Only the Market can fix the Market

In 2007, Western economies got hit by the American financial crisis and ensuing economic depression. Left wing politicians rushed in to point the finger at the greed of the bankers and the lack of regulation. Right wing politicians more or less agreed. They were all wrong.

There will always be greed. The trick is to get greed to work for you, not against you. In a free market, greed - like ego, pride and passion - is good. It works as the antioxidant of the economic body. It aids to guide the efficient distribution of resources and eats up the inefficiencies. The market uses the greed. No greedy businessman would ever tolerate wasting resources. And free market bankers would never get away with over-rewarding themselves with bonuses. They would lose their jobs, for either their employer would go bankrupt or their shareholders would force them out. That is what almost happened some years ago. It did not, for our governments bailed out the bankers and therewith awarded the overly greedy businessmen. That’s how you create bad greed. A truly free market would never tolerate inefficient behavior. In any other kind of market, greed becomes another growth killing variable. A free radical that feeds on risky behavior that will always go unpunished.

We really do not need more regulation. Simply study the rules and regulations, as well as the number of overseeing entities, financial corporations had to deal with just before 2007. A sheer avalanche it was, already back then. But it did not work. It did not weed out the greed and it did not stop banks from making some critically wrong decisions. So now more regulation is going to work the magic, right? Wrong. Greed and mistakes will always be there. It’s human. To think you can regulate that away is a fallacy of the highest order. They tried this, in vain, in communist, fascist, and socialist regimes. Sadly, it is a concept that is still entertained by the elitists who think that a select group of wise people should decide for everybody else. This, while history has proven that no amount of regulation is going to fix the market. Only the market can fix the market.  

What really caused the financial crisis is sustained government intervention. The powers-that-were spent like mad, kept increasing bureaucracy and taxes, subsidized some industries, forced low interest mortgage programs on the market, and - worst of all - regulated the markets through inept central banking systems that pushed interest rates to artificially low levels and printed money out of thin air. But they have not learnt one thing. Now, in order to ward off a double dip, the powers-that-be have been prescribing the same medicine, but with upped dosages. That’s like smoking more cigarettes in order to cure your lung cancer. Maybe it’s time to just quit smoking.