The world is facing a serious global debt crisis. Hardly any nation is following healthy economics and every nation is playing with the paper money to increase its national debt burdened on future generation. The Eurozone debt crisis is direct consequence of same Fabian socialism supported by John Maynard Keynes and as a result, the endeavors by government to rescue against this economic collapse is again a Keynesian policy of inflate the debt to create another boom. Yesterday, the world’s central banks announced a “coordinated action to enhance their capacity to provide liquidity support to the global financial system”. The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank decided to take recuperative actions by providing liquidity support to global financial system. This means that now Eurozone banks will have enough money to lend and hence there will be much more mall-investment. The Central Banks in Unison simply means a huge bailout for failing Eurozone economies. Obviously, the countries which were supposed to accept austerity before they may be provided any loan have now attained enough stimuli to keep their irrational spending on. However, is this …Read the Rest
Tag: US Federal Reserve
Bailouts and Government Bonds
Why United Kingdom Should Not Bailout Defaulting Eurozone Countries? Since 2008, the globe is facing serious issues of recession and right since then almost every government is trying to provide as much stimulus package and bailouts for the failing companies as it could. And now, in order to support the European countries against the Eurozone crisis, many governments are again pushing the idea of bailouts for countries suffering Eurozone crisis. Our world is facing a global debt crisis; almost every other nation is suffering the burden of huge national debt which is increasing regularly. The current national debt of the United States is $15.03 trillion1 , while the current national debt of United Kingdom is around £1.1 trillion. However, government often doesn’t care about the national debt because basically, it is not the government which is meant to pay any of this debt; rather the citizens of a nation are responsible to pay back all this debt. During the recession of 2008, the governments of the United States and the United Kingdom offered bailout packages free handedly that resulted in huge increment in national debt. United Kingdom is again expected to pay £5 billion to bail out Spain2 as the …Read the Rest
Reason behind Indian Inflation
While discussing about petrol price hike (Truth Behind Petrol Price Hike) , I mentioned that the major reason behind price hike and inflation is the governmental policy of economic stimulus for the defaulting sectors during the economic crisis of 2008. I was asked if I can offer an analysis to prove my point. Here is an explanation of Indian inflation rate going sky high. It is important to understand that inflation and price rise are two different phenomenons. Henry Hazlitt, a renowned Austrian economist explained the process of inflation in following words: Inflation is an increase in the quantity of money and credit. Its chief consequence is soaring prices. Therefore inflation — if we misuse the term to mean the rising prices themselves — is caused solely by printing more money. For this the government’s monetary policies are entirely responsible1 . Ludwig Von Mises also explained inflation when he commented, What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation2 . Price hike is just a consequence of inflation. As the available currency in …Read the Rest
Why Kingfisher Airlines should not be bailed out
Recently, Rahul Bajaj1 expressed his frustration about the possibilities of Indian government bailing out the Kingfisher Airlines. He clearly said, “I am a proud private sector man and I don’t see any logic of bailing out any private sector company either for sake of employees or customers, “If it’s a free market economy, those who die must die.” Obviously, he is suggesting the right way of action. No private sector company should be bailed out or offered any help by the government. In fact, government should not bail out anything, anyone. Is there a way to oppose and restrict the government from offering any stimulus, help to Vijay Mallya so that he may save the sinking boar of Kingfisher Airlines? Why bailing out is wrong? Bailing out is simply wrong because of the fact that a business in a free market fails only if it is not viable. Since Kingfisher Airlines is suffering, it certainly means that the manner in which this business is being managed is not appropriate and the money invested in Kingfisher Airlines is actually bad investment. If government will add more money in Kingfisher Airlines, it will increase the amount of bad investment. Bad investment always …Read the Rest
