Government Unlimited Inc.
How does it feel to wake up one day and realize that the only liability you have is towards the yield bearing credit you availed from the organized credit market? That day when no other misplaced altruism and law hijacks your hard-earned money. When no government body asks you to disclose your income details or tracks your expenses and you are neither answerable to anyone nor vice-versa. A world with no strings attached. While celebrating the Independence Day recently, it struck me that territorial independence is now a thing of the past. Today’s call is for financial and resource independence, where an individual as an entity is free to produce, consume and enjoy the fruits of her/his production without theft from policy makers. Excessive Government has been the hallmark of most of the modern governments (for argument’s sake let us exclude non democracies) with the emergence of every new crisis. World over, governments found it convenient for increased involvement to address the anxieties of Bourgeoisie and the economically challenged. Before the long-awaited asset-based recession struck the world, 2020 saw the first pandemic recession in about a century. The good part about a pandemic recession is that, while it is contagious, the aftereffects of this are minimal and acts like a reset button without prolonging itself like a typical balance sheet recession.
While I will leave the topic about personal liberties to another post, economically, the ideal distance between governments and central banks have shrunk drastically. Central banks have become minting machines for insecure administrations to secure democratically elected governments against any upset in the forthcoming elections. While the need of the hour is for governments to open-up economies, all we got to witness is an increase in the supply of demand less paper. Governments motivation to revive economies via increased fiscal expenditure, owes a lot to secure vote banks and catastrophic election upsets. Excessive spending can be achieved via centuries old principles of: Tax Theft and Purchasing Power Theft.
Governments received their wake-up call a long back when cryptocurrencies hit the market, as a small portion of the society lost its trust in the sovereign currency. While Cryptocurrencies can be considered a fool’s asset (for now), it may not be forever before someone decides to engineer an asset class that fills the underlying void. United States is a perfect example of how one crisis can comfortably lead to another. Following the footsteps of the anchor currency producer, majority of the emerging nations believe that Keynesianism and Modern Monetary Theory are the way forward and began considering governments as super-natural entities with no obligation to remain the nation’s largest household. While the federal reserve of the US now officially defies the fundamentals of economics, the Indian government’s direct monetization of $7.2Bn during this fiscal caused the Reserve Bank of India to hold off a potential rate cut, that would have otherwise benefited a private SME. The natural cycle of a free economic system that provides an opportunity every now and then (in the form of a crisis) for potential course correction and innovation is a dinosaur today. We now are on the brink of a possible asset bubble, thanks to the overtly aggressive central banks across the world. The increased urge of governments to showcase heroism can cost its citizens dearly not only by wiping out the value of their savings, but also by significantly deteriorating standards of living. The obsession to Keynesianism, caused a drastic rise in deficits of countries and increased interest rates thus hampering a regular Small and Medium enterprise’s effort to create fundamentally strong private sector jobs. As eternal optimists, we can’t shut our eyelids to the fact that when this pandemic is over, we can expect a significant rise in interest rates, rise in tax theft and inflation thus denying us the fruits of orthodox economic principles. Surprisingly, the disaster that a Debt / GDP of 100%+ can cause to an economy doesn’t haunt the policymakers yet.
Governments ought to free up the economy and society amidst this one-time opportunity by privatizing state owned enterprises, eliminating outdated regulations, reforming archaic laws, and more importantly trusting an individual and her/his ability to manage themselves. One way to begin with is by respecting the choices and resources of citizens by gradually reducing tax terrorism. Let the individual’s last ounce of respect in the established order and sovereign currencies prevail.