An Apples To Apples Comparison
October 13, 2008 2:56pm CST
You know the adage, that's comparing apples to oranges. Since I am writing about that wonderful fruit I call an apple, I wish to make a comparison to that fruit and the current state of the economy. A government created apple hysteria was start that drove up the price from $3 per pound to $10. Stores loaded up and even used them as collateral for expansion. Suddenly the price collapsed to $5 and finally to $2. Now government takes notice. What can government do to deal with the problem? It can try to boost the price of apples by forcing stores to raise their prices. But what about consumers? They won't buy at $10. So the apples sit and rot. Maybe government should buy them all or force consumers to buy them. Also perhaps stores will just not buy any more at all. Government could force them to. But it can't force them to stay in business. People can always walk away. So perhaps government can just buy the stores, all in the interest of keeping the price of apples up. But it will have to buy the apple-leveraged stores at a much higher price than the market would offer, so this is a bad economic deal on the face of it. The tangles can get ever more complicated and billions and trillions can be spent. You can put everyone in a prison camp and force people at the point of a gun to buy and sell apples at $10. But in the end, the problem is still the same: the price of apples wants to fall. Nothing government does changes that one fact. To attempt to change it is like trying to change gravity. Of course, the government’s central bank can raise all prices through inflation to the point that apples do in fact cost $10, but this is purely cosmetic. In fact, in real terms, the price of apples is still $2. It is a pointless and destructive activity to try changing this. You only cause massive damage in the attempt. Of course this is the same thing that happen with the housing market. Once again government stepped in where it did not need to step, but as usually government instead of stepping backward decided to run forward. Big government is bad government no matter what the reason is.
• United States
14 Oct 08
Yep. I saw an example last year, I don't remember what it was for sure , but there was a video that showed the price of a car and its actual worth. The price was in the neighborhood of $40000, while the actual worth was around $2400. That was the difference between fiat currency and gold. What we have today is a lot of bad debt that the banks were forced to incur at government demand. Instead of letting the free market work, the government has decided to take on this bad debt and pass it on to the taxpayers. It has also decided to take over these banks, or at least a portion of them. Among the other problems that this will cause... as part owner in the bank the government can now look at all of the accounts to see what you are doing with your money.... and it does it legally.
• United States
13 Oct 08
A very good way of putting it...I personally don't think they should have bailed them out. Perhaps that way the stores would have thought twice about buying so many d*mn apples. [b]~~IN SEARCH OF PEACE WITHIN~~ **AGAINST THE STORMS, I WILL STAND STRONG** [/b]
16 Oct 08
You have to consider the alternative. Now I would have never let those mortgage and loan companies lend money to the people who could not afford their houses. And I would have started a campaign to get those who could afford to buy a house, to think of a house as a place to stay, not something to get because the mortgage interest deductible and persuade them that if they want a big house, they should put on a large downpayment and pay more monthly. But if you give a bailout, then those who caused it have not learned their lesson. They will go and spend the money again. So things go from bad to worse.