It’s a gambit to start out a column by pouring cold water on potentially good news with negative shock value, but after a huge red hot Macau stocks rally which brought Wynn up 23% in a single day, some cold water may be needed. Earlier this week, Beijing’s point man in Macau, Li Gang, told the world that the Chinese government would soon enact policies to support Macau’s economy, and its gaming industry in particular. Sounds potentially encouraging, but he did not say what those policies would be. Given the history of the Chinese government attempting to support the Chinese economy, investors should be extremely wary of an announcement like this, especially because no particulars were given.

The ironic part is that this announcement was made in the forefront of an event celebrating the 66th anniversary of the establishment of the People’s Republic of China. Why ironic? And why wary? Because the People’s Republic was also founded on government promises to support the economy. Particularly, Chairman Mao Zedung’s “Great Leap Forward” which was the Chinese government’s attempt to shift the economy from agrarian to industrial by force in an attempt to catch up with the West.

The result was that the division of labor that had fed the Chinese population until then completely broke down, and according to official Chinese Communist Party archives, 45 million people died over the 4 years from 1958 to 1962. Great Leap Forward indeed, in terms of it being the largest death toll in world history outside of World War II.

To be clear, that is not to say that the Chinese government will cause anything remotely similar in Macau with its ambiguous new policies aimed at helping. Far from it. Those lessons at least have been learned. This is just a cautionary tale that shows how bad things can get when any government decides it wants to “help” by enacting “new policies”, so just be careful. Another example of a government trying to “help” an economy by enacting “new policies” that Westerners may be more familiar with that is much less horrific than the Great Leap Forward was Presidents Hoover’s and Roosevelt’s joint attempts to “help” America out of the government-caused Great Depression with huge and protracted spending schemes. These prolonged the depression by 15 years. The depression before that, which happened in 1921, was just as extreme as 1929 in terms of GDP drop but only lasted one year because the government did essentially nothing about it.