The way the U.S. government and the Federal Reserve have responded to the economic fallout of the Coronavirus pandemic has been something out of a Marx Brothers skit. Groucho aptly described the art of politics when he quipped, “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.” Unfortunately, we can only laugh at the absurdity of politics before the consequences of poor policy become too real and devastating. Inflation is a ticking time bomb waiting to go off in the United States and the rest of the world as fiscal and monetary tools expand at levels unseen before. While even the layman understands the economics of inflation, we tend to forget about the threat to your liberty when a currency is destroyed and prices skyrocket.
Many countries around the world have embarked upon inflationary crusades to salvage their economies from the doldrums of despair. By hitting a magic button for the printing press, governments have thought they could carve a path to prosperity with newly created money. Or, if affluence and opulence were not the aims of the politicians, statists also used the money tree planted outside the central banks to cover the costs of going to war. Is it any surprise that the 20th century was a period of total conflict and central banking?
Some of the most iconic examples of inflation nations are the Weimar Republic, Venezuela, Zimbabwe, the Soviet Union, and North Korea. They sparked financial crises due to their leaders’ reckless escapades and foreign adventures. What could these places possibly have in common? Let’s stroke our beards and try to identify the similarities: big government, socialism, authoritarian regimes, and economic illiterates.
When these nations disemboweled their money systems, the heads of state conjured up a wide variety of reasons. The Nazis blamed the Jews, the Venezuelans reproached the bakers, Zimbabweans accused the white man, and the Soviets charged the capitalist pigs. The public fell for the deception, pleading to the power-hungry charlatans to do something, as long as they could put food on the table, even if it resulted in a dictatorship. They then introduced a myriad of interventionist mechanisms, such as price controls, production quotas, and – you guessed it – more inflation. The public goes along with whatever the blighters bloviate, even if that means employing the same measures that brought the nation to the brink: more inflation, more spending, and more government. And this is what the political savages bank on: The desperate become dispirited, and the dispirited turn into victims of the iron fist.
Before you can utter modern monetary theory, the emperors soon impose instruments of oppression, from death and labor camps to police states to racist policies. It is the nature of the beast. Is it any wonder why proponents of socialism, Marxism, corporatism, and war advocate for a central bank?
Everyone is aware of the economic victims of inflation, but we forget about the evisceration of liberty.
By the time the money-printing machine is put to sleep, the damage has been done. Society will echo Groucho’s joke: “Why, look at me. I’ve worked my way up from nothing to a state of extreme poverty.” Inflation is not only one of the most dangerous taxes that can cripple a household and sicken a nation’s fiscal condition but also the method that can result in your loss of freedom. It is often said that the most dangerous words in the English language are, “I’m from the government, and I’m here to help.” This is what occurs when a currency is used as toilet paper, and the cost of living has a meteoric ascent. People will demand politicians intervene and rescue us from the abyss, forgetting about the inherent tyranny that lives within the Leviathan. But the state cannot flee its ignorance, choosing instead to take advantage of their incompetence and double down.
It is comparable to what is unfolding today amid the COVID-19 public health crisis: Politicians are not letting a catastrophe go to waste. It is totalitarian economics at its finest, and the population suffers in a myriad of ways. We might get a chuckle out of the money printer go brrr philosophy rampant around the world, but inflation can be a lethal weapon.
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