The black hole of western state debt that will never be repaid creates distortions across the economy
Can you give some examples?
Big government debts seem like the kind of thing that can fail catastrophically at some point, so they represent an important civilizational risk. But how are they distorting the economy? Do you just mean that governments spend much more than they raise in taxes?
Richard Cantillon observed that the original recipients of new money enjoy higher standards of living at the expense of later recipients. In colloquial terms, the closer you stand to the source of money creation, the wealthier you become.
When governments run large deficits that get monetized by central banks, this creates new money that flows first to government and financial sectors before reaching the broader economy. This distorts resource allocation because entities closer to the money source can bid up assets and resources before prices adjust throughout the system.
Can you give some examples?
Big government debts seem like the kind of thing that can fail catastrophically at some point, so they represent an important civilizational risk. But how are they distorting the economy? Do you just mean that governments spend much more than they raise in taxes?
This is a theory often referred to as the Cantillian effect
Richard Cantillon observed that the original recipients of new money enjoy higher standards of living at the expense of later recipients. In colloquial terms, the closer you stand to the source of money creation, the wealthier you become. When governments run large deficits that get monetized by central banks, this creates new money that flows first to government and financial sectors before reaching the broader economy. This distorts resource allocation because entities closer to the money source can bid up assets and resources before prices adjust throughout the system.