...we've been here before! Ludwig von Mises, in 1931, wrote about the causes of the Great Depression. His explanation bears a remarkable similarity to that of today's situation. I've included a small section below which indicates how wrong the current policies of fiscal and monetary stimulus actually are (make sure to click 'read more' after the first paragraph). The next logical step is communism (no doubt renamed and rehashed but fundamentally the same thing -- as everyone knows that communism is bad!)
2. INFLATION AS A "REMEDY"
It is astonishing that sincere persons can either make such a demand or lend it support. Every possible argument in favor of such a scheme has already been raised a hundred times, and demolished a thousand times over. Only one argument is new, although on that account no less false. This is to the effect that the higher than unhampered market wage rates can be brought into proper relationship most easily by an inflation.
This argument shows how seriously concerned our political economists are to avoid displeasing the labor unions. Although they cannot help but recognize that wage rates are too high and must be reduced, they dare not openly call for a halt to such overpayments. Instead, they propose to outsmart the unions in some way. They propose that the actual money wage rate remain unchanged in the coming inflation. In effect, this would amount to reducing the real wage. This assumes, of course, that the unions will refrain from making further wage demands in the ensuing boom and that they will, instead, remain passive while their real wage rates deteriorate. Even if this entirely unjustified optimistic expectation is accepted as true, nothing is gained thereby. A boom caused by banking policy measures must still lead eventually to a crisis and a depression. So, by this method, the problem of lowering wage rates is not resolved but simply postponed.
Yet, all things considered, many may think it advantageous to delay the unavoidable showdown with labor union policy. However, this ignores the fact that, with each artificial boom, large sums of capital are malinvested and, as a result, wasted. Every diminution in society's stock of capital must lead toward a reduction in the "natural" or "static" wage rate. Thus, postponing the decision costs the masses a great deal. Moreover, it will make the final confrontation still more difficult, rather than easier.
...and
All attempts to emerge from the crisis by new interventionist measures are completely misguided. There is only one way out of the crisis: Forgo every attempt to prevent the impact of market prices on production. Give up the pursuit of policies which seek to establish interest rates, wage rates and commodity prices different from those the market indicates. This may contradict the prevailing view. It certainly is not popular. Today all governments and political parties have full confidence in interventionism and it is not likely that they will abandon their program. However, it is perhaps not too optimistic to assume that those governments and parties whose policies have led to this crisis will some day disappear from the stage and make way for men whose economic program leads, not to destruction and chaos, but to economic development and progress.
