In this article, Professor Clifford Thies argues that a recession is likely and that it will be felt most strongly in those sectors of the economy that ballooned during the Fed’s monetary gusher of the last several years.
The right response, he argues, is to allow the bad investments to go bad and allow the market to make the necessary adjustments unhindered. “But,” he writes, “you can never discard the possibility that we (meaning, the government) will do one or more really bone-headed things” such as “cracking down on mortgage bankers, raising taxes, driving interest rates down as low as possible, flooding the market with money, attacking the automobile, and deporting millions of people.”
There is good reason to fear that the politicians will indeed do a lot of bone-headed things, using recession as the excuse for a lot of new authoritarian measures that — like those instituted during the New Deal — will continue doing harm indefinitely.
