Trying to understand economics is somewhat of a hobby of mine. I’m no expert, so all analyses should be taken with a huge shaker of salt. I’ve read some good books on the subject, books that make sense to me and seem to jive nicely with The Book. So periodically, I’ll put together a post like this that highlights things that I find on the internets.
1. In a post that was practically made for Unintended Consequences, Will Wilkinson highlights the fallout of the government’s past push for home-ownership for every American. In a nutshell,
Government-subsidized borrowing gave us the housing bubble, precipitated financial Armageddon, helped prompt recession and mass unemployment. But, as the infomercials say, that’s not all! By zealously pushing home-ownership, federal housing policy has pinned to the map many now-jobless Americans who otherwise would have moved to find new work.
In other words, the government forced banks and lending companies to lower their standards so that more people could “have a piece of the American Dream.” People bought more house than they could afford, the housing bubble burst, the economy cratered, those same people are now losing their jobs, and…. they can’t move to find new jobs because they’re stuck in their piece of the American Dream. And no one saw it coming.
2. Here’s a little historical perspective on the relationship between government action in the New Deal and the prolonging of the Depression Previously Known as The Great.
Why wasn’t the Depression followed by a vigorous recovery, like every other cycle? It should have been. The economic fundamentals that drive all expansions were very favorable during the New Deal…So what stopped a blockbuster recovery from ever starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.
Well, at least we learned our lesson.
3. And now for a little economic apocalypticism from Peter Schiff. In the short interview on the left side of the screen, Schiff thinks the economic “stimulus” will be “an unmitigated disaster.” He predicts a crisis of the dollar, hyper-inflation, and the collapse of the current consumer economy resulting in an Even Greater Depression. I’m wary of Chicken-Little-style sermons, but Schiff has been predicting a collapse like this for some time, and he seems to have more economic sense than both houses of Congress.
4. Finally, if you’re like me, you listen to someone like Schiff and you start to panic a little. “What happens if the economy does go belly up?” Anxiety starts to well up in the heart, sin crouches at the door, and you start to get the economic equivalent of a bad case of indigestion. If that happens, I would heartily commend John Piper’s message “What Is the Recession For?” from a couple of weeks ago, as well as a couple of posts from Doug Wilson (here and here).
Remember: The Market is not sovereign; it does not run the world. Jesus does, and of all people, that should give those who belong to him a mighty dose of mind-blowing, soul-anchoring peace.