This morning I was reading a piece by Thomas Frank, the token idiotic liberal over at the Wall Street Journal. His piece is an argument against people calling for laissez-faire capitalism, and he uses the oil spill as his proof that we need government.

Just last week, for example, the Washington Post featured a 2,500-word essay by Arthur C. Brooks, head of the American Enterprise Institute, calling for a “New Culture War” for laissez-faire capitalism—a grand moral debate over the right relationship of business and government that Mr. Brooks felt his side was sure to win.

Well, the Gulf spill has given Mr. Brooks and his movement the perfect opportunity to stage that debate. On one side, we’ve got the liberty-minded oil companies, the gentle giants that, just two months ago, the right was so keen to liberate from federal interference and to unleash on the nation’s coastline.

And on the side of government, we’ve got the Obama administration, which has backtracked on its new offshore-drilling policy and even announced plans to beef up drilling regulations. True, for most Americans that’s not a lot of statism to deplore, but the tea party movement is accustomed to regard even the most insignificant regulatory initiative as a front in the eternal war between freedom and socialism.

“Liberty-minded oil companies”? Is he serious? What oil company isn’t buying politicians? What oil company is begging for less federal involvement? Oh sure, they may not want the government involved in their operations, but they sure love government to be involved in steering leases their way, sending troops off to secure oil over seas, etc. Oil companies are in bed with government.

Also, laissez-faire doesn’t mean unaccountable. Those harmed by the spill would have recourse through the courts. BP and the other companies involved would have to compensate property owners for the damage they caused.

Most importantly, who will find an inventive way to blame government for the disaster? Not blame it for reacting too slowly after the spill—that is merely a statist reflex in disguise—but for somehow causing the spill with its meddlesome concerns for safety and the environment?

The answer, as far as I have been able to determine, is almost nobody. True, newspaper columnist Charles Krauthammer attempted last week to divert a little blame toward “environmental chic,” arguing that one reason the oil companies were even drilling in the Gulf is that environmentalism has blocked their access to other spots, such as the Arctic National Wildlife Refuge.

But for the most part, what we hear from the right these days is essentially the same as what we hear from the liberals: complaints about corporate misbehavior, the need for more federal action, and demands for a shakeup of the regulatory agencies involved so that they might regulate better in the future.

Has Mr. Frank ever heard of moral hazard? I’d blame the government for making the oil companies focus on bribing them instead of focusing doing what’s necessary to protect themselves from liability. Maybe if BP wasn’t wining and dining MMS bureaucrats in order to get awards and win approval for their projects, they would instead hire the best minds to focus on safety instead of hiring the best lobbyists to mingle with politicians and bureaucrats.

In fact, one of the people leading the criticism of the Minerals Management Service—the regulator in question—has been conservative paladin Darrell Issa (R. Calif.), who correctly accuses MMS of having “too cozy of a relationship” with industry. Former GOP vice presidential candidate Sarah Palin, for her part, has actually used the spill to outflank Mr. Obama on the left, suggesting that someone should find out whether his administration’s vacillating response can be attributed to the sizable campaign contributions he has received from BP employees over the years.

These are refreshing arguments to hear from the right. After hurricane Katrina wrecked New Orleans, you will recall, conservative pundit Amity Shlaes famously described the Bush administration’s vacillating response as the traditional observance of the “Federalist Pause.”

And Galt only knows how many times “coziness” of the MMS variety has been celebrated as part of the struggle for free markets and free people. For a reminder, just pull out that famous 2003 photograph of James Gilleran, then director of the Office of Thrift Supervision, a bank regulator, “cutting red tape” along with a smiling group of bank-industry lobbyists.

So Frank does see that the regulators are useless, but he call is for more regulation. Are we to believe every time there is a failure that that just means there wasn’t enough regulation, when it turns out the regulators were all corrupt?

But things are different today. The catastrophe is too great to brush it off with the usual laissez-faire scholasticism. So the great debate must wait. We are all liberals for the duration.

via Thomas Frank: Laissez-Faire Meets the Oil Spill – WSJ.com.

I’m still not a liberal Mr. Frank, well in the modern day context anyway. Laissez-fair is the correct approach. It is the only way for companies like BP to pay the piper instead of the governors. Mr. Frank comes to these debates with too many assumptions. He assume laissez-fair would mean no accountability, which is wrong. It would be increased accountability. Remember the corporate veil is a state created entity to protect the big wigs from liability. Remove that veil, and see how many idiotic risks are taken by our economic titans.

