Wednesday, September 10, 2008

Set This House on Fire

Originally, the US Forest Service fought every forest fire — until scientists and others demonstrated that forest fires are a natural part of the ecosystem's development. Indeed, a forest could only develop in healthy way if there were forest fires. Some pine cones, for example, would only open and release seeds when charred by fire.

Then the great Yellowstone fires of 1988 came. The fires were in no small measure the result of many years of failure to allow natural smaller fires. But the public and small-minded, self-interested politicians were indifferent to scientific fact. Policy reverted to its old approach — fight every fire. Nevertheless, it is universally recognized that fires are normal and larger fires result when smaller fires are not allow to proceed naturally.

The federal government's financial policy is similar. Irresponsible policy in the service of a select few and to appease popular demand makes a massive conflagration inevitable. The question here is what counts as a fire. Regular folks losing a home — that's not a fire. Just as in the great parks — the government only really cares when wealthy owners are at risk. The pressure to fight every fire has grown as more and wealthier people have built their MacMansions in the great wilderness.

Likewise now on the economic landscape. The government's concern was reached a fever pitch as risk has embraced the rentier class — the wealthy creditors, the people who make the loans. These people are scarcely affected at all by growing interest rates or by fraudulent or usurious loan practices. But they are directly affected when the dollar (and thus the value of what they are owed) drops or when debtors begin to default en masse.

No comments: