Bitcoin enthusiasts are in constant shock with central bank practices, particularly with the U.S. Federal Reserve. Recently Government debt exceeded $ 25 billion for the first time. In the past month alone, this huge pile has grown by a trillion. The problem is not just the amount. The problem is the amount in relation to gross domestic product (GDP). In this case, the debt is higher. The crypto space has always been outraged at printing money. Some have even compared the United States to Robert Mugabe’s Zimbabwe for printing wild money. Well then Is the comparison justified? Let’s not go too far. Is Zimbabwe’s fiscal and monetary policy under the Robert Mugabe regime really comparable to that of the United States during the corona virus?
The world has introduced an economic system based on fiat money. This is not an evil conspiracy. It is not the fault of the “ruthless bankers” and the “corrupt politicians”. That is, Fiat as a macabre plan by the elites who want to print money out of nowhere to harm people and enrich themselves. I am sorry to say that this old and repeated anti-system script is not entirely correct. I’m not saying that elites are little angels that are full of responsibility and kindness. However, it must be recognized that resentment plays a very strong role in all of these anti-system criticisms. Obviously the system needs to be reformed. But the planning has to make sense. Or at least viable. Suggestions need to be supported. It’s not about being a keyboard know-it-all on Twitter. It is very easy to criticize from the stands, but it is quite another to fight the lions in the area.
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The Keynesian business school deviates from the fundamentalism of the free market and recognizes that the “invisible hand” is not perfect. Intervention by the state in economic activity is therefore necessary and essential to remedy the shortcomings. British economist John Maynard Keynes is the forerunner of the mixed system and welfare state as we know it today. It is not the best. But it worked best so far. Ok, ok, calm down. Have a tea, count to ten, and keep reading. Finished?
Now, of course, many of us from the opposition criticize this system. And it is completely valid because it is not a perfect system. However Radicalisms are always disadvantageous. Mostly because they are not practical. Some economists think it’s best not to intervene and solve the crisis on its own during an economic crisis. It’s just that we have to accept the “temporary pain” and now. “Liquidationism” is the conviction of some economists at the Austrian Business School that they advocate doing nothing during a crisis so that bad actors die and the best survive in a litmus test. In the Nietzschean style of – what doesn’t kill you makes you stronger-. In other words, the Spartan ethic.
Liquidationism is very popular with libertarians. And through the libertarians it reaches the crypto world. Here it became a crypto-dog. The little detail about dogmas is that they are dangerous. Revolutions in which heroes march on the street and shake a book never end very well. In theory, everything is perfect. But once the system breaks down and it’s time to put the dogma into practice, things don’t end well. The remedy is worse than the disease. Ideologies are always true in the opposition. That is why it feels so good to criticize the system. Because the opposition is always right. But changing the world is a practical undertaking. And practice is a much more complex thing than sitting on a sofa and writing theories about revolutions and new worlds.
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Robert Mugabe destroyed his country Zimbabwe. As part of his agricultural reform, he ended national production and expropriated large producers. And distribute their properties to unskilled personnel. Aside from the poor implementation of the plan due to corruption, it’s the old utopia so prevalent in underdeveloped countries that the problem of poverty is distribution. “”We are poor because the rich monopolize national wealth“” It’s something like that. What is the solution? Forcibly taking away the rich to give to the poor. In other words, the Robin Hood story.
Logically, the country’s production apparatus collapsed. The Robin Hood revolutions never end well.
What did Mugabe do during the production crash? He increased public spending with inorganic money to stay in power. This was the recipe for disaster. Zimbabwe had an inflation rate of 231 million percent. An unemployment rate of 90%. And 74% of the population lives on less than $ 5.5 a day.
In the case of Zimbabwe, the solution was not to print money. Production increases and creates favorable conditions for productive work. And of course with investments. Production, investment, tax and currency discipline as well as a good legal framework. Mugabe did the opposite. Something very similar happened in Venezuela. Mugabe and Chavismo are separate twin brothers at birth.
The situation in the United States during the corona virus is completely different. This comparison between Uncle Sam and Zimbabwe is absurd. It’s a biased comparison made out of the box with a script under your arm. For starters, the United States has no production problems. And inflation is not a problem at the moment. In any case, you have a deflationary picture due to the fall in demand during childbirth. This was a very severe blow to an economy that was already slowing down. Liquidity injections are now necessary to boost the economy and drive the recovery forward.
This is the problem with dogmas. The script prevents you from realizing that giving two plates of extra food to an obese person is not the same as giving them to a malnourished person. What is surplus for one is the urgent need of the other. Of course, it is important to reduce debt in the United States. But there are mechanisms for this. Of course there are excesses and a lot of irresponsibility. But it is one thing to reduce debt and another thing to have no fiat money system and no fiscal and monetary policy that takes government intervention in the economy into account.
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It is perfectly possible to believe in and use Bitcoin while living in a fiat currency economy. Both things are not exclusive. Indeed, this confrontation is a false dilemma. Such an economy is not only possible, but also profitable. Whether we admit it or not, economies have experienced fewer economic crises since World War II. And that’s because we have learned to deal with recessions much better.
This is very difficult to digest because the anti-system environment is currently very strong. And much more in the crypto area. There is a deep resentment. But it is also possible to be critical, but at the same time reasonable and rational. It is possible to be a little more pragmatic. And analyze the data without angry outbursts. The United States is not Zimbabwe. It is obvious that less than 3 percent inflation per year is not the same as 231 million percent inflation. Making such comparisons is simply an excessive passion for dogma.