My production of posts about the characteristics of Austrian methodology has been interrupted for technical reasons. It may take until Monday, October 5, 2026, for me to resume that schedule.
In the meantime, I will make some posts about topics of concern of mine.
The Financial “Crisis”
Many commentators have started addressing what they call a “crisis” in federal debt. The national (government) debt has risen to over $40,000,000,000,000 (I wanted to see if I could write the digital form).
I don’t know whether the government faces a financial “crisis,” but I would like to suggest an activity that could contribute significantly to resolving federal finance problems.
Expenditure & Money
Evidence
The graph above plots government expenditures and the money supply (M2) from 1960 to 2020. I have used a log scale to show the rate of growth.
If I read this chart correctly, most, if not all the increase in federal spending has been financed with an increase in the money supply
The Problems
Monetary expansion causes two major problems. First, by distorting the price system, it misallocates resources. Second, it ultimately leads to price inflation. Monetary expansion is the only source of a general rise in prices.
Solutions
The solution to this problem is simple, but the political will simply does not exist.
Stop Money Creation To Cover Government Deficits
The chart above does not prove that monetary expansion finances most government spending, but it provides strong evidence for this contention.
Several methods could stop the government from using monetary expansion to cover deficits. One possibility would be to prohibit national banks from purchasing government securities.
Cut Spending
The second method for decreasing deficit spending would be to cut government spending until a balanced budget is achieved consistently. The only way to cut government spending to the extent I recommend is to cut welfare programs. Social Security, Medicare, and other federal programs should be eliminated.
For the sake of my fellow Social Security recipients, I hope this could be done in a way that doesn’t stop these payments suddenly, but if that’s what it takes, let it be.
Conclusion
We allowed the government to encroach on free markets to the extent that they can no longer be considered free at all. Until politicians discover the political courage to stop meddling in free markets, we will continue to perform a form of national suicide.
In the future, I will explain in more detail why we need to change the role of our government. For now, I hope you will take the time to think about it.