No More Potatoes

Thursday, October 9, 2008

Back on May 24th I wrote a Blog on how the free market works. I used potatoes as an example of how prices stabilized when the markets are free to adjust themselves. If you haven't read that blog, here is a thumbnail version.

Supply and demand automatically sets the price of any goods. If the price is too high, it won't sell. If the price is too low, the seller goes out of business. He must pick a moderate price.

Now today six months later we have the perfect example. Back in the 1990's our federal government enacted a law saying that lenders cannot discriminate against minorities and poor people when lending money. So, banks began lending money to poor and minorities even though they knew that chances of getting the money back was slim and none but they feared federal law suits.

Using the potato analogy, this was the same as the potato grower selling at a loss or giving the potatoes away free. Now the lenders are going out of business as predicted by supply and demand. However some clever lenders discovered that they could sell the bad loans back to the government via Fanny Mae and Freddie Mack who were gung ho to help poor people get houses.

Now, we taxpayers have to bailout (Rescue?) Freddie and Fanny and Wall street because Bill Clinton and his followers like to give working peoples' money to those who do not work. It didn't work in Russia and it won't work here.

The supply and demand system works but the, "Give free stuff to the drones", does not work. So please remember that on election day.

On Friday May 30th, I wrote a fable about the ant and the grasshopper. This also came true. Please read it and see if it doesn't make me look like Nostradamus.

Remember, I repeated the 8th grade and never graduated from high school. How come I can see this and Harvard graduates cannot????

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