Thought of the day....

Undoubtedly, Mundell understands that government efforts to improve upon markets are counterproductive, sometimes fatal—suboptimal under the best of circumstances, disastrous if the interventionist policies persist.

Governments intervention in markets can take 2 paths; One is to regulate markets the second is to actually divert resources from one part of the economy to another. Governments can only divert resources, they cannot permanently create value. So when governments spend money, they need to get it from somewhere. So they can only take it by borrowing or through taxes. This means that the people that the government borrow from or they tax will not have the money to spend or invest. So the government now will spend it instead. So its a very difficult argument to make that government is more efficient at spending or investing then the people that they take it from.

Mundell’s Dollar/Euro Fix Doesn’t Fix Our Currency Mess - Lawrence Hunter - Back on the Margin - Forbes