Gamesmith94134: Re-Capturing the Friedmans



“Alas, that did not happen. And it did not happen because the world described by the Friedmans is not the world in which we live.”



Friedman did give credits in the monetarism that small-government libertarianism in stimulating the economy in selling bonds to produce growth and stabilize the social development. The theory on liquidity and sustainability came across the margin of affordability made the resources finite and perpetuity on growth should aligned with its modifications like inflation and deflation to adjust the pace of growth. However, our government sees monetarism as the tool to eliminate inflation and deflation; and the recent social safety net like education and medical shifted to commercialism that broke line; since then, the government attempt to shift its cost to the public. Later, the sub-prime rate lending to house laid a heavy load on the government when the economy was overly stimulated with lesser employment or out-sourced from the factories, which caused the stagnated labor cost and created a downward spiral in the margin of affordability that the most middle class supports and grows on.



At first, the suppression of recession by cutting interest rate and reality of the support of the margin of affordability, our government lied about the reality of the sub-prime housing debtors which relied on the inflated price of their house to sustain its margin of affordability. The capitalization of the real estate market collapsed after the halt of inflation and stagnated labor cost and job positions were out-sourced.



Secondly, the cut of the support from the middle class in the financial make most capital market search on the short term investment and commodity market, it made the capital market worse that it went to the emerging market nations for a short term investment and lesser for the local development after the local real estate market turned sour.



Thirdly, Americans, the consumers of the world, were heavy in debts after the credit exhausted. Then the flight of cash flow toward the emerging market nations took the credits with them when the banks are insoluble and bankrupted. Our government bailed them out with trillions of bonds that FED loaned with low interest. Then, the argument on the sustainability and liquidity is greatly disrupted by the margin of affordability that our government took its liberty to marketing the capitals of social goods like education and medication to fit its budgets.



Perhaps, what we talk about undercutting the recession or depression, government participates in shifting the cost of social goods to its publics and deforming the nature of the business cycles like inflation, recession that made monetarism works on its own merits. I certainly said we deserve a depression locally and globally if we subjectively let monetarism works to adjust to all claims including government’s too.



May the Buddha bless you?

