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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Friday, March 06, 2009

The Obama Effect on the Weath of the Nation.....

I noticed this last year, that the market completely collapsed as it became painfully obvious that the nation was going to elect an empty suit socialist that is quickly proving to be a total clown. My discipline was to sell my shares if a socialist came into power. But I did not sell nearly enough. I should have sold all of them. So I lost lots of my life savings like many others.

**Note: the S&P500 is now below 700 an is below the bottom of the chart.

Some may argue that the Obamessiah inherited a lot of the problems, and I agree with that. Bush also inherited these same problems too as well as Clinton, Bush 1, Reagan, et al. 70 years of creeping socialism has destroyed the fabric of the nation that I think should now be called the United State instead of the United States.

But doubling down on socialism promises to create even more problems. One of the reasons that socialism destroys investment as it did too during the great depression is that governments have to arbitrarily seize some people's assets to distribute to others. For example, in healthcare reform, the government will implement all kinds of price caps and other meddling in the pricing mechanism that will transfer wealth from providers to consumers. This will have the effect of lowering costs at first, but it will also stifle innovation and lead to shortages of certain kinds of healthcare availability. More of that later.

But what happens is that when governments promise to deliver something, markets are concerned that funds will be generated in some arbitrary manner leading to lower and unpredictable returns for many investment classes. Prices adjust to take into account these uncertainties. This is why many researchers think that the stock market did so poorly in the 1930's and that is that there was uncertainty by investors over the future of government intervention in the economy. When investors do not make investments, people are not hired since there are no new jobs created. Communism was a hot topic back then and investors do not win under communism. Few win under communism.

Heathcare availability? I have heard whining from some leftists that poor people have to go to hospital emergency rooms to get care and that this is inefficient and less than optimal. Yes, this is true, but poor people are covered by health insurance through Medicaid. So why do they go to hospital emergency rooms? Because there is a lack of doctors that want to service Medicare patients since the government pays less for services than others. People cannot provide the service profitably so they do not do it. So, under government heathcare, we will all suffer. Many of us will die in dirty, squalid, insect infested government hospitals without comfort in terrible pain as treatments will be unavailable. I will just laugh since we asked for this.


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