Hey everyone, first blog post here. I am planning to post on a variety of topics, from updates on my personal life to economic/political issues to music and what not. Over the last half year or so I have become an avid blog surfer and have found a few that I like to read just about every day. This blog will serve as a way for me to link to those posts which I find the most though-provoking. Believe me, the blogs to which I provide links will be able to argue about things in the economic/political realm much more eloquently than I ever could. I hope you find some of the ideas as interesting and eye-opening as I do.
Today has been quite a day. I received an invitation packet in the mail today from the Peace Corps! I have been invited to serve in Honduras starting in February, in a Business Advising program. This is something I have wanted to do for over a year and it's a bit surreal now that it is all coming to fruition. I have 10 days to accept or decline the invitation. I'll probably post more on this later.
In other big news today, the House of Representatives voted against a $700 billion dollar bailout of the financial industry. This has been all over the news so I won't get into details, but I am pleased with the decision to reject the bailout. The financial industry was not exactly my specialty when studying economics in college, so as usual I turned to the blogs of economics professors to get a better understanding of the situation. I found plenty of reasons to oppose the bailout, and I've read a plethora of articles stating those reasons. Perhaps I will link to some of my favorites in another post. Anyhow, what sticks out to me about our current situation is that the opposition seems to be coming from everywhere: The average citizen who does not want their tax dollars to be used to clean up for the mistakes of people on Wall Street (a good way to summarize what we would be doing is "privatizing profits while socializing costs"). There are also many economists who oppose the bailout because it will create "moral hazard", a situation where firms realize that if the government is likely to bail them out in the future, they are able to take risks they would not under normal market conditions, knowing they have a safety net if they end up failing. Finally I have seen some convincing arguments from congressman Ron Paul and Austrian Economics, the economic school of thought with which he identifies. While I was hesitant to embrace the ideas of Austrian Economics at first (it goes against a lot of what I just spent 4 years learning in college, can you blame me?), after recent events it has become quite convincing to me. The argument of economists from this school of thought is that because the Federal Reserve has been printing money and artificially lowering interest rates, they have created a "false prosperity" for our nation. The false prosperity can only last so long, however, as has become much more obvious in recent weeks. (The abuse of the mortgage market through "government sponsored entities" is also part of the story of how we got to be in this situation, but that is for another time). A bailout would only prolong the correction that needs to take place to restore the market to more normal conditions. While there will be some painful shocks to our economy if the bailout does not pass, the argument is that the recession/depression will be longer and worse if the bailout does past. Based on the fact that Austrian Economists have tended to be much more accurate at predicting economic trends in the past, I am going to take their word for it on this one at this point.
I'll leave you with a
link to commentary by Ron Paul on CNN.com (it's about time he got some media coverage, unfortunately it has taken a financial crisis to spark it). He gives a good summary of the current situation, how we got here, and why there should not be a bailout, from the Austrian point of view.
