Thanks Bush

It was September of 2008 and everyone was panicking from a collapsing financial market. Bush tried to calm the nation with an explanation of what went wrong and how he was going to fix it. Bush then proceeded to demonstrate not only his ignorance of what went wrong but he caused further damage to our nation. According to Bush, the market was not working correctly and we needed more government to save us! His horrendous comments included the following:

I’m a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America’s financial system are at risk of shutting down.

The government’s top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.

The reality is that the market was working properly. The market was was trying to correct its self from a decade of malinvestments made as a result of the Fed’s artificially low interest rates and the corresponding credit expansion via fractional reserve banking. It’s the artificial economic boom that is the destructive phase of the economy. Manipulating interest rates removes their vital role of coordinating our limited factors of production to their best suited roles. The economic crash is merely the market’s revelation of the misuse of resources. The less the government intervenes in the market (and reduces its size) the quicker the economy recovers. The more the government intervenes to prevent the crash from going through the necessary liquidation process, the longer the economy takes to recover. Not only is Bush and along with both parties who have supported intervention in the economy responsible for our bad economy, they have further supported the myth that the market acts irrationally and we need the government to save us. And Republicans wonder why Americans put a statist like Obama in the White House. Thanks Bush.