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« Horwitz on Stossel-20/20 Fri 10/17 at 10pm EDT | Main | A Moment of Big-Headedness »

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A better term is "Control-Freak Capitalism," because that is what Americans are going to get after the election. It doesn't matter if it is McCain or Obama who wins. At worst, a generation of Keysianism on steroids; at best, a generation of progressive status-quo.

Danny L. McDaniel
Lafayette, Indiana

Yea, we all use the drinking binge and heroin addict analogies. Friedman did it quite a bit. And, the Fed has often been called the one body that "takes the punch bowl away once the party gets going."

But I've been saying over the past two weeks that the analogy should be changed. In my view:

Greenspan at the Fed spiked the punch bowl without our knowledge. Bernanke then tried to take the bowl away, but only after we were well hammered. Now as we wake up to the mother of all hangovers, Bernanke reassures that he will ease our pain by giving us the hair of the dog --with the Treasury paying the tab!

I've made the same "hair of the dog" point too Dave. I think that's right on.

Ahem: http://www.fee.org/pdf/the-freeman/IJASPongracic.pdf
Written in May, published in August. Relevant passage: "But what if the current crisis is the result of the Fed’s easy-money policy? Hair of the dog is a bad idea for housing crises as well as hangovers."
:)
I agree it's absolutely the best and most effective analogy we can use. I've been doing it a LOT for the last month - it works.

The analogy has its limits. The current mood is that capitalists were out partying too much too often, they're drunk, they lost all their money and so it's good that a "loving" mother (or father), the government, will now accept the stray lamb back into the safety of the family hearth. What's bad about that? A well-meaning and wise mother will nurse the markets back to sanity and then slowly, if they feel better, she'll let them go out again, a better and improved person. Stop!
Rewind. That's not how governments work! Deregulating is a dirty word, one could be fined for using it. Once a regulation is in place, only a much stronger and worse regulation can replace it. So let's change to the analogy that "a concerned and loving mother takes her son backs, locks him down in the cellar and throws away the keys". That sounds more like it.

Steve,
Allow me to throw my analogy into the ring.
Five years ago patient had spot on lung. Ignored it and kept smoking cigars.
Today the patient is rushed to emergency room and diagnosis is cancer spread from lungs to rest of body and is now untreatable.
Prognosis_Better call hospice.
ED
PS: I think this is what Mises means when he uses the word "catastrophe" whenever he concludes discussions about these matters.

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