Tuesday, July 6, 2010

People always adjust

Everywhere you turn you hear people, not just liberals, but well meaning conservatives and libertarians talking about economic disaster scenarios. If X happens, then Y will happen and that will in turn cause Z which will cause the world to end. Really? I didn't know the world was some sort of Rube-Goldberg machine, and the toppling of one little domino would send it all to pieces.

But apparently it is, especially if you are a keynesian (and if you aren't, you ought to be ashamed of yourself). Preventing a deflationary spiral is the justfication for all sorts of economic voodoo. Well, who cares about a deflationary spiral, how about some sanity. Here's the reality, if house prices go down, people (those atomic units who actually make up an economic system) will adjust. And at some point prices will stabilize, wealth will be lost, and we will start over again. Life will go on. What's killing us right now is not a lack of wealth, but uncertainty. And all this talk about home prices declining which causes consumer confidence to go down which tanks consumer spending which tanks...you get the point, is not productive.

Let's get to the bottom, lick our wounds, and rebuild. Yes, we will be poorer because we ARE poorer, government craziness cannot change that simple fact. And let's stop justifying craziness based on hypothetical scenarios which have no basis in reality.


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