Liberty Maven

Austrian economists are quick to point out that recession and market correction are an extremely critical part of how a healthy economy functions. Lew Rockwell, in his article called The Force Is With Us, points to some of the more obvious positive features of the current economic downturn:

It is a marvelous thing to see the market work, in good times and bad. Just look at the way that marvelous, unplanned barometer of wise resource use – the price system – has reacted in response to the human reality of economic downturn.

As we prepare for the future with the holidays upon us, consumers are wondering whether it is a wise thing to take on too many new financial burdens. They are cutting back and still somewhat indecisive about economic climate. For most people, the only real evidence of downturn they see is the devastation that has been wrought on their retirement accounts. This causes quite a psychological hesitation to buy.

He then goes on to discuss the Keynesian error, and the disastrous actions the Fed is taking to avoid the inevitable and necessary recessionary symptoms we are seeing.

As the Austrians have long said, the recession is a necessary phase. It is not an economic blight but a tonic that heals. If we let the market work without trying to interfere with its operations, we will see that the recession will bottom out and the economy prepare for future of growth.

…There is nothing that the government can do today – apart from repealing laws and regulations – that will make an improvement on the workings of the market. As Mises wrote in Profit and Loss, the price system is our guide to both success and failure under conditions of freedom. We need to be as tolerant toward one tendency as the other.

Read Lew Rockwell’s article here.