Housing Crisis - A Look at the Real Effect of Centralized Planning

The farther the planner is from the plan -

The local homebuilding company Todays Homes laid off all of its local employees Friday, leaving the fate of three oversized townhomes the company had pledged to move up in the air, along with dozens of other properties.
Scott Vaughan, who had been the sales manager for Todays Homes, said he didn’t know what would happen to the company’s properties and that it would be up to Todays Homes’ parent company, Unity Builders Group of Calgary, Canada, to work with the city and homeowners on unfinished projects.

The Real Effect

This is a very easy concept to understand overall. Government has allowed 'easy money' to infiltrate the system through artificially low interest rates which inflates and subsequently devalues the money supply via unbacked credit emission. This in turn causes the amount of debt to outsupply the amount of production in the system and cause the collapse of loans. Theft by counterfeit if you will.

The answer to this problem is to allow individuals and companies to default on their debt and suffer the consequences. Yet we continue to have the same insanity propagate itself on a national level.

Please explain how destroying these homes to 'preserve value' adds anything to the system? (A course of action not being discussed in this article but the only trick that central planners seem to know) I'm sure people would love to hear how an act of destruction makes us all more wealthy?

Imagine for a moment that this was the solution at say, Wal-Mart. Rather than get clearance, the items are subsequently rounded up and incinerated by a paid group of central agents.

Scenario A - Clearance

• 10 widgets are ordered
• 5 widgets are sold for $1
• 5 go on clearance and are sold  for $0.5
• Feedback is given to the company, next time the company orders 5 widgets and Bob the overzealous buyer is fired and Joe the conservative buyer is hired.

Total: Company $7.50; Customer - 10 widgets; Bob - Unemployed; Joe - Employed.

Scenario B - Central Planning

• 10 widgets are ordered
• 5 widgets are sold for $1
• Central planning pays Fred $2 (which comes out of the companies profits) to seize and destroy the 5 widgets which 'props up pricing'. No cheap merchandise here folks. Not on Fred's watch!
• No feedback which continues to order 10 widgets from here to eternity to support 'jobs'.  

Total: Company $3 ($5 - Fred's salary); Customer - 5 widgets; Bob - Employed; Joe - Unemployed. Fred - Wreaking havoc.

Yeah....this concept doesn't work. The Soviets proved that decades ago. You'd think we would have learned the same lesson.

Look for continued calls to 'support' things while simultaneously the public continues to get wise to the Broken Window Fallacy economics that are being played out in Washington.