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Saturday, March 21, 2020

The End of Civilization?

Governments all over the world are using the alleged threat of a COVID-19 pandemic to shut down the world’s economy. Daniel Lacalle, an authority on energy economics, writes: “The decision to shut down air travel and close all nonessential businesses is now a reality in major global economies. The United States has banned all European flights as Italy enters a complete lockdown, Spain declares a state of emergency, and France closes all nonessential public places and businesses.”

Further, he points out, governments can’t solve the problems they have created through massive spending programs and bigger deficits. These policies make things worse: “Governments will implement large demand-side policies that are the wrong answer to a shutdown of the economy. Most businesses will suffer from the collapse in sales and subsequent working capital build, and none of that will be solved with deficit spending. You cannot mitigate a supply shock with demand policies, which increase debt and overcapacity in the already indebted and bloated sectors and do not help the sectors that are suffering an abrupt collapse in activity.” And government printing of money, i.e., outright inflationism, is even more dangerous.

Lacalle’s remarks bring to mind the trenchant comments on Ludwig von Mises. He warns against attempts to shore up disastrous policies by printing more money. Mises says, “No emergency can justify a return to inflation. Inflation can provide neither the weapons a nation needs to defend its independence nor the capital goods required for any project. It does not cure unsatisfactory conditions. It merely helps the rulers whose policies brought about the catastrophe to exculpate themselves.” He tells us where a policy of inflationism will end: “Inflation is the fiscal complement of statism and arbitrary government. It is a cog in the complex of policies and institutions which gradually lead toward totalitarianism.”

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2 comments:

  1. More forget the poor rhetoric. It simply isn't possible in this crisis. Deal with it. Money is going to be printed, deficits are going to be created, and cash assistance is coming. You might as well can the conservative diatribes.

    Frankly it's a bad look because the only people who believe it are the people who aren't concerned with paying the bills. It sounds selfish.

    ReplyDelete
  2. Hidden danger of the Rainbow agenda people. Its been ongoing for decades enslavement of mankind for luciferian idealogy. Man made desruction is not a new modern day tower of babal

    ReplyDelete

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