ALL THEORY ), what can we expect from the coming avalanche of federal activism( TELL ME )?

By borrowing more than it can ever pay back( HOW'S THAT ? ), the government will guarantee higher inflation for years to come, thereby diminishing the value( NOT REALLY. PRICES WILL VARY BASED ON MANY FACTORS ) of all that Americans have saved and acquired. For now the inflationary tide is being held back by the countervailing pressures of bursting asset bubbles in real estate and stocks, forced liquidations in commodities, and troubled retailers slashing prices to unload excess inventory. But when the dust settles, trillions of new dollars will remain, chasing a diminished supply of goods. We will be left with 1970s-style stagflation, only with a much sharper contraction and significantly higher inflation( NOT ).

The good news is that economics is not all that complicated( USEFUL ). The bad news is that our economy is broken( IT'S NOT A MACHINE. GOD SPARE US MECHANISTIC THINKERS ) and there is nothing the government can do to fix it. However, the free market does have a cure( THAT MAKES THE UNEMPLOYED WHAT ? ): it's called a recession( AREN'T WE GOING THROUGH IT? ), and it's not fun, easy or quick. But if we put our faith( TRY ARGUMENTS, WHICH YOU HAVEN'T EVEN BOTHERED TO ARGUE AGAINST ) in the power of government to make the pain go away, we will live with the consequences for generations( DON'T BE SILLY. IF WE LISTEN TO YOU, WE WILL LIKELY END UP WITH SERIOUS SOCIAL DISLOCATIONS, WHICH, BELIEVE ME, YOU AREN'T PREPARED TO DEAL WITH. )"

I guess if you're rich, you're supposed to be smart. I don't believe that.

Let's go over this once again. The context determines the range of possible actions. Since he likes analogies, the same is true for human communication. The context determines the meaning of a sentence or word. Because our investor class believes in government bailouts and was preparing for them, they were entirely unprepared to handle this crisis on their own. That is the true context of this crisis. The free market does not exist here. We have a Welfare State. Most people accept its terms of operation.

Wittgenstein had a sentence about meaning that applies here:

"If a lion could talk, we could not understand him."

Let's try this:

"If a free market proposal were offered, we could not implement it. "

Let me add a postscript from Thoreau:

"That government is best which governs not at all"; and when men are prepared for it, that will be the kind of government which they will have. "

Men are not prepared for it, including libertarians. It's our job to get them there, but, as a good Burkean, I believe that it will take time and compromise, and nothing is written.