The major difference between the laws of economics and other natural laws is that government officials haven't yet bamboozled a large segment of American society into thinking that it's possible to violate the law of gravity.
1. True or False: The United States of America enjoys an economic free market?
Although central planning has been discredited in the Soviet Union and many other countries, the United States economic market is still controlled by central planning. Rather than allow the market to regulate itself, the Federal Reserve controls the money supply and interest rates. As a result of such control, the USA cannot be considered to have a free market economy.
2. True or False: Free market deregulation is to blame for the current economic crisis?
Contrary to what is conventionally spouted across the airwaves, the American economic market is very highly regulated by government. The primary way the government regulates the economy, as discussed in answer #1 above, is through the monopoly called the Federal Reserve. Other ways in which the market is highly regulated include the interventions of Fannie Mae and Freddie Mac, bailouts to friends of government officials, and stimulus packages to encourage further profligate spending among the United States populace.
3. True or False: Bailouts and stimulus packages will help cause a healthy economy?
They will create just the opposite. Bailouts and economic stimuli simply prolong and increase the economic agony that will inexorably follow the inevitable failures of central planning. Bailouts are generally given to rich friends of government. Stimulus packages generally encourage more purchasing of items on credit by the general populace, rather than to encourage them to save a healthy amount of their income. Bailouts and stimulus packages do not bail the economy out of its malaise, nor do stimuluses stimulate it. During difficult economic times, we need neither.
4. True or False: Boom and bust cycles are a natural part of a free market economy?
Booms and busts almost always occur in the presence of central economic planning. The Federal Reserve is not the first central bank that the United States has been plagued with. Other booms and busts have been related to previous central banks and their regulative mismanagement of the economy. If the United States government were to abolish the Federal Reserve, the likelihood of another boom/bust cycle would diminish dramatically.
5. True or False: A house is the best investment you can make? Houses never lose their value?
Answer: False and False.
After Japan's housing bubble burst, home prices plummeted by 80%. We should have seen it coming. Houses in the United States became vastly overvalued in the past ten years due to (1) artificially low interest rates kept in place by the Federal Reserve, (2) Fannie Mae and Freddie Mac purchasing up to 50% of United States home loans, freeing lenders to make more ill-advised loans, and (3) reduction of lending standards through faulty research that originally claimed that minorities were being unfairly rejected for mortgage loans, as well as through intimidation of banking institutions by groups such as ACORN, which resulted in large numbers of loans given to people who could not afford them. All of these problems and more made it appear to home builders that a far greater demand for homes existed than there really was.
. . .
As you noticed, the answer to each question in this quiz was "false". Hopefully by answering "false" to these and similar questions you will become more conditioned to spot the plethora of economic falsehoods that masquerade as truth in America. We've only scratched the surface. Stay tuned...