For students of Economics, there used to be a concept called ‘Free Market’. The USA was considered to be the home of free markets along with old democracies like France, UK, Japan and the like. Many economists believed that the Free Market was never born, but that is debatable.
After much thought, searching and with a heavy heart, here, I am announcing the death of free markets, and here is an obituary.
FM was never perfect and had a lot of imperfections. We had to assume that all the players were rational, had an ability to think and would always work in self interest. This was a terrible assumption – and showed in the fact that the biggest industries in the world (read US for all practical purposes) were ammunition, alcohol, sin, pharma and banking.
What really killed the Free Market? Well it is not clear, and a committee has been appointed, but largely the suspicion is on the following:
a) the stupid end user who refused to get educated about FM, and the fact that we had to assume he is literate. He was not.
b) the Corporate Short Term Oriented Greedy Executive- he was clearly filling up his salary account, Esop account, etc.
c) The street’s greed – Wall street or Dalal street was just incidental. Now they have no books and no Face to hide, but that does not seem to be bothering them.
d) The Central Bank’s ability to play with interest rates was so amazing that they could fool around with the markets, and eventually tire it to death.
e) The Governments that could print notes (which means their currencies went for a toss), and the countries which could not (they were bailed out by their vested interest partners: read Germany). They printed so many notes that the returns in Gold reached an all time high.
f) The Central Government scheme looked like Ponzi schemes, unless of course you want to call it the Madoff scheme – sheer size is far greater than Ponzi.
g) The American FED and the banks ensured that a tree costing US $ 3000 could be converted into US $ 3 Million, and they believed that was the solution. Long live Obama.
h) The Energy cartels which fixed the price of oil, coal, water and wind too. Awesome price rigging.
i) The Media’s amazing agenda driven chatter scaring people into doing completely wrong things. Awesome scare mongering. They did it during the riots, now they are doing it in the Financial Markets.
j) The Regulators amazing capacity to beat industries, and the players individually. The players have just succumbed to the pressure.
Free Market Economy. RIP.
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