In order to make it seem like the government and the banking sector aren’t one in the same, President Obama is rolling out his teleprompter to deliver a speech blasting Wall Street for acting like a bunch of ignorant drunks. Who cares that the Fed was supplying the booze.

From the Wall Street Journal

President Barack Obama will return to Manhattan’s Cooper Union on Thursday, two years after a campaign speech that laid out his vision for Wall Street, to castigate a financial industry that he will say has too often forgotten the ordinary Americans who have suffered from its reckless irresponsibility.

OK, I know what you’re thinking. Here is the leader of our government blasting Wall Street for forgetting “ordinary Americans  who have suffered from its reckless irresponsibility”. This is the same government who forgot about the ordinary Americans almost a century ago. This is the same government who tried manipulated the real estate market by promoting “everyone should own a home”, which led to millions of American losing their homes and millions of others left to pick up the pieces. This is the same government who’s robbed the middle class by devaluing the currency over 30% just in the past decade. This is the same government who’s created an unsustainable empire that’s led to wars, terrorism and the hatred of America. Oh, and this is the same government who is enslaving us and our children to foreign debt holders who will have us working as slaves to pay them back. Oh please, President Obama, tell me how the evil Wall Street banks forgot about ordinary Americans.

The speech comes at a pivotal moment in Senate negotiations over a sweeping measure to re-regulate the financial industry. After trading barbed accusations, senators from both parties now say they are near a deal that would preserve the framework of Mr. Obama’s plan. By appearing just two miles from Wall Street, Mr. Obama hopes to raise the political pressure and seal the deal.

“A free market was never meant to be a free license to take whatever you can get, however you can get it,” Mr. Obama will say, according to speech excerpts released Wednesday night. “That is what happened too often in the years leading up to the crisis. Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement. What happens here has real consequences across our country.”

What an ignorant a-hole. Behind every dollar is nothing. That is the problem. Our government has become our modern day money changers. Unfortunately, while the people can be fooled, the free market can’t. It will blow your house of cards down eventually, which is what happen. Wall Street and the mortgage industry is not a free market. Obama is either ignorant or flat out lying. These are two of the most regulated industries we have. In a free market, you wouldn’t use monopoly money backed up by nothing. In a free market, you wouldn’t have government pushing people to buy homes with taxes credits and incentives. In a free market, you wouldn’t have bailouts and the FDIC basically telling the banks to do what they want because they’ll print more money if needed.

As he has done several times in the year-long debate, the president will implore industry executives to call back the lobbyists engaged in “furious efforts” to thwart or water down his legislation.

“I am sure that many of those lobbyists work for some of you,” he will say, according to the excerpts. “But I am here today because I want to urge you to join us, instead of fighting us in this effort. I am here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector.”

Sure sounds like something a mafia thug would say. Lobbyist are sent to argue the side of their client. When you have people with guns that say they are going to start shooting, of course you are going to have people sending representatives to argue why their clients shouldn’t be shot. Maybe if we had a free market, where the government wasn’t pointing guns, we wouldn’t need lobbyists.

The legislation would grant the federal government the power to seize teetering financial giants and dismantle them the same way the Federal Deposit Insurance Corporation now can seize failing banks. It would create a new financial consumer regulator, would boost the strength and budget of the securities and exchange commission and would impose new transparency rules on the trading of derivatives, the complex financial instruments that helped bankrupt Lehman Brothers and nearly wipe out American International Group and Merrill Lynch.

More moral hazard. Just what we need. How about we let them fail, and let everyone know that we will let them fail. When everyone knows the government is going to step in no matter what happens, they will rightly assume that they can take idiotic risks that they otherwise wouldn’t. People bet on CDOs and housing because they knew the government would not let housing collapse, in particular Fannie and Freddie.

Mr. Obama will treat his return to Cooper Union as something of a triumphal homecoming, with a touch of “I told you so” in the speech. Two years ago, he called on Congress to give the Federal Reserve more supervisory power over the biggest financial institutions and to demand tougher new capital and liquidity requirements. Pending legislation largely follows that demand. Congress appears ready to meet his request, now two years old, for a new financial consumer regulator. His calls for stronger, international accounting standards and financial stability requirements have been taken up by the Group of 20 nations, although talks are proceeding haltingly.

This is just hilarious. “he called on Congress to give the Federal Reserve more supervisory power” is Obama’s “I told you so”? The Federal Reserve is the reason we had this mess. This is like saying we should give Madoff more power to regulate the purse snatchers of the world.

His 2008 suggestion of streamlining the hodgepodge of “overlapping and competing regulatory agencies” has been abandoned. But he will dwell more on the warnings he issued in that first Cooper Union address.

“I take no satisfaction in noting that my comments have largely been borne out by the events that followed,” he plans to say. “But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass – an outcome that is unacceptable to me and to the American people.”

“One of the most significant contributors to this recession was a financial crisis as dire as any we’ve known in generations,” Mr. Obama will say in a highly-anticipated speech at the Coopers Union, a college in New York.

He will tell the expected crowd of 700 that America must learn from the mistakes of the economic crises and enact legislation to help prevent it from happening again.

Yes, we live with a broken record government. We always need more legislation to help prevent something from happening again. Over and over we are told they must act to protect us. Only they aren’t protecting us. They are stacking the deck more in their favor. If you want real reform, ask them to quit protecting us.

Obama’s push for financial reform has intensified in recent weeks and he has lashed out at Republicans for meeting with Wall Street lobbyists. In his speech he is expected to say that legislative proposals in Congress would help restructure the rules that allowed Wall Street to take risky bets that Americans ended up paying for.

Republicans have to be completely tone def. What morons would meet with Wall Street lobbyists after everything that just happened? Oh well, I’m hoping for a third party anyway.

He will state that he won’t accept compromises that would weaken the bill, particularly in the area of derivatives, complex financial instruments that played a role in the economic crisis.

He will also say that financial reforms must set limits on the size of risks that banks can take, and include provisions that would make it easier for a failing institution to unwind before taxpayers would be affected. He will also say he believes in a free market. “But a free market was never meant to be a free license to take whatever you can get, however you can get it,” he said. He will add, “That is what happened too often in the years leading up to the crisis.”

-By Jared A. Favole

via Obama to Castigate Wall Street – WSJ.com.

Hahahaahahah, Obama will also say he believes in the free market? This sounds like the plantation owner telling his slaves how much he believes in freedom. What a damn joke. I can see it now. “I believe in the free market. Now let me tell you all the regulations, loop holes, incentives, kick backs, and advantages I’m going to hand out. Also, we’re going to print more fake money that we will filter through these same evil banks. This free market stuff rules!”

Previously I posted about government created unemployment and gave an example of how they create unemployment by impeding two free people from free exchange. Well, today the Wall Street Journal has some real world examples from people who are running businesses out of their houses….well trying to anyway. Many of these people were either laid off or had a business else where, but could not afford to keep a rented space. All of them though should be commended for taking responsibility for themselves and engaging in the free market to support themselves instead of becoming government welfare recipients. Instead they are faced with harassment by busy body government officials.

The recession is causing a growing number of people to venture into home businesses, a boost for the economy but a nuisance for neighbors.

As jobless people trade their desks for kitchen tables, or as businesses reduce costs by giving up commercial storefronts, cities and states are grappling with problems caused by a rise in home businesses such as traffic and noise.

Thanks for the Wall Street Journal framing the issue to make it seem like government is trying to prevent the complete chaos working people make at home. I work at home and know many people that do, and guess what? I don’t know anyone who creates traffic and noise. Cities and states aren’t grappling with these issues. They are grappling with not being able to milk higher taxes out of commercial properties and not being able to force people to run businesses where they want them to run businesses. It goes against their “master plan”.

Officials in Nashville, Tenn., are discussing ways to loosen restrictions governing the operation of home businesses as high unemployment prods a growing number of entrepreneurs into offering everything from hair perms to piano lessons out of their living rooms. (Oh the horror. The traffic and noise from piano lessons and hair perms must be horrendous!)

Nashville’s planning code allows home-based businesses as long as no customers come to the house—a rule that is causing problems for front-porch barbers and others. City officials are now drafting less-stringent zoning to bring before the planning commission this month.

Oh my world. The government is telling people who can come to their house, that you supposedly own and have property rights to. How does the government know if its a customer or a friend? I guess that just means they need more code enforcers to find out. This must be one of the ways government looks out for the little guy. Obviously, these people must be rich and greedy. Who do they think they are trying to earn money giving haircuts out of their house. Damn “Big Business”. They are evil.

