Comment: The credit crisis from a Liberterian perspective

We've been through this before. A collapse (or apparent collapse) of the financial system, the cry for swift, far-reaching government action to stabilize the market, etc. It was called the great depression.

Modern analysts (Most recently Amity Shales in The Forgotten Man) increasingly take issue with the role of the federal government in "solving" the depression. Comes now the crisis with the credit market, and the cry for the government to "do something," when it appears that government policies got us into this mess in the first place.

Martin Masse of The National Post in Canada is one of several liberterian writers that take issue with the reason for the present danger (link posted here). He also quoted a wise Liberterian on the problem of forced credit expansion:

As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ...

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More on the economic situation by Freedom's own Tibor Machan under Editorials