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Sounds very good. Is there a written paper?

The Freedom you discuss can only be found in the lack of system. The economy is inevitably bigger and stronger than any "system". That being said, it is still simply rent stability or lack there of that makes the world go wrong.

So imagine this. Imagine rents deflating (not hard since they are). Now imagine if "New Landlords" were born that appreciated the long-term economic rewards of relatively low rent and stable rent that they charged their more stable tenants.

Such competitive low, stable rents would make for ever improving tenant credit and inevitably replace the current system of perpetually higher rents and eroding credit. Other landlords would soon be forced to jump in to compete for a ever more scarce supply of good paying tenants. And with the same vigor that rents once rose, they would fall and fall, and our entrepreneurial business tenants would aggressively capitalize on such falling rents.

As rents fall, relative energy prices continue to rise or stay constant since electricity is the true first mortgage on our land. So tenants and landlords collectively demand renewable energy to provide ever increasing stability to their investment and business.

Renewable energy growth gives the economy its Keynesian like short-term boost (i.e. manufacturing of solar and wind), yet still making a long-term investment (not stimulus) in the real economy.

Mini-Stockmarkets are formed to compete against one another to find the best credit tenants paying the most valuable rental stream. Such Mini-stockmarkets increase in value as the credit (not rent) of their tenants increase due to their relatively stable low rent.

The system is called Economic Pluralism. It changes the inputs and outputs from Capitalism. It stresses diversity of team size, as opposed to Capitalism which rewards Monopolistic characteristics. The system utilizes the natural resources of air, water and light to produce and distribute renewable energy as opposed to Capitalism, which utilizes land to distribute non-renewable energy (coal or oil).

In the end, Pluralism is sustainable.

One of the people discussing the current crisis at the MPS was Martin Wolf, a leading columnist for the "Financial Times."

He has, unfortunately, turned in an almost hyper-Keynesian direction over the last few months, in spite of his long-time defense of market-oriented policies.

His latest column in yesterday's "Financial Times" was so disturbing that I sent him the following email communication:

"Dear Mr. Wolf:

"I have long been an admirer of yours. I have enjoyed your columns and especially your defense of globalization and the benefits to humanity from a more open and competitive market order.

"But your positions over the last several months and in particular you most recent column in FT on “Seeds of Its Own Destruction,” have been disappointing me more and more.

"It is not capitalism or the market that has “failed.” It is the interventionist state and mismanaged monetary policy.

"It is “the Fed” that kept interest rates abnormally low for years – according to the St. Louis Fed several key rates, when adjusted for inflation, were either zero or negative. This more than anything else fed the housing, investment and consumer debt bubbles. The banks were awash in funds, which they had to get out the door; they did so by either lowering borrowing rates and/or lowering their creditworthy standards for lending. This is what generated all the financial “creativity.” It is hard to see how this chain of events would have ever been set in motion if not for the “easy money” policy of the Fed starting in 2003-2004.

"Second, the financial institutions were under pressure to make housing available to higher risk/less creditworthy borrowers by both the Democrats and the Republicans. Fannie Mae and Freddie Mac – not market-created institutions – subsidized and funded this process even more.

"Here, in Fed monetary policy and housing interventions by the government, is the primary source for the current economic crisis.

"And, of course, the world in general was on an easy money spending boom that, also, could not last. This was done by central banks, not by the market. You don’t blame the patient for getting sick because of the medicine dosed out by the doctor.

"Now, what is proposed? Massive deficit spending and monetary expansion. With all due respect, what economies need is readjustment, rebalancing to restore markets to stable and sustainable growth in the years ahead. This requires reallocation of misallocated resources, downsizing of some industries, allowing markets to determine what various financial assets are really worth in the post-bubble era, so they can be properly written down or off the books. And allowing, in general the price and wage system to do its job of telling the truth about what goods and factors of production are really worth in alternative uses in the economy.

"I do not see how this process will be advanced by sustaining industries, jobs, and sectors of the economy in states of disequilibrium and imbalance by artificially pumping up demand with borrowed or created money that at the end of the end will have to come to an end – at which point the adjustments will still have to be made, and will have been overlaid with any additional misallocations and misdirected investments the “stimulus” spending will have generated.

"The truth hurts. But there is a real economy, and it must adapt to underlining market conditions. Keynesian-type policies are merely attempts to avoid that reality.

"It is as if Johnny went to the circus with his Uncle Sam. And while Johnny was watching the performances his Uncle Sam kept feeding him cotton candy. Now, when he has gotten home, Johnny has a tummy ache from that sugar high. And what does his Uncle Sam tell Johnny? “Oh, you’re tummy hurts? Here,have some more cotton candy!” "

Mr. Wolf kindly replied, but alas not with a response to the type of argument that I offered.

He said: "I think we must agree to disagree. I disagree that the Fed alone caused these problems and I disagree that the right thing to do is liquidate everything."

Notice how he suggests the implication of government non-intervention, that it would be necessary to "liquidate everything."

The point of the Austrian mirco-analysis of macroeconomic events is precisely to show that to think in such "aggregate" terms hides from view the sectorial and individual firm and industry adjustments that may have to occur -- and all of which would be to different degrees.

The shift away from market solutions by people even as knowledgeable and well-versed in the "economic way of thinking" as someone like Martin Wolf shows just how deeply imbedded the Keynesian framework really is in the minds of all those trained in mainstream economics over the last sixty years.

Richard Ebeling

The Power to Tax is deadly to liberty and I'm thrilled to hear somebody with Peter's credentials express that perhaps it's time to end it.

I've been thinking along the same lines about taxation. You can find links to my first two posts in a five part series on the topic on my blog, http://adamwhys.com/awhysblog.


Forgive my ignorance, but I'm not sure I understand the Phelps analogy. I understand that business is over-burdened with regulation and thtat business taxes should be reduced. However, I don't understand how it explains the current situation - i.e. "credit crunch" etc.

Please can you expand?


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