Unemployment in the Greater Nashville area hit 9.4% in December, compared with 6.5% a year earlier. Mr. Bernhardt estimates there are now 14,000 business with licenses that are operating illegally because they are located in residential areas, in violation of zoning codes.

Sounds like we have at least 14,000 criminals on the loose. Better hire more cops and build more prisons. Nah, they can just fine them out of their profits. Like the mob, if they want protection, they have to pay. More proof that chances are you break some law everyday, and the only real role of government now is to make everyone law breakers. These people must be a threat to society for the crime of trying to put food on the table. The moral decay of our society is shocking. Don’t you know if there is a law, it means you are immoral if you break it?

Along with the rising number of home shops come complaints. Code-enforcement officers in Gilbert, Ariz., 20 miles outside Phoenix, received a complaint in October about a fishy smell and flies around a town garage.

The “guy had 50 40-gallon fish tanks full of live fish that he delivered to pet stores,” recalled Michael Milillo, the town’s senior planner. The resident said he previously had a warehouse for his fish, but that to reduce costs in the downturn, he moved them to his garage, according to Mr. Milillo.

While Gilbert does allow home-based businesses, code officers thought the fish entrepreneur was running a home-based warehouse, which isn’t permitted. They moved to close it, but a town zoning board narrowly agreed—over Mr. Milillo’s objections—to allow the business, partly based on the resident’s claims that the storage was a temporary solution in a rough economic climate, Mr. Milillo said.

The resident’s employer, Tropaquatics Inc., declined to make him available for an interview.

Not only are municipalities becoming sympathetic to home-business owners, but many neighbors are, too. While one neighbor spoke at the Gilbert zoning meeting against the fish operation, 10 others said it wasn’t causing any problems and should be allowed to remain given the tough times.

“Seeing everything they’ve gone through with having to move from a big warehouse because of the economy and bring their business back into their garage—that’s the only thing that’s kept them alive. If that’s what they need to do to keep the business thriving, and it’s not endangering my family or causing any unwanted stress on our house, than I am all for it,” said neighbor Matthew Tidwell, a 34-year-old corporate-relations representative.

Go figure, one busy body stirring up trouble. The surprising thing was 10 people coming to stick up for the guy. Usually only the busy body has time to go to the zoning meetings. Other people actually have work to do. I guess the busy body couldn’t just go over to the guys garage and talk to him, ask him if there is a way to minimize the smell, or how long he plans on being in the garage. Maybe he did, but considering how busy bodies operate, I doubt it. Instead he figured, he’d use the gun of government to point it as his neighbor, who is just trying to get by. Apparently, it would be better for the guy to go out of business and live off the state.

Ok, time for the most horrendous case of a home owner causing such chaos with her evil business.

In Nashville, the lightning rod was a beauty parlor. Code-enforcement officers paid a visit to Dot Moon, a 61-year-old woman who, with her daughter, runs a shop with one chair and a tanning bed out of her detached garage. A small sign with a pair of scissors and a comb and the name “Crystal’s Hair and Tans” hangs from her mailbox.

Ms. Moon said she was told a few months ago that she was in violation of city codes because customers came to the house. “We don’t understand why they are picking on us,” she said.

Mr. Bernhardt, the city planning director, said that under current city rules, “it’s impossible to have a hair salon” in a home in a residential neighborhood. He said cases such as Ms. Moon’s are being considered as city officials look at loosening the rules.

Nashville Councilman Bruce Stanley proposed a narrow expansion of the city code to allow for home beauty parlors. Nashville’s Planning Commission rejected that idea in January as being unfair to other businesses. But realizing that more and more of these living-room operations are cropping up, the City Council has since begun work on broader rules for home-based businesses in residential areas.

Oh the traffic and noise must have been overbearing. I can only imagine who much traffic and noise was generated by this gigantic 1 chair and 1 tanning bed salon. Oh and the blight of the neighborhood must have been horrible with the small sign hanging on the mailbox.

Sara Marie Jenkins, who is 26 and designs bridal gowns in her home studio in Nashville, says “financially it helps a lot to work at home in this economy—not having to pay rent for a space or pay a second electric bill.”

Sara… Sara….Sara, but who are you to decide what is financially in your best interest. You are just a serf, and should do what your overlords tell you to do. Your family’s well being is not of concern to their master plan for the community. If you have to live off the state, that is better than you having a business that provides for you financially and provides value through your products and services to your community. Oh Sara, so naive you are.

via States Revisit Home-Businesses Rules – WSJ.com.

