by Llewellyn H. Rockwell Jr.
Governments all over the world are using the alleged threat of a COVID-19 pandemic to shut down the world’s economy. Daniel Lacalle, an authority on energy economics, writes: “The decision to shut down air travel and close all nonessential businesses is now a reality in major global economies. The United States has banned all European flights as Italy enters a complete lockdown, Spain declares a state of emergency, and France closes all nonessential public places and businesses.”
Further, he points out, governments can’t solve the problems they have created through massive spending programs and bigger deficits. These policies make things worse: “Governments will implement large demand-side policies that are the wrong answer to a shutdown of the economy. Most businesses will suffer from the collapse in sales and subsequent working capital build, and none of that will be solved with deficit spending. You cannot mitigate a supply shock with demand policies, which increase debt and overcapacity in the already indebted and bloated sectors and do not help the sectors that are suffering an abrupt collapse in activity.” And government printing of money, i.e., outright inflationism, is even more dangerous.