Governments and central banks have become the lender of first resort instead of the last resort, and this is immensely dangerous. Global debt soars, inflation creeps in, and many of the so-called supply chain disruptions are the result of zombification after years of subsidizing low productivity and penalizing high productivity with increased taxes.
Quantitative easing was designed as a tool to provide time for governments to implement structural reforms, boost growth, and strengthen the economy. However, it has become a tool to increase the size of government and take increasingly riskier levels of debt.
The United States economy has not strengthened in the period of enormous fiscal and monetary stimuli, as the latest data shows. It needs increasing units of debt to generate a new unit of gross domestic product (GDP), productivity is extremely poor and leading indicators are negative.
An energy policy that bans investment in some technologies based on ideological views and ignores security of supply is doomed to a strepitous failure.
The energy crisis in the European Union was not created by market failures or lack of alternatives. It was created by political nudging and imposition.
The Nobel Prize in economics for 2022 was awarded to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig for their research on the role of banks in economic growth and on how banks can set in motion a severe economic crisis. In this article, we focus on the work of Ben Bernanke while making brief comments on the work of the other laureates.
Every theory must ultimately meet two tests: one, that of internal consistency, the other that of consistency with reality.—Frank A. Fetter
