How government destroys the economy
When a country wants to borrow money to finance its expenditures, but cannot attract enough investors to lend the money, the central bank steps in as lender of last resort and provides the resources to the government by "printing" money. This process that causes inflation has very damaging outcomes for society; devalues the currency, which depletes the people's purchasing power; leads to wealth inequality (Cantillon effect); and allows governments to swell their scope into every area of the economy and society, hindering individuals' freedom.
There are other indirect ways it hampers sustainable economic growth. In the name of promoting economic growth, reducing wealth inequality, helping the needy and elderly, and bestowing every kind of privileges (disguised as human rights) to its citizens, a government imposes price controls, sets the interest rates and comes up with all sort of rules and regulations, resulting in price signals distortions, which ultimately cripples the functioning of the free market.
In this segment, we'll see how the laissez-faire capitalism works and why it is the best economic system ever conceived. After that, in its turn, governments' shortcomings are going to be analyzed. Then, a thorough appraisal of the economic history, since the Enlightment age, will explain how we got here and shed some light to where we are heading. Having said this, I'll give my opinion, based on what I exposed, on the economic meltdown: what will be the trigger, who are going to be the biggest losers and winners, and how governments, central banks and supranational entities will deal with this.
There are other indirect ways it hampers sustainable economic growth. In the name of promoting economic growth, reducing wealth inequality, helping the needy and elderly, and bestowing every kind of privileges (disguised as human rights) to its citizens, a government imposes price controls, sets the interest rates and comes up with all sort of rules and regulations, resulting in price signals distortions, which ultimately cripples the functioning of the free market.
In this segment, we'll see how the laissez-faire capitalism works and why it is the best economic system ever conceived. After that, in its turn, governments' shortcomings are going to be analyzed. Then, a thorough appraisal of the economic history, since the Enlightment age, will explain how we got here and shed some light to where we are heading. Having said this, I'll give my opinion, based on what I exposed, on the economic meltdown: what will be the trigger, who are going to be the biggest losers and winners, and how governments, central banks and supranational entities will deal with this.