“The apparent gluts of commodities, capital, and labor that the Wall Street Journal reporters see hanging over the global markets and which they forlornly wish governments could “cure” through more deficit spending are, in fact, the relative imbalances, distortions, and misdirection of capital and labor brought about by years, if not decades, of government fiscal, monetary, and interventionist policies that have created many of the problems we now face.
They are the residues of housing booms and investment bubbles caused by earlier interest-rate manipulations and money creation that artificially misdirected capital, labor, and resources into unsustainable activities, given consumers’ and savers’ real preferences to demand goods and save portions of their incomes as the basis for sustainable investment patterns.
Unemployed labor has far more to do with government interventions that impose labor-market rigidities and nonmarket wage levels that overprice too many wanting work from successfully finding it. Anti-competition regulations and restrictions, and high and distorting tax policies, not political intrigue, prevent reasonable and profitable uses of capital in the service of actual consumer demands.
The low rates of interest in many of the leading economies of the world have nothing to do with mythical market-created gluts of savings and capital. They are the result of constant and continuous monetary expansion that has undermined the virtual existence of market-based rates of interest to know the reality of actual savings preferences of income earners and the profit-guided investment choices of borrowers that are based on the actual availability of scarce investable resources for the undertaking of capital projects.“
Austrian Economics & Public Policy, pp. 270-271, Richard Ebeling