Economics in one lesson

Austrian economics is right.

I've never read such an impressive body of knowledge with such good foresight and prediction, as the Austrian economists.

I'm reading Henry Hazlitt's "Economics in One Lesson", written back in 1962. He warned about the perils of socialism again and again, and in the last week, as a result of all the doomy predictions that have come to pass, the American government has brought about even more socialism.

The individual, the tax-payer is the biggest victim of our times. I thought it very interesting and relevant to post a key section from the book:
----------------------------------------------
Chapter VI:
Credit Diverts Production;

"Government encouragement to business is sometimes as much to be feared as government hostility. This supposed encouragement often takes the form of direct grant of government credit or a guarantee of private loans."

"But there is a decisive difference between the loans supplied by private lenders and by a government agency. Each private lender risks his own funds. When people risk their own funds they are usually careful in their investigations to determine the adequacy of the assets pledged and the business acumen and honesty of the borrower.
If the government operated by the same strict standards, there would be no good argument for its entering the field at all. Why do precisely what private agencies already do ? But the government almost invariably operates by different standards. The whole argument for its entering the lending business, in fact, is that it will make loans to people who could not get them from private lenders. This is only another way of saying that the government lenders will take risks with other people's money (the taxpayers') that private lenders will not take with their own money."

And this summary should also serve as a warning to our financial alchemists:

"There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it."