Next to my own article at Quadrant Online is a new one by Peter Smith, one of the few economists I think of as worth the time to read: This Can’t Go On Much Longer. His point is that you can print money from now until forever, but eventually you will cause enormous damage which will remain unrecognised until after the deluge has struck.
I will go to economics and ask where is the money coming from and what are the implications of governments spending so much of it. I note that some commentators have referred to Modern Monetary Theory for guidance (watch for lefties coming out of the woodwork to promote it). Consult my article in the last July/August issue of Quadrant if you want to know about this theory; but, sufficient to say, it sheds more obscuration than it does light.
Governments are giving vast amounts of money to businesses and individuals to try and make up for their loss of revenue and income. Is it a good policy? Yes, it is. Governments have shut economies down and, thus, there is no option. Otherwise, people would starve and businesses across the board would collapse. At the same time, the character of giving matters. Some is sensible; some wasteful.
A formula being used in the US, and maybe elsewhere, seems by far the most sensible. Small and medium sized businesses are being given loans to cover their costs, including their wage costs, which will be forgiven if they keep all their employees on. Support to large businesses is also vital to ensure they do not collapse; and support to individuals thrown out of work.
Even on my own high street, there are all kinds of businesses in great difficulty, some even shutting down, never to return again, in many instances because landlords are not reducing their rents. Others will return, but many others won’t. Back luck to them, but also bad luck to you since your personal wealth is being depleted by these typical actions of governments, actions costless to them but not to us. This is how Peter ends:
So, what am I saying? I am saying that the normal implications of government overspending do not apply. This situation is unique. Think of it as an enforced sojourn, albeit on hard rations in solitary confinement. Most everything shuts, we sit on our hands, and the government gives those made destitute free money to pay bills and buy food and medicines. When the sojourn is over, we will have suffered a sharp loss of production but can make up for that over a period of time.
The trick is to ensure that business collapses are kept to a minimum; that most are in shape to start up again, and that individuals are kept whole. Every day will make it harder for some businesses and people to bounce back. This means the sojourn can’t go on much longer; only a few more weeks at most. Trump knows this, and could provide a lead for other countries, including Australia; if the hate-filled American media don’t deter him from acting as speedily as we need. And need it we do. Morrison, in the announcement I referred to, mentioned restrictions being in place for six months.
It’s every government’s greatest wish to throw around money at everyone and everything. Just think of Kevin Rudd and Barack Obama in the wake of the GFC. It then took near on a decade to return to where things had been in the US, and that only because of Donald Trump. Here we never got back to where we were in 2009. If you think this will be different, well good luck to you. We are being systematically robbed, and it will continue right up until the day the community at large finally says they have had enough.
EN PASSANT: From the comments thread at QoL:
This is the economic destruction of the West (and Australia) that the globalists, climate Cultists, Fabians, Totalitarians (of every ilk) and Socialists have dreamed about since forever. Greta can now go back to skool as the capitalist world has deliberately suicided at the behest of our politicians.
It appears to be relatively easy to prophesise our future, so here are some of mine in this Orwellian Brave New World:
a. The Chinese are already buying stocks in key American (and Australian) companies.
b. They are offering big loans and support to those supporting their Belt & road initiative – like Victoria. All you have to do is bow and kneel. How easy is it to just bow and scrape in order to be saved?
c. The ‘Oz stimulus package’ will turn out to be a massive ‘hot shot’ heroin overdose that will economically ruin Oz.
d. The Oz $$ will become valueless
e. The Chinese will call in their markers and will take key assets as payment (Ports, Communications, Infrastructure, and whatever else they want that destroys our sovereignty). The Greens, the Left and the ABC will cheer this on as a ‘good thing’.
f. Emergency ‘Social Control’ measures will become more draconian and possibly permanent
g. Pollie pensions and benefits will NOT be cut …
Welcome to the future …
As usual, my solution requires ‘risk-taking’, which my children condemn as cavalier. When their arguments have no effect on me, they then (justifiably) ask, ‘But what about Mum?”
Anyway, I think that applying a harsh Triage approach has statistical merit and would contribute to achieving the prime practical objective of decreasing the ‘Rate of Increase in Infection’ through the period of Peak Hospitalisation Demand. This would maximise the number remaining at work and minimise the permanent damage to business and industry.
However, as we import so much from China our industries will probably collapse anyway as materials are already in short supply. The owner-builder next door has stopped as he cannot get – wait for it – roofing screws.We have destroyed the Australia I knew because 1,800 people are known to be infected and 16 have died.
The look of self-satisfaction on ScoMo’s face at the destruction he and Parliament have wrought on Oz beggars belief. Why not add a super-tax to our last productive industry and finish the job? Kill off mining and we will have destroyed Oz to save the planet.