“Nobody saw it coming” — WRONG

Sometimes, we read that “nobody saw it coming” regarding the current economic mess, driven largely by the residential real estate bubble which was in turn driven by government policies that pushed banks to lend money to people who couldn’t afford them–the “sub-prime” mortgages which are now so notorious.

That particular Ponzi scheme collapsed last fall, just in time to elect hard-core leftists to power in the United States. Gary North of the Mises Institute effectively demolishes the “nobody saw it coming”[*1] line.

Ever since September of 2008, we have seen the fruits of the fiat money roots that Mises warned against almost a century ago. But modern free-market economists are as hostile to Mises’s theory of the business cycle as they were hostile to Mises’s theory of the economic irrationalism of socialism … until the Soviet Union fell. Then, they got religion, but they still never mention Mises. It was as if he had never lived.

Mises? Who is Mises? Yes, the Soviet Union went bankrupt. We didn’t think it would in 1986. Except for that lucky guesser Judy Shelton, nobody predicted that it would. We told people that the Soviet Union had remarkable economic growth. Yes, it turned out that the Soviet Union was nothing but Bangladesh with missiles, just as journalist Richard Grenier said in the 1980s. We did not see this at the time. Still, we will take credit for its collapse anyway: the new capitalism defeated it. We will continue to praise the regulated fascist economy that the United States has been over the last hundred years, and call for more of the same. We love economic efficiency, because efficiency lets the state get larger. When people get richer, they can pay more taxes.

This is why academic economists are demanding even more federal spending to bail out the banks and the other institutions associated with high finance. Almost to a man, they are saying that the bailouts are necessary. Why? Because they have been great proponents of the mixed economy ever since John Maynard Keynes wrote The General Theory in 1936 — even before this, since the real mentor of American fascist banking, Irving Fisher, back in 1911.

Here’s a post I made right here on Medary.com on January 17th, 2008–nine months before the bubble burst:

How long can we afford to pay the bill for other people’s irresponsibility? At what point do we start demanding that our fellow citizens get their snouts out of the public till, put their heads down, get to work, and SUCK IT UP?

It’s hard to be “heartless.” It’s much easier to be an enabler–“oh, you poor thing, here, let me allow you to continue to wallow in self-destructive behavior while fooling yourself that all of your problems are caused by somebody else. Poor baby.”

You know what? If you took out one of these sub-prime mortgages to buy a house you couldn’t afford, you’re an idiot. If you were the ones holding out sub-prime loans to people who couldn’t afford them, you’re a scoundrel.

Scoundrels need idiots almost but not quite as much as idiots need scoundrels.

Suck it up, everyone. You made your own hole. Dig yourself out of it. Quit borrowing money, start living on, as Dave Ramsey says, “beans and rice, rice and beans.” Take control of your own life, unless you really, really, really want somebody else to control it for you.

Unfortunately, it’s beginning to look like a large segment of the American public wants exactly that. To which I can only say: be very careful what you wish for.

There were people who saw this coming. Hell, even George W. Bush, no brilliant economic mind, saw it coming, and belatedly tried to reform Fannie Mae and Freddy Mac just before they completely drove over the cliff, taking the rest of the world with them.

So now people in Washington are seriously talking about nationalizing banks, and forcing the responsible people (those who didn’t participate in the mortgage/housing bubble) to give money at the point of the IRS gun to the irresponsible people, those who made those disastrous loans, and those who were duped into taking them.

This is necessary in order for the idiots and the scoundrels to learn the proper lesson: that it’s OK if you do stupid things, because there will always be enough non-stupid people around who the government can steal money from to bail out the stupid people.

I guess I need to re-evaluate who’s really been stupid all along, and modify my behavior accordingly.