What IS government good at?

Here's an excerpt from an article, which talks about the insistence of governments on creating economic crises through abject stupidity:

"After the economic dip of 2000, the US central bank's loose monetary policy laid the groundwork of the housing bubble. When the bubble burst, government implemented a series of stimulus packages, and monetary authorities set the interest rate down close at the zero bound. As of now, new packages are on their way and the Federal Reserve's reluctance to initiate its exit strategy is all too obvious.

In other words, they created one bubble, which burst, so immediately started creating another one with stupid policies, and now are afraid to abandon this newest disaster.

As the collapse of the real-estate markets in the United States demonstrated, the credit boom has produced misallocations on a massive scale. The costs of many houses that were built when loans appeared easy to finance turned out to be unbearable. Projects that seemed to be financially manageable during the time of easy money had to be abandoned when the reality of scarcity was revealed. Investors and consumers were forced to retrench. Capital was lost, yet the debt burdens remain, and the fallout is felt throughout the entire economy.

Misallocations are when governments do stupid things and flood the economy with cheap money which makes it feel like you can do anything and it will come out ok. There'e no reason to use your brain. Then there is a crash and some moron with a teleprompter will complain that it is the fault of the evil "market" or "speculators." In other words, they will lie.

As if economic history is to repeat itself, with each cycle getting worse, policy makers around the world repeat the old mistakes again and again. They have embraced, almost in unison, the rather crude belief that low interest rates and government spending will create wealth.

In the 1970s, in the face of the first oil-price shock, many governments and economists had great expectations of the stimulus policies in Europe and the United States. But the result was global stagflation. Japan practiced fiscal and monetary expansion on a grand scale since its economy entered a recession in the early 1990s, and the result has been stagnation ever since.

Despite the colossal efforts to sustain the boom in Japan, Europe, and the United States, the systemic fragilities of the global financial markets have not vanished, and business bankruptcies and unemployment are on the rise. What has been accomplished, however, is the formation of unsustainable levels of debt and of excess reserves in the banking sector, which could explode at any moment into a surge of inflation.

Fabricating bogus economic growth is highly appealing to policy makers because they can easily produce such "growth" by wasteful consumption for war, welfare, and all kinds of popular government programs. Each stimulus package at first incites irrational jubilation but leaves behind a wasteland of failed projects and frustrated expectations. This mental discouragement of investors and consumers will linger on for years after the boom has ended.

While monetary spending is limitless, and there is no scarcity of zeros to add to the price tag, production remains limited by the scarcity of the factors of production."

In other words, instead of helping the private sector actually become more productive, which has been proven over and over again to be best done by staying out of people's way, government does quick and expensive things it thinks are fun. Of course, these things are disasters, but it's ok, because taxpayers have unlimited money.

Governments create bubble after bubble, problem after problem, find someone to blame, then waste no time in making it worse. The current gargantuan problem they are deliberately creating will no doubt be the fault of "the market," "capitalism," "speculators," and maybe even Christians. Christians seem to be the bogey man of this administration, though they are 80% of the poplutaion.

Antony Mueller, Mises Institute, 3/12/2010

"In the US and Euro zone, POLITICS holds preeminence in ALL its affairs, thus political solutions are always substituted for PRACTICAL solutions. Capitalism, competition and creative destruction of entrenched crony capitalists is BANNED through tax and regulatory corruption. Capitalism is alive and well in the emerging world, and it is dead and buried in the developed world. This is not a failure of capitalism in the developed world; it is a failure of socialism. We live in the land and times of George Orwell, where black is white, up is down and socialism is called capitalism.

Don’t forget, true capitalism is DISINFLATIONARY – its creative destruction provides more goods and services for less money because entrepreneurs compete for customers. Socialism is INFLATIONARY – it is always less goods and services for more money because elites short circuit the creative destruction and substitute crony capitalists who, through regulatory and tax manipulation courtesy of corrupt public serpents, mandate the winners in the competition for CUSTOMERS."

Ty Andros, 3/12/2010

I guess it's too obvious to be worth mentioning that all of this choosing who is too big to fail, who gets to survive and who die, propping up certain companies or industries and so on is blatantly socialist. Socialism causes higher prices, lower wages, inflation, and general stagnation. Hey, but at least you don't have to be bothered with having rights! Again, it is the government interfering in and screwing up the economy.