The Laws of Economics Are Like Gravity, They Cannot Be Avoided By: Curtis Ophoven 11/3/2009 - 5 Comments The basics laws of economics are part of the fabric of every form a money throughout the world. Your Ad Here Every nation has to respect the laws of economics or they will end up paying the price for their ignorance. The laws of economics are as simple to understand as 'what goes up must come down', yet our government leaders continue to think that they can defy gravity. Here are the basics Laws of Economics; The borrower is slave to the lender Real wages will only increase with an increase in productivity Private property is the most effective way to motivate an increase in productivity Wealth is created with savings and production This is why the trillions in government bailouts and stimulus packages has not been able to improve the economy. The laws of economics have already been broken years ago and the result is that the economy needs to rebalance.  Creeping socialism has transformed America into a culture of over consumption with a bloated government that is standing in the way of ever returning to a sound economic recovery. Government's don't produce anything and therefore have no money that they haven't taken from the productivity of the people.  Governments can only stimulate one sector of the economy by depressing other sectors, since they must tax, borrow or inflate the money supply to finance the spending. There is no way to quickly undue this mess we have without a long process of re-educating the public to realize that it was pure capitalism that brought America into prosperity and capitalism is the only road back to prosperity. Repeating Mistakes of the Great Depression The U.S. economy is in big trouble and the governments' attempt to stimulate the economy has only broken the laws of economics even more, by causing more money to be misallocated.  President Hoover, followed by Roosevelt made the same mistakes and turned the recession of 1929 into a decade long depression.  They didn't want to face a recession, even if that is what that laws of economics were demanding. They tried again and again to use government intervention to avoid the recession - to no avail. Perhaps one of the best explanations of what happen can be found in Thomas J. Dilorenzo book, "How Capitalism Saved America". How Capitalism Saved America: The untold history of our country   "How Capitalism Saved America"     Contrary to the current political leadership, the best policy for the fastest economic recovery is the reduce government intervention, which is primarily responsible for distorting the markets in the first place, and let the free market take over to adjust for the previous policy mistakes as quickly as possible. History has shown that the right thing to do is often very difficult for elected officials to do, unless they have a genuine interest in the long term prosperity of the economy, in which many decisions they need to make will not result in a benefit until after their term of office.  President Obama has been quick to take created for 650,000 jobs (according to his numbers) saved or created by his stimulus package.  This is a clear indication that he wants credit for his policy actions.  Without the government intervention, the free market would have created 6 million jobs by now but no one would have been able to take credit for it.  History has proven again and again that the laws of economics cannot be avoided and the recession that would have been over by now is just getting started. Time is not on our side. The sooner we turn from socialism the better – no matter what the terms are, we will never find prosperity in expanding the government and printing money to pay for it. The government cannot product an economic recovery, here are 5 Ways to Turn Around the Economy.   Subscribe via RSS Copyright © 2010 PennyJobs.com. All rights reserved. Related Articles Gold Hits New Record as News Spread of a Possible Replacement of Dollars in the Global Oil Trade The Reason the Rich are Getting Richer is Because Inflation Pushes Money Up and Inflation is Accelerating Cash-for-Clunkers Widens Trade Deficit to Most Since 1999 Here Is Why Inflation and Socialism Will Eventually Fail and Capitalism Will Regain Its Worthy Support Why Doing Nothing Would Have Been Better Than The $787 Billion Stimulus Package << FREE >> Weekly Newsletter... Signup today and start receiving our free weekly newsletter! Reader Comments Comment 1 Lawrence Says: on Wednesday, November 04, 2009 2:04:26 AM As the saying goes... History always repeats itself. And as most of you would agree, one of the most important reasons for documenting history is so that we do not make the same mistakes twice. I wish that were the case now. It saddens me to see move down the path that has already been tried and proved to be a mistake. Comment 2 Pete Murphy Says: on Thursday, November 05, 2009 12:04:37 PM The problem with the "laws of economics" is that many of them are myths or philosophies as opposed to proven theorems. You've repeated one of them here: "Wages can only increase with increases in productivity." The fact is that there is no relationship between between productivity and wages. Wages are driven by the demand for labor. If the demand rises, so too will wages. If you don't believe me, go to the Bureau of Labor Statistics web site and plot the data for yourself for all of the NAICS codes of labor. I did. You can compare plots showing the effect of productivity on wages vs. the effect of demand on wages at http://petemurphy.wordpress.com/2008/07/20/five-short-blasts-theory-explained-part-2/. Pete Murphy Author, "Five Short Blasts" Comment 3 Curt Says: on Thursday, November 05, 2009 2:37:14 PM @Pete Thanks for the great comment/question. My statement “Wages can only increase with increases in productivity” is true indeed, although it is not always easy to recognize with the distortion in the demand for labor from government central planning and foreign currency manipulations. The last 30 years of the expansion of the global economy has resulted in the increase of wages of millions of workers in China and India with their increase in productivity. The increase in productivity in these nations far out way the increase in productivity in America, which is why we have see a major wave of outsourcing. Your