It is becoming more and more apparent that the entire global financial system is rushing headlong into a titanic collapse sometime in the future, and governments along with central banks are willing to do anything to extend it as far as it can go. This of course means that at certain points along the way they need to use more and more drastic measures in order to stimulate spending.
Starting late in 2015, and continuing so far into the first part of the new year, these ‘drastic measures’ are starting to hit mainstream. And besides the growing talk about negative interest rates, and banning or ending the use of physical cash, the last resort scheme in the arsenal of those in power is right now knocking on the door, and is being looked at strongly in Northern European country’s like Norway and Switzerland.
And that last resort scheme is the direct distribution of cash to the people.
Swiss residents are to vote on a countrywide referendum about a radical plan to pay every single adult a guaranteed income of £425 a week (or £1,700 a month).
The plan, proposed by a group of intellectuals, could make the country the first in the world to pay all of its citizens a monthly basic income regardless if they work or not.
But the initiative has not gained much traction among politicians from left and right despite the fact that a referendum on it was approved by the federal government for the ballot box on June 5. – Daily Mail
Most of the industrialized world already has in place welfare and ‘safety net’ systems that provide a modicum of cash to those unable to work, or unable to even find employment. But even these amounts of taxpayer funded benefits have become inadequate to keep economies going, especially since there are becoming more and more people who can’t afford to keep up with general economy price inflation, and have cut their spending down to absolute bare minimums.
The most diabolical result of Keynesian economics is that it eventually becomes like a snake eating its own tail. By increasing money supplies and devaluing one’s currency, it creates abnormal prosperity to a small group of people while lessening wealth for the majority who find that their wages cannot keep up with the price inflation that results from excess money and debt. So this causes government’s and central banks to need to increase debt even more, at a rate where eventually they reach the point of diminishing returns, and where there is little left to do but to tax working people into oblivion, or as the Swiss and Norwegians are proposing, direct cash payouts to everyone to increase spending and create artificial growth.
In the end however, free money acts as the opposite of price controls, which is a mechanism imposed by poor 3rd world banana republics, but with the same inevitable result. As the conclusion to either program is even greater price inflation, which at a point becomes to great for even a government or central bank to keep up with.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.