Friday, November 16, 2007

Economic theory

Today I read about some of the excerpts for Mein Kampf. The one I found interesting here on page 84 is about Hitler's idea that economics is not the responsibility of the government.

"The state has nothing at all to do with any definite economic conception or development...The state is a racial organism and not an economic organization...The inner strength of a state coincides only in the rarest cases with so-called economic prosperity; the latter, in innumerable cases, seems to indicate the state's approaching decline...Prussia demonstrates with marvelous sharpness that not material qualities but ideal virtues alone make possible the formation of a state. Only under their protection can economic life flourish. Always when in Germany there was an upsurge of political power the economic conditions began to improve; but always when economies became the sole content of our people's life, stifling the ideal virtues, the state collapsed and in a short time drew economic life with it...Never yet has a state been founded by peaceful economic means..."

He says here that a strong economy cannot exist without a strong government and a strong government will inevitably bring about a strong economy. Yet it is when the government begins to get involved in the intricacies of the economy, and the people become obsessed with the economy and not the practices of the state, both will shortly collapse.

I like this excerpt because of the current stock market situation and the steady decline of the Dollar to the Euro. The American economy has risen and fallen with the times I know, but there has been multiple occasions where the government has interfered and our economy has never truly rebound.

Example 1:
The removal of the US dollar from the gold reserve. In other words, we told the world that we did not need the gold to back our money. (We actually do not have enough gold in the US to cover all of the money in circulation.)

Example 2:
The Fed Reserve bank at the request of the US Gov, has continually cut interest rates in order to try to stabilize the economy, with little or no success. The Interest rate cuts have helped the decline of the dollar in the world market.

Please continue this discussion in the comment section below. Lets see what you think the quote might mean.

Good day again....

Dan