You might say, “If the government can simply print or electronically create more money, as the Federal Reserve can do, then why doesn’t the Federal Reserve simply issue a good income for every single person in America — and the world, for that matter? Why not give everyone an income of $100,000 a year? Or even a million per year, for that matter?”
Now you know the answer. If the Federal Reserve did this, it would create a massive demand for goods and services that no market — especially in a world where people do not have to work — could create. With supply of goods and services LOW relative to the HIGH demand created by “free” money handed out by the government, you would get … massive hyperinflation. In other words, the currency would lose all its value.
On a smaller scale, this is what happened with COVID fascism and its aftermath. The government and media literally shut down the world, by scaring people (irrationally) into not leaving their homes for months. Understandably, the demand for most goods and services went way, way down since most people, during this time, weren’t doing things they’d normally be doing.
Yet the government escalated its “printing” or issuing of free money, rationalized as a “rescue package” — a rescue from a crisis of the government’s and media’s own creation! What you got was more demand for goods and services (thanks to free money) than the market (paralyzed by COVID restrictions for 2 years) could hope to provide.
Now you see the shortages, but you also see the inflation. Inflation and shortages are two early stages of the disaster when an economy starts to transition from a free market to a collectivist, socialist, Communist economy. It also happened in Germany’s Weimar republic, paving the way for the rise of Hitler in the 1930s.
COVID fascism and the mega-spending by government in its aftermath is an opportunity to better understand how economics works, why government control of the currency is dangerous, and what happens when you abuse that control of the currency for political reasons.
Other Communist/socialist countries have learned this painful lesson in generations past. Now it’s America’s turn. I doubt most will learn the lesson, sadly. As Biden has said, government needs to spend MORE, not less. If we do, hyperinflation (i.e., where the dollar becomes worthless) will literally destroy life as we know it.
Michael J. Hurd, Daily Dose of Reason