"Occupy Wall Street" Should Have Occupied the Fed

This is not a political blog. And though I have definite political views, I've tried to stay away from partisan opinions here. Both American political parties share some of the blame for the dismal state of our economy.

That said, the policies which have brought the world to its present state of indebtedness and relying on central banks to artificially stimulate economies are much more widely embraced by those on the left. Liberals believe that government can better the lives of people through regulation and manipulation, even to the point of attempting to violate economic laws. Many moderate Republicans have more or less accepted these policies. Richard Nixon himself famously said, "We're all Keynesians now." Even so, most conservatives shy away from these policies. And libertarians loath them.

Keynesianism, conceived by John Maynard Keynes, is an economic philosophy which holds that in times of economic hardship the government should deficit spend and make money cheap (lower interest rates) to stimulate economic activity. This policy more or less works, much like a drug--that is, until the drug itself becomes the problem, which it has. We have reached what is known as the "Keynesian End-Point," that place where its policies no longer work because the problems it is attempting to solve have been caused by the policies themselves.

Whether such policies are always bad is a matter of endless debate. What is no longer a matter of debate is whether our government has abused them. There is no doubt it has. We now own a record $16 trillion debt, and the U.S. dollar has lost 95% of its value in the last 100 years due to the inflationary effects of too much money creation.

Even so, there are those, mostly on the left, who continue to insist that the problem is not government policies, but that we still don't have enough of them. In other words, they want to administer more of the same medicine that got us here in the first place. Because they've cast their lot with government as the ultimate solution, they are blind to the fact that it is government fiscal and monetary mismanagement that brought us to this state. So they continue to blame "Wall Street," and "big business" and "capitalism" and all the other usual suspects, instead of the one entity with the real power to ruin the economy--the government.

So why does the government do these damaging things? Because they seem to work in the short term--that is, just in time to get re-elected! Keynes himself famously scoffed at the long term, saying, "In the long run we're all dead." Well, the long run has arrived, and some of us are still here and have to deal with it.

Wall Street does bears some blame, as does Main Street. And capitalism is not perfect. But none of these could have produced the damage that was done without the cheap money policies brought on by our government. As Peter Schiff told us, Wall Street got drunk, but it was the government that served the free drinks.