Because Nobody Votes for More Pain: The Toxic Economics of Politics

An enormous problem with our political system is that all elected officials are highly, highly incentivized to do things that benefit people now, today, immediately. And there is zero penalty for punishing those same people in the future. Or even worse, their children and their children’s children.

So if creating money out of thin air will make it so that people don’t have to feel the pain, or even normal consequences, of free market decisions, so be it. Less pain = more votes.

We are moving into a crisis of monumental proportions. There has been a serious fundamental problem infecting economic policy on a global scale. This conflict has been between monetary and fiscal policy. While central banks engaged in Quantitative Easing, governments have done nothing but reap the benefits of low-interest rates.

Economic growth has been declining year-over-year and we are in the middle of a situation involving low-productivity expansion with high and rapidly rising budget deficits that benefit nobody but government employees. Once upon a time, 8% growth was average, then 6%, and 4% before 2015.75. Now 3% is considered to be fantastic.

Private debt at least must be backed by something whereas escalating public debt is completely unsecured. The ECB wanted to increase the criteria for bad loans, yet if those same criteria were applied to government, nobody would lend them a dime.

- Source, Armstrong Economics