more on the meme

Dr. Sowell wonders how the Dems avoid blame for crisis and whether the facts matter. This is puzzling over the meme that has been built by a propaganda effort over the years, a propaganda effort that was not conceived as such nor planned and very much in the vein of well meaning.

Unfortunately, the future of this country, as well as the fate of the Western world, depends on how many people can be fooled on Election Day, just a few weeks from now. Right now, the polls indicate that a whole lot of the people are being fooled a whole lot of the time.

Much of the financial side of things – the stock market and banking and financial management – are based on perception and emotional factors. When folks fear a bank will collapse they’ll try to get their deposits out of the bank before that happens and, if very many follow the same path, there will be a run on the bank that will indeed create a self fulfilling prophecy.

There have been many demands of the money managers in recent years to abandon their capitalist greed motivations and instead serve socialistic causes. These are feel good things that redistribute wealth and provide such things as housing and retirement security at levels some might not otherwise be able to achieve.

These demands meant a much broader market trying to buy houses and investments and that demand meant the prices went up. House values and stock indexes bubbled. But then the fear mongering about the economy coupled with a bit of over-reach has punctured the bubble. A few folks could not meet their obligations (a couple of percent of mortgages). That started a run on the investment instruments holding these mortgages. Like a run on the bank, you had a whole lot of people trying to turn an intangible asset into something they could stash under the mattress. That meant the value of the mortgage based investments crashed.

The last time we saw this sort of behavior it was on banks and one result was FDIC insurance. Economists figure that the other governmental responses attempting to fix that major economic problem added about seven years to the effort to regain stability.

The question Dr. Sowell ponders is whether we will learn from history, whether we will bypass the propaganda and obtain an accurate picture of the source of the current mess, and whether we will make choices and drive policies that are informed by an accurate foundation. What is problematic is that it does not appear that we will.

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