The fact that the American government has a heavy hand in the media shouldn’t be news to anyone, but it is becoming clearer every day. When one clicks the Politics tab at CNN.com, one immediately sees these two headers and following notes each leading to special pages on the CNN site:
Rescuing the Economy – See how the federal government is spending trillions of dollars to fix the troubled economy.
Estimated stimulus benefits – How much infrastructure spending will your state get and how many jobs are coming?
So, I, the troubled American citizen, see the words “Rescuing the Economy,” and immediately click. What do I see?
Economy rescue — What the government’s money is intended to do: Make credit more accessible, Bail out companies, Stimulate the economy, Prevent foreclosures, Extend unemployment aid, Take over failed banks.
Make credit more accessible? Did the people who work at CNN just skip Economics 101 in college and then ignore the fact that our current economic woes are largely a result of a credit orgie in which credit was accessible to anyone and everyone, or is there something deeper here? Let’s look onwards. The concerned American, now confident that the government is working tirelessly to rescue the economy, now clicks on “Estimated Stimulus Benefits” to see how much he’ll be getting. Let’s just take my state of North Carolina as an example. According to the CNN stimulus site, my beloved state will have an estimated 105,000 jobs created with economic stimulus money. Wow, that sounds great! 105,000 jobs!
But wait a minute, where did this stimulus money come from? Heck, I’ll just let the government answer this one on their own via PBS.
…the Federal Reserve and the Department of the Treasury fill different functions in the economic system…While the Treasury deals with collecting taxes and borrowing money in order to pay for government services, the Federal Reserve acts as a central bank that can actually create money when it is needed.
So the money to create these jobs either comes from borrowing or “money creation.” Wow, money creation sounds great. So, even if the average concerned American can assume that money being borrowed is money that has to be paid back, he can still be encouraged by the Federal Reserve’s money creation powers. But how is this possible? If we can just create money to create jobs, then that’s fantastic, right? Doesn’t more money equal more wealth?
Henry Hazlitt, one of the great economists of the 20th century, clearly lays out the reasons why a government inflation of a currency is disasterous for an economy.
…so powerful is the verbal ambiguity that confuses money with wealth, that even those who at times recognize the confusion will slide back into it in the course of their reasoning. Each man sees that if he personally had more money he could buy more things from others. If he had twice as much money he could buy twice as many things; if he had three times as much money he would be “worth” three times as much. And to many the conclusion seems obvious that if the government merely issued more money and distributed it to everybody, we should all be that much richer.
…inflation turns out to be merely one more example of our central lesson. It may indeed bring benefits for a short time to favored groups, but only at the expense of others. And in the long run it brings ruinous consequences to the whole community. Even a relatively mild inflation distorts the structure of production. It leads to the overexpansion of some industries at the expense of others. This involves a misapplication and waste of capital. When the inflation collapses, or is brought to a halt, the misdirected capital investment—whether in the form of machines, factories or office buildings—cannot yield an adequate return and loses the greater part of its value.
And now comes the part that leads us down one of two paths. Even if the people at CNN do not agree with this theory, is it not one which they should consider and allow readers to measure on their own? Are they just completely ignorant to the entire Austrian school, or are they deliberately hiding it? On the one hand they are complete and utter morons, if not for rejecting the only sound economic doctrine currently holding any prominence, then for not recognizing its existence in the first place. On the other, they are complete and total statists bent on aiding the government in achieving their goal of complete centralization. Either way, it seems that we, the American people, are between a rock and a hard place, and it’s not looking up anytime soon.
But how does one respond to this problem? The answer is education and activism. The ultimate goal is certainly to get our fellow Americans to sit down to read the likes of Hazlitt, Mises, and Hayek, but in order to do this they first need to be asking the important questions about the American system for themselves. We can’t make them do this, but we can push them in the right direction. The best way to do this is to know our cause backwards and forwards, and to use this knowledge to help wake up our fellow citizens.Published in