Economic thought and the scientific method
There are many schools of thought when it comes to Economics - the one that's dominated American society for the last 30 years is Keynsian economics, which is based around the idea that the government can increase utilization of resources and thus increase wealth and prosperity by (partially) controlling the economy. The Austrian school holds that intervention in the economy by governments (or, more importantly, central banks like the Fed, which aren't part of the government) causes business cycles and bubbles, like the one causing the current crisis.
The interesting thing is that, regardless of what you think the causes are, Keynsian policies haven't done anything to stop this crisis from happening, and completely failed to predict that it would happen at all. On the other hand, Austrian school economists (including Ron Paul) have been predicting this crisis, the devaluation of the dollar, and everything else going on right now in our economy for years. Here's a quote from a speech made by Ron Paul in the House of Representatives in July 2002:
Easy credit became the holy grail of monetary policy, especially under Alan Greenspan, "the ultimate Maestro." Today, despite the presumed protection from these government programs built into the system, we find ourselves in a bigger mess than ever before. The bubble is bigger, the boom lasted longer, and the gold price has been deliberately undermined as an economic signal. Monetary inflation continues at a rate never seen before in a frantic effort to prop up stock prices and continue the housing bubble, while avoiding the consequences that inevitably come from easy credit. This is all done because we are unwilling to acknowledge that current policy is only setting the stage for a huge drop in the value of the dollar. Everyone fears it, but no one wants to deal with it.
Full text here
Thanks to the fact that these issues are so heavily politicized, there's never any consideration of which theory is better at predicting future outcomes - there's just finger-pointing and scapegoating, while the value of a dollar steadily trends towards zero. The proposed bailout plans aren't going to help because they don't address the root causes; they're only treating the symptoms. The Fed is starting to push for the freedom to print as much money as they want, as a way of 'restoring liquidity' to the money supply. If they get their way, things are going to go south in a big hurry.
The interesting thing is that, regardless of what you think the causes are, Keynsian policies haven't done anything to stop this crisis from happening, and completely failed to predict that it would happen at all. On the other hand, Austrian school economists (including Ron Paul) have been predicting this crisis, the devaluation of the dollar, and everything else going on right now in our economy for years. Here's a quote from a speech made by Ron Paul in the House of Representatives in July 2002:
Easy credit became the holy grail of monetary policy, especially under Alan Greenspan, "the ultimate Maestro." Today, despite the presumed protection from these government programs built into the system, we find ourselves in a bigger mess than ever before. The bubble is bigger, the boom lasted longer, and the gold price has been deliberately undermined as an economic signal. Monetary inflation continues at a rate never seen before in a frantic effort to prop up stock prices and continue the housing bubble, while avoiding the consequences that inevitably come from easy credit. This is all done because we are unwilling to acknowledge that current policy is only setting the stage for a huge drop in the value of the dollar. Everyone fears it, but no one wants to deal with it.
Full text here
Thanks to the fact that these issues are so heavily politicized, there's never any consideration of which theory is better at predicting future outcomes - there's just finger-pointing and scapegoating, while the value of a dollar steadily trends towards zero. The proposed bailout plans aren't going to help because they don't address the root causes; they're only treating the symptoms. The Fed is starting to push for the freedom to print as much money as they want, as a way of 'restoring liquidity' to the money supply. If they get their way, things are going to go south in a big hurry.