Ok, I probably tried putting too much sarcasm into text, which usually doesn’t come across right when I do it. Anyway, when are people going to wake up and realize we do not need government telling us how to live every aspect of our lives. Not only does it create unemployment, but it creates a community of adversaries. Do you think communities were closer when we had less government, and they worked problems out themselves; or do you think they are closer and more involved with each other, now that the government gun is laying around for everyone to try and get a hold of to impose their wishes on their neighbors?

We also need to wake up to realize most government rules are idiotic. They should be ignored by the masses. Saying you cannot have a business in your house goes against all three components mentioned by Jefferson in the Declaration of Independence,  as well as the edited out part of “right to property”.  Liberty is taken away by every government rule and action. Pursuit of happiness is taken away if you cannot pursue commerce to put food on the table, and life is hard to have a right to when you can’t provide for yourself. Oh sure, the state can take care of you, but do you then have control of you life? Do you have a right to your life or does the state?

Last is “right to property”. This has been taken long ago with local property taxes and zoning codes. Like I said, you are a renter of your land and you will agree to pay on time or pay a late fee, and you will only use “your” property based on your lease agreement, which unlike a regular leases changes at the whim of local zoning boards and the like.

Yesterday, the EPA ruled that carbon dioxide is a pollutant, which gives them power over our entire economy.

EPA Administrator Lisa Jackson said yesterday that her ruling that greenhouses gases are dangerous pollutants would “cement 2009′s place in history” as the moment when the U.S. began “seizing the opportunity of clean-energy reform.” She’s right that this is an historic decision, though not to her or the White House’s credit, and “seizing” is the right term. President Obama isn’t about to let a trifle like democratic consent impede his climate agenda.

With cap and trade blown apart in the Senate, the White House has chosen to impose taxes and regulation across the entire economy under clean-air laws that were written decades ago and were never meant to apply to carbon. With this doomsday machine activated, Mr. Obama hopes to accomplish what persuasion and debate among his own party manifestly cannot.

This reckless “endangerment finding” is a political ultimatum: The many Democrats wary of levelling huge new costs on their constituents must surrender, or else the EPA’s carbon police will inflict even worse consequences.

The gambit is also meant to coerce businesses, on the theory that they’ll beg for cap and trade once the command-and-control regulatory pain grows too acute—not to mention the extra bribes in the form of valuable carbon permits that Democrats, since you ask, are happy to dispense. Ms. Jackson appealed to “the science” and waved off any political implications, yet the formal finding was not coincidentally announced at the start of the U.N.’s Copenhagen climate conference (see above).

Still think you are free? Still think Obama isn’t a tyrant? The people and their representatives will either cave to his demands, or he will find ways to force compliance. This is nothing but a gun to the head of all of congress.

This ruling has been inevitable since at least April and we warned about it during Mr. Obama’s campaign, but its cynicism and willfulness still astonish. The political threat is so potent precisely because invoking a faulty interpretation of the 1970 Clean Air Act will expose hundreds of thousands of “major” sources of emissions that produce more than 250 tons of an air pollutant in a year to the EPA’s costly and onerous review process. This threshold might be reasonable for traditional “dirty” pollutants (such as NOX) but it makes no sense for ubiquitous carbon, which is the byproduct of almost all types of economic production.

The White House knows this, which is why earlier this fall Ms. Jackson announced a “tailoring rule” that limits this regulation to sources that emit more than 25,000 or more tons a year like coal-fired power plants and heavy manufacturing. Ms. Jackson claims this unilateral rewrite of a statute is a concession, but its real purpose is to dodge a political backlash while still preserving the EPA’s ability to threaten business and recalcitrant Democrats.

In order to avoid a huge backlash, they just willy nilly change the law? Go figure.

For now, this decision moves into the courts, and years if not decades of litigation. Yet the decision really is historic: The White House has opened a Pandora’s box that will be difficult to close, that is breathtakingly undemocratic, and that the country, if not liberal politicians, will come to regret.

via EPA Regulates Carbon as Dangerous Pollutant – WSJ.com.

If the media had any credibility, they’d be outraged about this. The supposed protectors of our freedom are too busy talking about the political calculations instead of explaining how the executive branch is oppressive and tyrannical. Thomas Jefferson is probably rolling in his grave.

