A monetary explanation for our current malaise

Written by John Leake on March 28, 2023. Posted in Current News

At a family dinner this evening, my youngest brother opined that the gamut of dangerous, nonsensical, and fraudulent activity we see in public affairs would have been inconceivable without the stupendous increase of the money supply since the Financial Crisis of 2008

If NO public funds were available through endless bailouts, crisis countermeasures, extravagant military adventures, artificially low interest rates, “quantitative easing,” subsidies for silly social and educational programs, sweetheart “public-private partnerships,” and lobbyist-driven investment in industries that could never stand on their own in a free market, we would have to focus our energies on productive enterprise, and would have no time for dangerous nonsense.

The need to earn a living would force us to make difficult, adult decisions instead of avoiding them and instead indulging in drivel.

By creating and spending endless amounts of money, the U.S. government and its Federal Reserve enable our politicians and people to think and feel like a spoiled trust funder with a cocaine habit. As a result of the constant bailouts, he is able to avoid the consequences of his wasteful, destructive conduct.

Such a trust funder is the opposite of the protagonist in the coming of age novel, A Day No Pigs Would Die, by Robert Newton Peck, in which a Vermont farm boy experiences the terrible consequences of an exceptionally long and cold winter.

In the heartbreaking, climactic scene, he must confront a necessity so harsh that it eliminates all other considerations and attachments.

As dinner concluded, my brother asked me if anyone had ever drawn the connection between debt-fueled prosperity/excess consumption and widespread lack of reason in public affairs.

I thought about it, and the man who came to mind was the Austrian economist and historian, Ludwig von Mises, who wrote about what he called malinvestment.

Googling the term yielded this gem:

The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment.

Though this statement is written in an economic idiom, something akin to it applies to the spiritual life of a nation, and may be rephrased as follows:

The [debt-driven] boom vitiates moral and intellectual vigor and reduces discernment of reality through the insulating effects of bailouts and subsidies; its immediate freedom from consequences is ultimately paid for with a catastrophe.

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