Tuesday, January 03, 2012

Quote of the Day - pessimism vs. optimism

Marc Faber, market analyst and publisher of "Gloom, Boom and Doom Report" newsletter, recently made the following statement on CNBC:

"I am a great optimist in life; otherwise I would commit suicide in view of the kind of governments we have nowadays."

Pretty scary, huh?

As Mike Scully, who blogs at LibertyInsight.com, wrote here:

The fact that we optimists are so pessimistic about the economy should cause you to take notice and ask if maybe there is something to all this gloom and doom after all.

That may seem like a paradox. If you listen to the financial news, those of us who have been predicting that the economy is on the verge of collapse are "gloom and doomers" who are just negative people. When we say that the Greek debt crisis can't be resolved with more bailouts and that default is inevitable, they call us defeatists. When we point out that America's economy is as bad as or worse than the problems in Europe and that the only solutions to get us out of this mess are currently politically impossible, they say we have no faith in America.

In fact, nothing could be further from the truth. We economic "gloom and doomers" are simply realists who understand the nature of the crisis based on Austrian economic principles. Our thirst for the truth has led us to question the Keynesian economic theories taught in our schools and propagated in the media, which sound sensible on the surface, but fall apart under logical scrutiny. This Austrian understanding of business cycles and the nature of money and human action tells us that unsustainable debts cannot be sustained, and that a debt-based fiat-money system that can't go on forever, won't.

So who are the optimists and who are the defeatists?


skeeter1107 said...

Good post Maggie. There are two items that I think are pertinent to your post.

Keynesian economics never promoted the idea of perpetual deficit spending. That given, what we have found in both Europe and the United States is the reality that deficit spending has it's obvious limits. Essentially it can last forever until it comes to a sudden stop.

Secondly and perhaps more importantly, politicians have promoted the idea of Keynesian economics not based on their understanding or it's theory. Instead the central tenet for politicians is the fact that it requires government intervention. It provides a basis for the politicians to "do something" and have control over people and business.

If Keynesian economics didn't involve the meddling of politicians in the economy, they would have no interest in it. It's the reason they shy away from more capitalist market economics because it requires the politicians to get out of the way.

Maggie said...

Excellent points, Skeeter - thanks for making them!

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