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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: neolib who wrote (263946)7/26/2010 1:21:45 AM
From: grusumRead Replies (2) of 306849
 
N: "Quite literally. When did you last hear government leaders advocate raising taxes in good years to save for the next down cycle stimulus spending?"

you assume that government spending has the desired effect of stimulating the economy when there's scant evidence that it does. government spending mostly just depletes the revenue it has taken out of the private sector. at the very least it's much less efficient than the private sector. i've never seen a convincing argument that government spending helps the economy very much. at most there's a short term blip that never seems match the input. government spending is always a long term losing proposition which is why the founders wanted to limit government spending to national defense and the coining of money. the other function of the federal government should be the protection of personal and property rights which probably doesn't involve that much spending.

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N: "Pretty much all the "Keynesians" of today are "half Keynesian". They only advocate stimulus in the down periods, but not skimming the peaks to save for the troughs."

that notion presupposes that anyone on earth is smart enough to know where the peaks and troughs will be before they occur. it's so easy to see them after the fact that people get fooled into thinking they can forecast those events. it's the same type of thinking that makes people believe that some great intellect could know where interest rates should be set. and it's the same type of thinking that makes some people think they can beat the negative expectations of casino games with some system. of course no system can beat a mathematical negative expectation.

no one knows where the peaks and troughs will be before they occur, no one knows where interest rates should be set and there's no system to beat a perfectly balanced roulette wheel either. of course the casinos make untold profits from people who think they have a system to beat the wheel. systems are seductive because they look like they will work. but they don't and can't.

let the market set interest rates and let free market capitalism effect the economy and maybe stay away from the roulette wheel.
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