Welcome to the New Weimar Republic: The Indivisible Laws Of Economics
By J.J. Jackson
August 22, 2011
Liberals like to think the laws of economics are like the laws of physics. In physics, particles behave differently on the subatomic level than they do in the macroscopic realm. This is because as one gets smaller and smaller, different forces become dominant and take control of how particles interact with one another thus leading to sometimes counterintuitive solutions. This is why there is an entire field of physics, called quantum mechanics, to deal with this special situation.
Economics however, does not act differently on the macro or micro level. Yes, there are actually two fields of economics; microeconomics and macroeconomics. And economists, for God only knows what reason, actually try to forcibly separate the two. I think this is why liberals get confused.
Microeconomics is officially defined as the study of how people (including businesses which are just conglomerations of people) allocate resources and how prices of goods and services are set. Macroeconomics is officially defined as a study of the entire economy (GDP, exports, imports, etc.) of a group such as a state or nation.
Of course anyone that has ever taken both macro and micro economics, and who passed the courses, quickly understands why trying to separate these two fields is folly. Macroeconomics is really nothing more than an effect of many microeconomic spheres all acting at once. One does not have exports or imports, for example, without decisions on how to allocate resources and determining that those resources must either come into or go outside of their own sphere.
As such, the laws that govern the basic interactions of microeconomics are the same as those that ultimately govern macroeconomics. Liberals disagree. They think that on the macro level things work differently.
This belief is why they think government can print $1.7 trillion to simply pay for programs, handouts and waste that exceeds revenues. You cannot do that in your own household or business however. If you doubt me, try it. Try just ripping out a couple thousand in $20 bills from your home printer and see how quickly no one will accept the "money" you have just created. Then sit back and wait to be hauled off to jail as an added bonus.
Liberals do not think that the fact that the United States is $14.3 trillion, going on $20 trillion, in debt is a problem. Even though hundreds of billions are paid each year in interest on the debt, it does not bother them. Even as they are faced with the reality that in a few short years, unless they can artificially keep interest rates at zero percent, that couple hundred billion will be a trillion and liberals laugh in the face of reality. HA, HA, HA they chortle. They say they will just print more money to cover the costs and they believe that people will keep lining up to buy bonds in return for a future payment of interest when, these liberals hope, their policies of big government actually generate enough revenues to cover the expenses.
To some extent, yes, liberals can just keep printing money. They can do this especially if all other nations around the world do the same to cover their own deficits. But the only reason this works is because everyone is ignoring reality and delays obvious economic consequences. These consequences are horrible things like artificially high inflation and lack of trust in the ability of government to pay future obligations on freshly printed money resulting in a need to increase production of worthless paper yet some more. The terrible secret is that eventually critical mass is reached.
At that point of critical mass, regardless of what other nations are doing, the economy of the United States collapses because no one has any faith in the government anymore. The most basic of rules of economics tell us that on any level you cannot continue to arbitrarily print and spend money year after year, after year, after year, after year. Many nations have collapsed because they tried to do just this. It happened to the Soviet Union and it is happening now in China.
Most famously it happened in the Weimar Republic. You know it probably better as pre-World War II Germany. The Weimar Republic tried to just keep printing money to solve its economic problems too. It also lived off of loans and spending more money than the economy could produce. Hyperinflation quickly consumed the nation.
Ever hear people refer to a wheelbarrow full of money being needed to buy something? This is where it comes from because the people of Germany at the time literally needed so much money to buy the basic essentials of life. And it was no joke. The Germany currency was so worthless that it was a laughing stock of the world. Ultimately, the Weimar Republic proved that the principles of economics on the macro level are the same as on the micro level.
What was worse is that the malfeasance of the Weimar Republic lead to the rise of Hitler and the Nazis. Yeah, something that was not good in most people's books. But it was a response by the people of Germany to the horrid economics they had tried to force to be real.
And what have we here in America done? We have instituted the latest version of this failed experiment based on the regularly disproved fallacy that nations, by virtue of simply being nations, are not subject to the basic laws of economics.
Let me be the first to welcome you to the New Weimar Republic. Formerly it was called the United States of America.
J.J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com. He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at Liberty Reborn.