We really only have one shot to avoid all of Obama’s edicts. Next year, we need to kick as many Democrats out of office as possible. While I don’t trust the Republicans with all branches right now, I do trust them with the legislative branch. They need a veto proof majority to reign in this oppressive government. Then we need to hold their feet to the fire to rewrite the Clean Air Act, prevent government health care, prevent cap n trade, and to start repealing back all laws that take away our freedoms. We cannot have our freedoms depending on limp wristed Democrats. Obama stops by Congress to bang some Democratic heads, and the next thing you know, we have lost more liberty.

Since the mortgage crisis began, the left has used the repeal of the Glass-Steagall act as a battering ram to break down the pro-free market argument. The left, the media and even some conservative politicians claim it was not having enough regulation that caused the mortgage crisis and ultimately the economic melt down that we are currently experiencing.

This really is a silly argument on its face. How does removing an act, which separates commercial and investment banking, cause risky behavior? Causation is what the statists are claiming. This would be like saying removing a guard rail is what caused me to drive off the road and into a tree. I’m sure we can all agree, it wasn’t the guard rail. It was my reckless driving. Similarly, it wasn’t the removal of the Glass-Steagall act that caused the current mess, it was the risky behavior. But, why was there risky behavior? Why would I drive off the road and hit a tree? Something must influence these actions.

In the case of driving off the road and hitting the tree, maybe I was drinking, or maybe the speed limit sign said 100mph. Both of these influences would be considered the the causes, would they not? Also, by the standard of the left, removal of the guard rail would cause every driver to drive recklessly and hit the tree. If all drivers fly off the road and hit the tree, surely there must be something that causes them to do so. It would have to be a 100mph sign heading into a blind bend, or maybe a mandatory rest stop where all must fill up on liqueur before heading back down the road. Either way, both would cause the reckless behavior.

Similarly, in the mortgage crisis, something influenced the behavior of the entire market. Bankers didn’t wake up one day and say, “Hey, let’s be really risky.” Bankers were enticed into being risky by the government. The government encouraged the risky behavior with artificially low interest rates by the Fed and legislation (ie. regulation) by congress that was trying to promote so called affordable housing. “Everyone should own a home” was the mantra of the past decade.

First, the government and community organizing groups through their power of controlling and influencing how banks operate forced the banks to lend to borrowers that would otherwise be deemed risky. This was not just the left. The Bush administration jumped on board with similar pushes. Fannie Mae and Freddie Mac’s purpose was to push affordable housing, and they are the ones who basically establish the market in which bankers operate. Who do you think created the mortgage backed security instrument of which this monster was created?

Second, another part of the Glass-Steagall act that everyone forgets, but which everyone loves is the establishment of the FDIC. While it may seem like an excellent idea, how does saying, “Don’t worry. If you fail, the government will bail out your depositors.” effect behavior. Would that not increase risky behavior, knowing that you cannot harm the customers? Doesn’t that make customers less critical of who they deal with for their banking knowing that they have nothing to lose?

Third, the Federal Reserve artificially lowered interest rates to a historic low, reaching a negative real interest rate. In order to lower the interest rate, the Fed increase the money supply and encourages the banks to push out that money via loans. The whole point of this is to cause an expansion in the economy. Well, we got an expansion alright. As, Thomas Sowell says, “You can open the flood gates, but you can’t control where the water goes.” In this case, the water went into real estate. One could argue that the government did control the water somewhat with their push for affordable housing and their everyone should own a home legislation.

Another problem for the statists argument is if the guard rail of the Glass-Steagall act was still there, would we have still had a meltdown? While I cannot prove something that didn’t occur, one only need to look at the last meltdown with the dot com bubble. That was also Fed induced with money flooding the market. With the Glass-Steagall act in place, the money was forced into another sector, and we still had a meltdown. One can say it was not as big of a meltdown as our current one. The problem there though is the argument is just a matter of proportion. We didn’t have the historic low interest rates in the last meltdown and we didn’t have government passing legislation saying, “Everyone should own dot com stocks”.

Now we could get into the consequences of our entire banking structure and the problems with fractional reserve banking, but that would require too long of a post, and it would probably take me into deeper waters than I’m prepared to swim. The point of this post is to demonstrate that the anti-free market crowd doesn’t seem to understand causation. You can’t hold the free market accountable for something it did not create. Removal of the Glass-Steagall act was not the cause, just like removal of a guard rail doesn’t cause the driver to hit the tree. It both cases, it is outside influences, and in our current meltdown causation lies with the government.