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Market Intervention

Introduction

Market intervention consists of the interference with the natural process of exchange. Intervention comes mostly from government. It leads to less efficient allocation of economic resources and the loss of liberty.

Markets lose efficiency because intervention distorts the information flow created by prices. People lose liberty because of intervention because they cannot freely chose actions that represent their preferences.

To understand the nature of exchanges in the modern world we must take into account the many forms of intervention. Violent intervention has become so pervasive that we must consider it in the background of every question about the process of exchange. We must ask, "Would we see a different—and arguably better—result without a specific intervention."

In this section we pick up our discussion of exchange—started in the first section, but with an eye toward how interventions affect those exchanges.

Monetary Intervention

Artificial manipulation of the quantity of money in an economic system amounts to one of the most influential, yet most misunderstood, forms of market intervention.

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Government

Ronald Reagan famously said, “big government is the problem.” Ludwig von Mises said, “government is the denial of liberty.”

Government, at all levels, represents the primary source of economic intervention resulting in the misallocation of precious resources.

We will discuss the deleterious effects of government intervention in its many forms.

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Economic Crises

Today's crises arise from yesterday's solutions.

When examined closely we find that nearly all economic "crises" occur as the result of previous solutions to "problems" in markets.

Economic crises seem to occur with significant regularity. The topic of economic crises takes up a lot of media time these days. So I will devote space here to discussing the whys and wherefores of economic crises.

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