With all of these bailouts at the federal level and all of the emergency monetary measures, a logical question comes to mind – does money, debt, and price(s) matter? If it’s perfectly ok for a government to rack up as large a deficit as it likes, and as such, a national debt, and with no consequence – then what difference does it make what the price of anything is? This is getting eerily close to adopting Modern Monetary Theory (MMT), which is a bogus “economic” theory that basically states that deficits and debts do not matter. It could reasonably be argued that we’re already under that paradigm, but we digress.
So if deficits and debts do not matter – then again, why have prices? In a market economy, the pricing mechanism is key. Embedded in a price is a ton of information. It can tell a consumer that they’re getting a deal for a good or a service they demand. It sends signals to producers and potential producers what kind of profits they can make if they enter a certain market. Prices are the clearing mechanism between consumers and producers that allows for equilibrium to be established. Now of course, with governmental and monetary policy interference, this system becomes distorted and leads to the types of financial market and economic collapses that we are in the midst of. But getting back to debts not mattering. One can run up his debt tab by purchasing things he cannot currently afford by purchasing them on credit – thus debt. But with MMT, we’re told that debts don’t matter – so then logically, prices would not matter either. If it costs $10,000 but you don’t have $10,000 who cares? Buy it anyway and go into debt. Why? Because debt doesn’t matter. We hope you understand the ridiculousness of this crackpot theory, but nonetheless we could be heading in this direction. All one needs to do is look at the emergency measures being taken by the monetary and fiscal authorities. And all we can say is that it looks a lot closer to MMT than FMC (free-market capitalism). Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Gold #COVID19 #USA #EndTheFed #Revolution