research that shows “wages are driven by the demand for labor” does not include the expansion of labor from the global economy. I agree that the trade deficit is a major concern and the reason that it is not moving back into balance is because of a global war that is being waged through the foreign central banks who artificially suppress their own consumer demand by holding the value of their currency down with respect to the dollar. This currency manipulation artificially increases the productivity of their labor and artificially reduces the productivity of our labor. Yet, America remains the police force of the world and must continue to work to increase its productivity to afford its vast military that protects the world from war. Many nations take advantage of the ‘free’ military protection that America provides them which is paid for by the hard work of the American public. No nation in history has been able to maintain a global military presence without a continued increase in productivity, which international central bankers are not allowing. The U.S. central bank continues to deplete the wealth of America by printing and borrowing money – until one day when foreign central banks decide that they no longer need the American consumers – and the dollar has a major crash. Then the true productivity of America labor will be visible again and the manufacturing industry will thrive. Tariffs After reading your “Five Short Blasts” article series I agree that the trade deficit is a true measure of our declining economy and should be our nations’ top priority. But I disagree that tariffs are the solution. The expansion of the global economy is responsible for the increase in the standard of living around the world for the last 30 years through the increase in productivity from the division of labor. I explored this in an article series called, The Rise of the Global Economy. The global economy is here and there is no going back. Tariffs would result is higher prices for almost everything and lead the world into a global depression. The solution that the world is headed towards is a global central bank, with a global currency to control the global financial system.   Comment 4 steve Says: on Sunday, November 08, 2009 8:18:31 PM I don't think the trade deficit is the worst problem but I do believe tarrifs would allow us to lower taxes and therefore improve the business climate & prosperity in the USA again. Comment 5 Curt Says: on Monday, November 09, 2009 8:05:14 AM @Pete Here is an article explaining how productivity is falsely rising because of an increase in foreign labor. Economists Seek to Fix a Defect in Data That Overstates the Nation’s Vigor "American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics." "On another front, many argue that labor productivity is rising faster than the pay of workers who made the greater productivity possible. That argument would be watered down if more accurate data showed that productivity had been overstated. " Write a Comment Please keep comments civil and on-topic. Abusive or inappropriate comments will be removed without warning.  Name (required)     Email Address (required)     Website URL  Comment

Related Articles Gold Hits New Record as News Spread of a Possible Replacement of Dollars in the Global Oil Trade Gold hit a new all-time record high above $1,041 in morning trading, passing the previous intraday record of $1,033.90 set last year March 17, 2008. Read More... The Reason the Rich are Getting Richer is Because Inflation Pushes Money Up and Inflation is Accelerating Michael Moore has produced a new movie titled, “Capitalism, A Love Story” in which he suggests that Capitalism has caused 1% of the population to gain 90% of the wealth, while the middle class has been pushed into poverty. Read More... Cash-for-Clunkers Widens Trade Deficit to Most Since 1999 The U.S. trade deficit is a much better way to look at the progress of an economic recovery then using government numbers like the CPI and GDP.  Read More... Here Is Why Inflation and Socialism Will Eventually Fail and Capitalism Will Regain Its Worthy Support Contrary to the current popular opinion in the leadership today, inflation and socialism do not help the poor or the middle class or anyone else for that matter. Read More... Why Doing Nothing Would Have Been Better Than The $787 Billion Stimulus Package By now it's pretty clear that the "doing something is better than doing nothing" mantra of government intervention was and still is a lie. Read More... How Capitalism Saved America This book is an excellent presentation on the problems of government 'regulations' into free market mechanisms. This book illustrates simply and clearly how many chaotic economic problems were caused by interference from government regulations and how capitalism has overcome them. Master this book and you have overcome most of the bad economic thinking of our time. Government is the cause of capitalism failure. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse In discussions of today's economic meltdown and what to do about it, the Federal Reserve is a stealth helicopter: it never shows up on the radar. With the exception of a few esoteric specialists and those Ron Paul Revolutionaries who burst into chants of "Abolish the Fed!" Historian Thomas Woods notes in this important book, the Federal Reserve bears a large part of the blame for the mess we're in. In the first part of "Meltdown," Woods shows how both in theory and in practice, Fed policy fueled an artificial boom and is now leading us to a much larger meltdown. U.S. Manufacturing: The Engine for Growth in a Global Economy This volume provides a comprehensive analysis of the essential role of the manufacturing sector of the US economy. The increase in the relative importance of the service sector and the globalization of manufacturing has tended to dull the image of US manufacturing....This volume contains much useful data that has been condensed into tables and charts to provide support to the reader without interrupting the flow of the text. The Coming Economic Earth Quake Larry Burkett explains how the financial troubles in America started back in the 1930s. Larry explains the economics of huge goverment and public deficits and how it leads to hyper-inflation. We may be headed for another great depression.