The video is on the simplistic side but is accurate enough. The point is that spending of itself doesn’t make your economy grow and more especially, able to repay a loan. Only value adding investment does that, investments where every dollar spent leads to output whose value is greater than a dollar. Virtually no government ever does that, and when occasionally some government does, that government is not run by Daniel Andrews, nor, unfortunately, by Scott Morrison.
Let me continue along the same line of thought with this from Mises.org: Central Banks Are Destroying What Was Left of Free Markets. It is a more sophisticated version of what I wrote about earlier: “The best way to destroy the capitalist system is to debauch the currency”. The author here is Alasdair Macleod, “the Head of Research at Goldmoney”.
Those receiving subsidies and loan guarantees are no doubt grateful, though they probably see it as the government’s duty and their right. But someone has to pay for it. In the past, the redistribution of wealth through taxes meant that the haves were taxed to give financial support to the have-nots, at least that was the story. Today, through monetary debasement nearly everyone benefits from monetary redistribution.
This is not a costless exercise. Governments are no longer robbing Peter to pay Paul. They are robbing Peter to pay Peter as well. You would think this is widely understood, but the Peters are so distracted by the apparent benefits they might or might not get that they don’t see the cost. They fail to appreciate that printing money is not just the marginal source of financing for excess government spending, but that it has now become mainstream.
I will take you to the final para which ought to make you think very hard about where we are heading, but you may have to read the part in between, and perhaps also my own previous article to make sense of it. No one can know for sure, but why would you trust a central bank?
Earlier in the descent into the socialization of money, nations had opportunities to change course. Unfortunately, they had neither the knowledge nor the guts to divine and implement a return to free markets and sound money. Those opportunities no longer exist, and there can be only one outcome: the total destruction of fiat currencies, accompanied by all the hardships that go with it.
And while you are considering all this, let me bring this up as well: The Worldwide Lockdown May Be the Greatest Mistake in History.
The forcible prevention of Americans from doing anything except what politicians deem “essential” has led to the worst economy in American history since the Great Depression of the 1930s. It is panic and hysteria, not the coronavirus, that created this catastrophe. And the consequences in much of the world will be more horrible than in America.
Oh, really? How so?
The lockdown is “possibly even more catastrophic (than the virus) in its outcome: the collapse of global food-supply systems and widespread human starvation”. That was published in the left-wing The Nation, which, nevertheless, enthusiastically supports lockdowns. But the American left cares as much about the millions of non-Americans reduced to hunger and starvation because of the lockdown as it does about the people of upstate New York who have no incomes, despite the minuscule number of coronavirus deaths there. Or about the citizens of Oregon, whose governor has just announced the state will remain locked down until July 6. As of this writing, a total of 109 people have died of the coronavirus in Oregon….
Michael Levitt, professor of structural biology at Stanford Medical School and winner of the 2013 Nobel Prize in chemistry, recently stated, “There is no doubt in my mind that when we come to look back on this, the damage done by lockdown will exceed any saving of lives by a huge factor.”
To the left, anyone who questions the lockdown is driven by preference for money over lives. Typical of the left’s moral shallowness is this headline on Salon this week:
“It’s Time To Reject the Gods of Commerce: America Is a Society, Not an ‘Economy,’” with the subhead reading, “America Is About People, Not Profit Margins.”
And, of course, to smug editors and writers of The Atlantic, in article after repetitive article, the fault lies not with the lockdown but with President Donald Trump. The most popular article in The Atlantic this week is titled “The Rest of the World Is Laughing at Trump.” The elites can afford to laugh at whatever they want. Meanwhile, the less fortunate — that is, most people — are crying.
Maybe a year from now we will be looking back at all this and laughing. Or maybe not.