Old Hop on the Economic Collapse....

Some condensed and edited comments from Chuck at Old Hop's Hideout:

We are in a Depression.

Austrian School economists have been predicting this since 2002. Our economy, inextricably linked to an unconstitutional central bank called the Federal Reserve, is dis-contorting itself from false, manipulated credit and has entered the crack-up phase of the boom-bust cycle. If ever the prescient wisdom of Thomas Jefferson and John Taylor of Carolina was to be proven, it is now.

Central banking is the ruination of any economy.

The harder the Federal government tries to fix the problem the worse it gets. Chicago School economist and Nobel laureate Milton Friedman demonstrated that a series of time-lags (recognition, decision, and implementation) results in government fiscal and monetary interventions only exacerbating market convulsions. George W. Bush has embarked on the same disastrous policies taken by Herbert Hoover and Franklin Roosevelt in the 1930's.

Both Presidential candidates John McCain and Barak Obama have supported the infusion of yet more false liquidity into the financial markets, proving that neither understands the Federal Reserve System as the cause and aggravation of the business cycle. Neither of these men have the economic acumen to solve this crisis, regardless of their political demagoguery. Whatever policies either of them pursues will only deepen and protract the suffering.

Meanwhile, the only candidate who understands how the economy works, Ron Paul, was roundly rejected by American voters.

It does not take an economist with a Ph.D. to intuit that days of debt-financed high living have to meet with an inevitable end.

In a free market, business failures are absorbed by the market with minimal impact to the general public. More efficient players buy up and reallocate the assets.

Under our managed economy inefficient players -- in many cases large inefficient players -- are allowed to continue operation, propped up by subsidy and/or loose liquidity. They then become "too big to fail," and their losses are socialized and passed on to the public. Marc Faber used the metaphor of a crack addict (where "crack" is credit) to describe our economy.The main lesson the Austrians teach us: credit is not the engine of economic health; saving is.

We're hearing and will continue to hear from a chorus of boo-birds blaming the "free market" and "capitalism" for all of this. But the fact is that we don't have free markets; they are actually managed markets, especially the financial markets that led to the bust.

The great danger in times like these is for a public outcry for more regulation and tighter government controls. There is always a Hitler out there waiting to oblige.