Jim Lacamp's Brillian Defense of the Free Market and Ron & Rand Paul on the Debt Ceiling

Really not a lot of news today.  Jim Lacamp has a great article on RealClearMarkets making the case for why the free market didn't cause our current economic malaise and why it will eventually triumph.  Some key excerpts:

To a large degree, governments and policymakers have gotten what they want: control. They have brought free market mechanisms to their knees, to the point of submission, almost to the point of being unrecognizable. Free markets, particularly in developed nations, are no longer free. As the Egyptians, Libyans and other subjects of suppression have shown, breaking free from these chains often causes violent, volatile reactions.
Sometimes it requires a volcano to light a match.

George Orwell and Franz Kafka could scarcely have imagined many of these recent events and governmental action and inaction. Rules, treaties and laws are now tossed aside with alarming alacrity. Discipline? It has given way to euphemisms, semantics, legislative parlor tricks and recalculations. Greece doesn't hit their mandated targets? Give the money anyway!

Now anyone can criticize government intervention and blame it for wrecking the economy, but unless you mention Federal Reserve money manipulation, I start losing respect.  Fortunately Lacamp follows through:

The Fed has created a junkie. Get this: There's an over 85% correlation between US stocks and quantitative easing programs. Unbelievable. The recent market reaction to Ben Bernanke utterances illustrate just how significant a stronghold Fed policy now has on stocks. All this despite the fact that Bernanke has been consistently dead wrong about the direction of the economy and that QE2 hurt more than helped our recovery. Incidentally, those higher stock prices? They were more than offset for most Americans by significantly higher food and fuel costs.

The big enabler here though is a much bigger issue. It's our currency system. When you can print money, you don't have to balance trade. It gives policymakers way too much room to tinker with the economy in order to retain their power. Look, when you don't balance trade, and can print money, it gives license to simply take on more debt to allow continued trade. This allows China to build up huge sovereign wealth pools, and to buy commodity resources around the world, rather than balance trade. 

Back before we had the Fed, before we went off the gold standard, our economy had shorter recessions and less debt

Mix in some attacks on Keynesianism and you definitely win the key to my heart:

Many of America's politicians, still drunken on ill-advised dogma that Keynesian spending can solve our problems, continue to contrive New Deal-type schemes that ultimately leave more debt and crowd out the private sector and again, free market forces.

Lacamp even ends with a powerful closing paragraph to boot:

In the long run, we are not Keynesian and we are not all dead. Allowing free people to pursue what is economically best for them and their families is the only way that governments and their people can peacefully and prosperously co-exist. And thrive. Despite the worst efforts of policymakers, free market forces are still alive. They are starting to fight back. We can argue about how, we can argue about when, but we cannot argue about whether they will win in the end. They will win.

As Ron Paul keeps warning, the current financial/Wall Street/Federal Reserve/politicians-buying-votes-with-money-that-isn't-theirs system can't lost forever.  Free markets will eventually prevail, it is just a question of when.

As the debt ceiling charade continues, check out this great interview of Ron and Rand Paul by Neil Cavuto:

Pay attention to how Rand notes that many financial institutions are contemplating changing their rules and restrictions to allow them to hold only AAA securities and, get this, government securities!  Ha! Very clever on their part.  Also pay attention to Ron Paul's call for more inflation starting next summer.  Quite the unusual call to make but he probably pays attention to the money supply more than I do.