The challenges faced by California Governor Gavin Newsom have been considerable. Recently, it was disclosed that the state’s Department of Public Health had significantly mismanaged its COVID-19 record keeping, underreporting new coronavirus cases by nearly 300,000.
This revelation may have led Newsom to take a moment of introspection. During his Wednesday COVID-19 news briefing, shortly after quoting Voltaire, Newsom shared the following thought-provoking insight: “Businesses can’t thrive in a world that’s failing.”
While this observation may seem insightful, it is, in fact, quite apparent—even to those who may not be particularly astute. The failing world that prevents businesses from thriving is largely a result of the government-imposed lockdowns, for which Newsom is primarily responsible. California was, under his leadership, the first state to impose lockdown measures, making it unfortunate that he didn’t take a moment of meditation before driving the state into disarray.
The repercussions of Newsom’s lockdown decisions were foreseeable. With the economy in a freeze, bills remained due, even as numerous individuals found their paychecks had vanished.
For businesses, while outstanding payments loomed, receivables quickly turned overdue. In essence, the flow of cash—a vital component of economic exchange—ground to a halt.
Newsom likely believed he was acting in the best interest of public health by implementing these restrictions. After all, several governors followed suit, resulting in similarly disastrous outcomes.
However, that was merely the initial phase. Soon after, the federal government went into action…
Printing Press Money
The chance to tackle the impending economic downturn realistically—through bankruptcies, debt write-downs, and extensive financial corrections—was lost with the launch of expansive fiscal and monetary stimulus initiatives, including the CARES Act, the PPP, the PMCCF, and the SMCCF, among others.
The overarching goal of these initiatives was to compensate for the cash flows lost due to the lockdowns. Although the intentions behind them were commendable, the outcomes have stirred significant concerns.
Efforts to mask the income decline for individuals and businesses could not last indefinitely. Additionally, these programs were inherently flawed, relying on printing money—essentially, credit generated from nothing—to function effectively.
This reliance on printed money constitutes a major shortcoming. While it may provide temporary relief, the ramifications are severe. Firstly, it erodes the value of hard-earned savings. Secondly, it distorts the stock market, turning it into an indicator of money supply expansion.
However, the connection between money printing and the resulting economic and financial distortions poses increasingly grave risks. Although the stock market serves as a gauge for money supply growth now, it could face a significant downturn, causing consumer price inflation to assume this role in the future.
The lasting effects of mass currency debasement are irreparable. Once printed money becomes intertwined with earnings and savings, it cannot be disentangled. The integrity of all currency comes into question, jeopardizing its value.
What lies ahead?
What You Will Find When You Follow the Money
The next phase mirrors the previous one and can be encapsulated in one word: “More.”
More monetary stimulus. More fiscal spending. More financial programs. More unemployment benefits. More bailouts. More government-backed loans. More currency in circulation. More purchases of corporate bonds by the Federal Reserve. More debts. More deficits.
Endless “more” that will come at the cost of ramped-up money printing.
This influx of printed money inevitably leads to greater market distortions, creating asset bubbles, driving inflation, increasing wealth disparities, sparking protests, causing riots, and ultimately inciting chaos—more and more of it.
We always anticipated that this moment would arrive, though we expected it to be significantly more dramatic. Over several decades, the Federal Reserve has systematically limited its options, painting itself into a corner.
Consequently, the Fed is poised to continue its current course: more money printing, further debasement of currency, and more destruction of the economy.
More individuals are starting to realize that something is fundamentally wrong. They’ve sensed discrepancies that simply don’t add up. For years, political and class divisions effectively masked their grievances.
However, this appears to be shifting. Increasingly, people are tracing the flow of money back to its origins. What they unveil is shockingly crude, grotesque, and unsettling—a reality so difficult to grasp that it seems almost unreal.
But it’s all too real—and it spells disaster.
Sincerely,
MN Gordon
for Economic Prism
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