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What is the proper role of the Federal Government (Feds) and central bank (the Federal Reserve or "the Fed") in managing the economy?

(- 5) Centralization view: The Federal Government, Federal Reserve Banking System (the "Fed"), and large corporations must work together to insure American economic prosperity. Our government-funded schools tell us why. They tell us that the Great Depression was caused by greedy businessmen who overextended themselves before the stock market crash and by people who got scared and started saving too much and who slowed down the economy. Therefore, government had to step in and stimulate spending, manipulate markets, manipulate prices, create corporate cartels, and manipulate investment through its taxation and fiscal spending policies. The "Fed" needed to provide more liquidity to banks to avoid more bank failures. We require activist, interventionist government and central bankers to insure that these problems never take place again. Government knows when to eliminate unnecessary redundancies by creating utility monopolies, special privileges, and corporate cartels, conversely, it also knows when and where to bust trusts to maintain competition. We require aggressive use of military force overseas to insure cheap access to vital resources and make sure foreigners know not to ever mess with American businesses.
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(+5) Decentralization view: Government officials should have absolutely minimal involvement in business, because they are almost always guided by politics and rarely by sound economics. Virtually none of them know anything about competent entrepreneurial calculation. Central planners can never adjust the economy like the price information mechanisms of free market competition. Just throwing money at economic issues rarely solves them. In the long run, the main effect of government and central bank intervention is to distort the economy and create very wasteful inefficiencies. The Fed recklessly expands money and credit in a fractional reserve system. This is divorced from grass roots entrepreneurial calculation, although it remains highly profitable for Fed insiders. Corporate cooperation with the Federal government is fascistic crony capitalism. It is the very worst and most corrupt form of protectionism, and destroys free market competition. Generally, the government is too arbitrary and politically motivated whenever it tries to either bust trusts or create cartels. The government and central bank actually crowds out private entrepreneurial infrastructure at the grass roots. In the long run, maintaining this infrastructure to create higher quality, lower cost products that people want to voluntarily buy is much better than central planning.

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