No, the stock market hasn’t gone crazy

Quite the reverse, it is trying to uncrazy. So argues Competitive Enterprise Institute fellow Bill Frezza in this sharp Daily Caller piece.

The root of our economic troubles (right now, and also going back a century) is that the federal government intervenes in the price system, particularly interest rates. “By manipulating interest rates, they induce massive misallocation of resources, warping consumption, production, spending, and saving choices, and biasing risk decisions across the entire economy,” Frezza writes.

Stock market crashes and recessions are the means by which the economy tries to cleanse itself of all the distortions caused by erroneous prices. Our problems (and China’s) have nothing to do with, as the Krugmans of the world opine, greed, underregulation, or insufficient demand. They are caused by government policies that produce temporary and unsustainable growth in some parts of the economy.

Frezza has the solution: the separation of money and state. He’s right.

Read the whole thing.

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