Tuesday, February 15, 2011

What can we learn from the riots in Egypt?

What can we learn from the events in Egypt? We can learn 2 things from these riots.
One is that we are partly responsible for the riots. One of the main causes of the riots was the huge increase in the price of food which can be traced to the Fed's inflationary monetary policy. The CRB food index shows increases in food price in the past year of up to 36%. When people are hungry they riot.

The dollar is at the center of the international monetary system. When the value of the dollar drops, the price of food goes up. While our consumer price index isn't really effected by food prices, many people throughout the world suffer because of increased costs of food.

Our monetary policy is not only ineffective in the United States, but it is also causing resentment against the U.S. Radicals are taking advantage of this situation by promising food and shelter for all.

The Fed's inflationary monetary policy is failing here in the U.S. and puts America's influence in the world at risk.

The Fed has failed at doing the job that it was created to do. We have had too many recessions and 2 major depressions since the Fed was created. It is time to eliminate the Fed.

The second thing we can learn is that the people in government are not any better than the rest of us when they try to anticipate the future. No one was able to forecast what happened in Egypt. This just shows why socialism fails and capitalism succeeds. There isn't any federal government that can regulate the economy. When the government tries, it will eventually fail.

When you depend on the government to control everything, you are saying that the government knows more than the private section and can foresee and avoid financial crisis like the one we are in now.

Of course, the government will blame someone else, but it is only that the government cannot control the future. As a result, the government's promise that it can prevent future crises actually has the opposite effect. The government acts when it shouldn't and causes more problems.

The market may not be able to control problems, but the problems are not increased with bailouts which only postpones and increases the problem. The market allows bad decisions to fail and it corrects itself as quickly and painlessly as possible.

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