When government becomes the largest actor in the economy

That is “when” not “if”.

Some thoughtful soul put online a diagram to illustrate the interconnectedness of government and big business.

http://www.techdirt.com/articles/20111221/17561617164/mapping-out-revolving-door-between-govt-big-business-venn-diagrams.shtml

If this diagram shocks you, you have not been paying attention.

By and large, people are happy to present a cynical stance vis-a-vis government. In truth, few can identify the processes by which government can become a threat to the economic health of individuals or to their personal freedoms. Generally speaking, government is perceived as an entity that owes us something because it is a well worn common place to hold that government over taxes us. Furthermore, there is a fundamental misunderstanding (is it deliberate?) as to what government money is, to the extent that individuals consecrate considerable time and effort to extracting as much financial support from government as possible.

Although I don’t know how accurate the information portrayed in the diagram may be and although I am not going to check, in a context of Debt Based Fiat Money and electoral politics the symbiotic relationship of government and big business is a mathematical certainty. It cannot be otherwise.

DBFM is predicated on inflation brought about by the constant expansion of credit markets. Inflation conforms to the law of diminishing marginal efficiency. All this means is that DBFM is inherently limited mathematically. If DBFM were allowed to follow its natural life cycle, the economy would undergo regular resets during which the sponsors of the system would naturally succumb to bankruptcy. And it is this particular feature of DBFM that is most dear to its sponsors because as DBFM guarantees recurring devastating crisis, the sponsors of the system are guaranteed several opportunities to trample due process in the name of fighting an ostensible emergency that risks fire and brimstone upon society.

But the diminishing marginal efficiency of inflation also guarantees that each recurring crisis is orders of magnitude larger than the previous one. Thus, as the sponsors of the system progressively inject greater degrees of debt into same, in order to avoid saturation and catastrophic failure not only does government have to curry favor with industry and business but the monetary system must perforce assimilate other currencies and other markets too. Naturally this is a self reinforcing dynamic.

Eventually, as you do that over decades, government must perforce become the largest and most influential actor in the economy not only at home but in other countries too.

Which brings us to the moral dilemma this situation represents.

Graph of Federal Government Debt: Total Public Debt

*

Graph of Real Gross Domestic Product, 1 Decimal

 

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2 Responses to “When government becomes the largest actor in the economy”

  1. The Daily Climb « georgesblogforum Says:

    […] https://guidoromero.wordpress.com/2011/12/23/when-government-becomes-the-largest-actor-in-the-economy… […]

  2. Pat Donnelly Says:

    Moral dilemma? Pray tell!

    Voters become consumers. The mob with education, demand bread and races. Panem et circenses. Circus gives us circuit and relates to racing and gambling with attendant whores.

    MASSIVE P*RN AND SUDDEN POVERTY CREATES MASSIVE NUMBERS OF WHORES.

    Banking requires and stokes sin. The wages of sin is credit!

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