The first rule I teach my economics students is that when the economy fails, it’s usually safe to blame the government. To paraphrase Winston Smith in 1984: If we accept that the state is the source of economic misery, “all else follows.”
As a science, economics is really not that difficult because it encompasses decisions we make every day that impact our well-being and the well-being of those around us.
This system of natural law that we refer to as economic law governs economic activity, and much like the laws of physics that govern the world and universe in which we live, these laws are absolute and can only be manipulated at great risk. They cannot be negated.
In economics, legislation and regulations cannot fundamentally change the reality of economic law. If we bend them, reality snaps back with a vengeance, and the corrections will often be unpleasant.
Speaking in the 1920s, Ludwig von Mises said that any “correction” following an artificial boom period must be equal to or greater than the expansion that created it in order to fully liquidate the asset distortions amassed during the boom period. At the end of the 1920s he was proven correct.
In the 1930s, the Temple of Macroeconomics was built in honor of the new Zeus, John Maynard Keynes, and economic law was mostly cast aside. Washington, D.C. became the final word in even the smallest transactions in the economy....To Read More....