Murray Rothbard’s The Don’t Do List When in a Recession. How many countries followed Rothbard’s advice? Sweden seems to be one, helped along by probably the only Libertarian Finance Minister in the world (AndersBorg) 1. Prevent or delay liquidation “Lend money to shaky businesses, call on banks to lend further, etc.” 2. Inflate further “Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government ‘easy money’ policy prevents the markets return to the necessary higher interest rates.” 3. Keep wage rates up “Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.” 4. Keep prices up “Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.” 5. Stimulate consumption and discourage saving “We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved-capital even further. Government can encourage consumption by ‘food stamp plans’ and relief payments. It can discourage savings and investment by higher taxes, particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. Some of the private funds would have been saved and invested; all of the government funds are consumed. Any increase in the relative size of government in the economy, therefore, shifts the societal consumption-investment ratio in favor of consumption, and prolongs the depression.” 6. Subsidize unemployment “Any subsidization of unemployment (via unemployment ‘insurance,’ relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.”
Posted on: Tue, 18 Mar 2014 21:55:15 +0000
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