Monday, 19 January 2009

Money, Unemployment and Politicians...

"The gold standard is the only method we have yet found to place a discipline on government, and government will behave reasonably only if it is forced to do so.

I am afraid I am convinced that the hope of ever again placing on government this discipline is gone.

The public at large have learned to understand, and I am afraid a whole generation of economists have been teaching, that government has the power in the short run by increasing the quantity of money rapidly to relieve all kinds of economic evils, especially to reduce unemployment.

Unfortunately this is true so far as the short run is concerned. The fact is, that such expansions of the quantity of money which seems to have a short run beneficial effect, become in the long run the cause of a much greater unemployment.

But what politician can possibly care about long run effects if in the short run he buys support?
", Friedrich A. Hayek, 1974 Nobel Prize in Economics.

Interesting to read what Mr Hayek visionary writing (or symply describing a cyclical phenomenon) had to say 30 years ago and put it in perspective into today economical situation amid growing political "short viewed" intervention...

Coming back to home seasoned politician:

"The Prime Minister also said that he hoped investors will look to the example of the state, which does not expect any dividends at all.

"The state issued a directive already last autumn that it does not expect dividends from listed companies. It was intended as a signal to other investors, as well."

I think it's about time to layoff some politicians for few weeks to have a break in the stream of hypocritical, socialist oriented remarks usually eagerly echoed by the media...

Investors put money in what they think is a sound company that will make the right decision at the right time. So the question is, is it better to sacrifice the investors or keep a company from readjusting itself? shortly the employee or the investor?

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