America has never been a totally free-market society and there may be good reason for that: we are a democratic society. So what does that mean? Well it means that we use tax dollars collected from the public for many different security needs. Often times we think of security as the military. However it also includes police, fire, health, and retirement. Then we take security one step further and bring in education, unemployment, food stamps, job training, and more. But what about security from ourselves, our greed, and our dreams? What kind of pain should we all carry?.....
We have never experienced a real free-market crash or "market self-correction", not even in the great depression because there were a number of government efforts to at least buffer some of the "natural" forces involved. When we see a dip in the stock market for 12 to 36 months that means 6% to 15% job loss, or up to 25% if it depression status. Anyone who has taken an economics class will learn about the textbook approach to Free-Market economics an approach that on paper makes a lot of sense and as a professor once told me, this method does not take into account the "stability, safety, and welfare of a society".
My professor was very much a libertarian and free-market advocate because from an academic point of view it would be amazing to see it really play out on a grand scale, not just from the example: "copper will not run out because its price will get so high people will find another resource to replace it". However that test never really explains how the credit market would correct itself once the price got so high people defaulted on it. We hear a lot about businesses needing a line of credit and then we hear about consumers needing a line of credit to pay for products that neither businesses nor consumers can pay out of pocket but over 3 months to 5 years with interest. How much do either one have in savings? Very little other than a little wrapped up in stock.
So let’s let free-market ride, let’s see what a TRUE free market bottom looks like. A general way to look at it would be to remove 80% of businesses and consumers that rely on credit and pull them out of production. The credit cap has been hit, betting on our futures when so many of our bets are making money from other bets. So much of our lifestyles and technology has been created from the idea that there is a certain amount of wealth. However there really is very little wealth, credit is not factored into consumer purchasing power so when we got these stimulus checks for example they were used in a fair number of cases to pay off debts. When I would listen to CNBC they would say people put the money into "savings" instead of into the market but the public did neither they paid off some credit card debt; which helps neither the market nor the credit card companies.
There is no such thing as a dip in a true free-market. There are extreme highs and extreme lows; so low that we have never seen anything like it in the world (total change from top to bottom). So all of the tax dollars that have been calculated for local, state, and federal governments could be cut 40% to 80% for 3 to 12 years while the market "self-corrects". So when we talk about security and taxes and government investment, we need to consider it insurance on greed, stupidity, bad-luck, and unforeseen or ignored competition. When you have few tax dollars coming in, you will have few cops on the streets, and a lot of desperate people. The pain free-market types would like to see us go through, is a pain that they don’t even understand, because they compare it to maybe the great depression, but pain and the changes from the top to the bottom, would be so great, that the stability of world could be at stake. When you don’t save, and make poor bets from the consumer, business and government we create a house of cards so great that the bottom, isn’t the table, but the floor! Trust me you can’t handle a true free-market.