The Government Bubble

We mention the time we were together
So long ago, well I don't remember
All I know is that it makes me feel good now
--The Motels

Peter Schiff suggests that perhaps the biggest bubble of all is forming right now: a bubble in government.

He uses the recent move of the US government to monopolize the student loan market as an example. The Obama administration's argument is that loans would be cheaper if intermediary banks were cut out of the supply chain. No, we'd be better off if government were not involved. State involvement not only reduces efficiency and innovation in the system, but the artificially cheap loan terms guaranteed by the government also works as a subsidy, which boosts demand, jacks tuitions higher, and bloats campuses around the country with new infrastructure projects.

Quoting Schiff:

"Whether it is in education, housing, health care, automobiles, insurance, or banking, government involvement in the economy means higher prices, lower productivity, more bailouts, bigger deficits, increased taxes, diminished industrial capacity, fewer private sector jobs, less freedom, and a falling standard of living."

This, btw, is the core argument behind the Tea Party movement. Opponents to this movement are trying to deflect attention elsewhere, because they realize the difficulty in countering the TPs core argument.