Big Government, No Growth. The Implosion of Statism.

Rising government spending and public debt create economic stagnation and declining living standards. Many citizens believe that the state will give them prosperity and equality. However, the state only makes paper promises by issuing debt, creating a constantly depreciated currency. Taxpayers are constantly expropriated, while the recipients of subsidies become a dependent subclass. Who wins? Bureaucrats.

Deficit spending is not a tool for growth. It erodes prosperity, creates persistent secular stagnation, real wage growth decline, and poor productivity growth.

High public spending and government debt falsely inflate GDP through government outlays while, in most cases, masking a private-sector recession underneath. GDP is easily manipulated by increasing government spending and changing the calculation of GDP deflators.

The state issues debt, a form of currency, and establishes a system that continuously suffocates the productive sector. In effect, GDP and CPI serve as measures of economic strength that obscure the imbalances created by the state; GDP overstates real growth by incorporating government spending financed by debt, while CPI, like the GDP deflator, underestimates the currency’s loss of purchasing power.

Major economies face a hidden real recession for households and small businesses using “robust” headline figures bloated by ever-rising government debt. Every new dollar of debt now generates less than sixty cents of nominal GDP in the U.S. However, when we look at countries like Japan, France, the UK or Germany, the multiplier effect of new government debt is either nonexistent or negative. The consequences are evident: true productive economic expansion is hurt by rising taxes, regulatory burdens, and inflation, which reduce incentives for private investment and innovation.

Statism creates enormous disincentives for productive investment and promotes malinvestment and the constant transfer of wealth from the productive sectors to the government. Governments finance their ever-expanding budgets in privileged conditions, creating a crowding out of the private sector that suffers the consequences of persistent inflation and raising taxes.

Remember that high taxes are not a tool to reduce debt but to justify it.

Despite political messages promoting growth and stability, statism results in low productivity growth, which in turn causes declining real wage growth and diminishing purchasing power as governments overheat economies by issuing more currency than the private sector demands while maintaining unsustainable public accounts. Persistent inflation is the systemic result of chronic government overspending and central bank easing to sustain sovereign debt bubbles.

Ironically, many citizens hail politicians and governments who promise to lower inflation by printing more currency through subsidies and government programmes. Governments promise to solve the problems they create, paving the road to serfdom.

Capitalism and social media do not cause inequality and discontent. Governments create inequality in its most severe form, which arises from political favouritism.

Artificial creation of currency is never neutral. It disproportionately benefits the first recipient of new money and governments and hurts the last recipients, wages, and deposit savings.

Workers and the middle class cannot protect themselves against the stealth expropriation of the economy. Those with financial means hedge against currency debasement through asset investments, while wage earners and deposit savers suffer the hidden tax of inflation and the erosion of purchasing power.

The hidden costs of public debt are more evident than ever: governments absorb available credit, banks become reluctant to lend to productive private enterprises, genuine investment suffers, and job creation and long-term productivity weaken. Instead of fuelling sustainable growth, government borrowing absorbs capital to bloat the administration machine and promote asset bubbles. Small and medium enterprises face constant penalties while malinvestment thrives.

Keynesian policies promise prosperity through endless spending, and when it does not work, they always say that they did not spend enough. However, the promises of eternal government expansion meet the reality of the economic, fiscal, and inflationary limits, which have already been surpassed in most developed economies. Tax hikes generate diminishing receipt improvements, while productive investment is penalised. Additionally, debt accumulation meets a loss of investor confidence and erosion of currency stability. Thus, with persistent inflation, the purchasing power of the currency deteriorates.

By manipulating interest rates and maintaining elevated public outlays, governments create a stealthy nationalisation of the economy and a slow-motion crisis. This leads to a gradual decline in both purchasing power and living standards.

The solution is to diminish the power of the state, promote sound money, strengthen the private sector, favour entrepreneurship, and make systematic cuts to government spending. Only by refocusing on genuine market-led investment and trimming bureaucratic overhead can economies escape stagnation, restore real wage growth, and revive productivity. Without decisive spending restraint, citizens remain trapped in a vicious cycle of dependency, currency devaluation, and impoverishment.

Rising government spending and public debt do not deliver productive growth. They create stagnation.

Surveillance Money. The European Central Bank Accelerates the Digital Euro.

Many market participants have built long positions on euro-denominated assets, expecting a positive outcome from the German stimulus plan and Rearm Europe projects. However, betting on a stronger euro may be optimistic considering the poor track record of these government plans, the rising fiscal challenges of France and other nations, the elevated debt and enormous unfunded liabilities, as well as the imminent implementation of a central bank digital currency. There are undoubted fiscal and deficit problems in the United States, but the relative position against the euro is undeniably stronger considering all the previously mentioned factors.

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Welcome to the Age of Perennial Crisis

The world is not going to see another crisis like the ones experienced in 2008 or 2011. No central bank or government is going to accept it. You may think the prospect is good news. However, the flip side is that this means secular stagnation and perennial crisis for wage earners and the middle class. There is a slow-motion eternal crisis that leaves the average citizen wondering why they cannot make ends meet, while governments boast about their economic stability.

A crisis is only the manifestation of a previous excess. When governments prioritise prudent investments, healthy public accounts, and attractive taxes, crises end quickly, and the recovery is stronger. However, when governments claim to be the solution and mask economic imbalances with increased spending, debt, and taxes, they merely create a significant transfer of wealth from the private sector to themselves, resulting in persistent inflation, higher taxes, weaker productive growth, and lower real wages that burden taxpayers.

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The Fed Models Were Wrong About The US Economy

In 2025, the mainstream Keynesian narrative that the United States would inevitably experience a recession and stagflation has proven to be utterly incorrect. The American economy is performing much better than its comparable nations, is showing broad-based strength, and even has indications of accelerating growth, giving investors and consumers plenty of reason to feel more optimistic, despite the consensus estimates from earlier in the year.

The consensus was wrong.

The United States economy is outperforming the economies of the UK, Germany, France, Italy, Japan, and the entire euro area, showing estimates of economic growth that exceed those of the best-performing developed nations, along with significantly lower unemployment rates and solid real wage growth.

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