Amusing Comment by a politician

Today, I was browsing through some books in Popular, and chanced upon a book on the financial/economic crisis of 2008. In the book, I saw a comment made by a prominent politician in Singapore. He said that the market is not self-regulatory, and more regulations need to be created by the governments as well as the central banks to ensure that the market is more stable. He argued that the lack of regulations is why we have such a huge crisis as the crisis of 2008.

I find this statement myopic in nature. The fundamental issue is not being considered here. Most people (I would venture to say 99% of the population) are being educated/sold on the idea of Keynesian Economics, and this is the result. To counter this politician's statement, I would say that big government and central banks are the roots of the problem. Easy credit has led to all these bubbles and economic/financial upheavals. But they don't want to admit it! Recently, I talked to a taxi driver. According to him, the Singapore average income has increased 3x since years past, but housing prices have increased 30x in the same time frame! One has to ask how is this possible? I have the answer, but it'll require another lengthy essay. All I can say is that the root cause of this is badddd.

Back to the politician, he is wrong I'm afraid. The market is self-regulating, contrary to his assertion. That is why those bad financial institutions ran into trouble in the first place!! The market is trying to weed out the bad companies from the economy, and shave off the excesses that have built up over the past decades. But time and again, the government and central banks step in to prevent this from happening. They try to be big and control everything. They are the instigators of subsequent bubbles which will be bigger and worse. Look at the US! Big government and central banks take away market stability. And yet they have the audacity to claim that they help stabilise markets. The financial institutions are one of the most regulated group, but yet we still see all these crises over the years. More regulation is not the solution. A smaller government is. Ok with all that being said, at least the Singapore government is doing a way better job than the Western counterparts with its fiscal policies. If I were to choose some nations that can recover quickly from a severe recession, Singapore will be one of them.

Study the Classical Gold Standard, study Austrian Economics, read books like the Dollar Crisis, and I am confident that you will readily agree with me. It just makes so much sense. I tried looking from the point of view of the Keynesians, but there's just no way that it will work out. After getting the basics of Austrian economics, I really recommend The Dollar Crisis by Richard Duncan. It is a heavy (and boring) read for those who are not familiar with financial and economics stuff, but the knowledge gained is invaluable. You will be able to really see how money flows around the world, from its creation to its destruction. Armed with this knowledge, you'll have an idea of how to profit from this money movements. There was a survey done by a Canadian minister a few years back. He interviewed people from all walks of lives, the homeless, the educated, professors, students, professionals, entrepreneurs, and even the bankers. What he found was rather surprising: none of them ( 0%!!) have an accurate picture of how money is created in our world.

Why are costs of living rising? Why is the rich-poor gap widening? Why are the middle classes in developed countries shrinking? Why are families getting smaller and smaller? Why do we need 2 people in the family working instead of 1 like it was in the past? The simple answer, and the root cause: creation of money out of thin air by the governments and the banks.

I am not making all these arguments because I want to be special and different from the crowd. I have better things to do! Again, study those things that I have recommended and you'll understand why I make these arguments. These are not argue-for-the-sake-of-arguing sort of arguments. I deeply believe that our current economic and financial system are very unsustainable. Our system creates debt out of thin air, to repay previous debts, and on top of that, we have interest charged on those debts. It is a perpetual cycle of debt creation. And it requires that the world keeps growing and consuming more. That is why the world is so obsessed about growth. There won't be an end to this until all the earth's resources have run out. The burden on future generations will be huge.

Do I care? I do care, but I know I can do nothing about this. The system is so deeply entrenched, and I am not some kind of a revolutionary guy to change things. All I can do is to help raise awareness of these issues to the people around me, to the people dearest to me, and to my future generations.

And as I'm writing this post, gold hit a record high (yet again) of > USD1130. Its silvery sister is still way below its record high, waiting patiently for its chance.

Cheers