that's not correct...it was the govt's meddling and the creation of hte federal reserve that causes what's known as the business cycle.
http://www.hescominsoon.com/?p=1912
This causes the cycles of highs and lows we see due to not only our financial system but most of the world's as wlel being based on...nothing..it's all run on inflation. Inflation can only go on for so long before there has to be a correction. The gov't is not the one to regulate this..it should be the market. Paper money is nothing but debt..it doesn't stand for anything since it's backed by...nothing..it's relaly worth...nothing.
Didn't say it wasn't the government (hence my statement that it was overly tight monetry policy - which at the time was governemnt policy), just not what he said it was and not for the reason he said it was (I think you will find that this supports your no regulation arguement better than the previous post which suggested stimuls packages were to blame). Again I refer to Sowell's book.
In essence the government does not really have a lot of power anyway. Monetry policy is not handled by the governement and fiscal policy is in essence relatively powerless and really can only be aimed indirectly at adjusting economic issues. The stimulus package sounds huge but with limited government power, and beyond excessive regulation, I can't see what else they could have done. The only real leaver the government has is fiscal policy, and history shows that policy must be short-term, targeted, and aim at boosting spending. Should it work, which may be doubtful, increased consumer and industry spending should encourage banks to once again lend to each other and hey presto recovery should result.
You can read the book about whether money really is a freud or not but to summarise:
Feit, which HCS refers means "let it be". Money used to be based on the Gold standard (i.e. countries used to have to have enough gold to cover the money in circulation) or where money used to be pinned to the US curreny (which was them covered by the gold standard). This was in essence untenable as their is simply not enough gold in the world (indeed if you gather together all the gold ever mined it would account for only two olympic sive swimming pools - see recent national geographic for details). Money systems then moved to Feit, that is the government said our dollar is worth X number of US dollars. NOw most currencies are regulated by market forces (i.e. investers, etc, buying government bonds betting on their increase or decrease in value). So where does fiet come in. Well the whole monetary system is based on the banking system. What happens is the bank lends $100 to person a, person a spends money which makes its way back to the bank which then relends the money to person B. The bank has now magiced the $100 and turned it into $200. In repeated this process the bank can turn $100 into much more out of thin air. This works excellently provided everybody does not come for there money at once. To cover this, every bank must put aside at the government reserve 10% of all incoming coin to cover this. Essentially, money used to bail out banks should come from the banks money that it has put aside in the federal reserve. Whether this is happening or not I am not sure as the finacial system in the US is under alot of pressure and is essentially maintained by China which maintains large stocks of US currency thus maintaining the system. If the government does not turn this crises around by all means possible China may pull out of US currency which will sink the US.
Thus I say pray that the stimulus package works or else much greater problems could occur.
