Thursday, May 22, 2008

Government, the Market-Wrecker.

We've discussed how Uncle Sugar Daddy's "Ethanol Initiative" has caused chaos in the grain markets while providing no competitive relief to increasing gasoline prices. The current Farm Bill is an even larger example of the catastrophic results when the government manipulates markets. The New York Times analyzes the current bill, and the inescapable conclusion is that once Government starts handing money out in subsidies (in this case cash payments to farmers), it becomes permanent, regardless of market conditions. Iowa Senator Tom Harkin, the champion of the continued payouts to the farmers, admits that the political pressure to continue the handouts is insurmountable, while fact that grain prices are at record highs now appears to be irrelevant.

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