The ever-increasing implementation of the monetary policy, which, due to the pandemic and its measures to deal with economic shutdowns and social isolation, in other words the continuous printing of money, is being used to cover the damage caused to economies while providing state aid to both workers and businesses (in the form of subsidies and interest-free loans), forced the West to adopt Socialist-style policies.
The difference now lies in the fact that State subsidies in the form of grants are granted to everyone without exception according to the needs of each (person, family, company) and not based on the productive potential of the economic units concerned. This is a kind of socialist policy.
Of course, these budgetary policies are considered temporary.
The problem is that both governments and international economic institutions such as the IMF and the World Bank, the ECB and the Fed want these economic/fiscal policies to continue after the pandemic.
Given that for a decade in the Eurozone the continuous supply of the economy through the applied quantum easing policy has not managed to create technically inflationary pressures they have chosen to continue to implement this monetary policy.
Of course, the fact that the public debt of many countries will soar to astronomical heights does not concern them because they can:
- This, money will be given in the form of subsidies rather than loans.
- Or in the form of an extension of the repayment period of the public debt to reduce the amount of its annual service costs.
The aim of economic policy in the West is to provide aid/subsidies to all so that people can adapt to the changes brought about by the rapid advances in technology that will cause the elimination of millions of jobs.
The target of governments is therefore to establish a basic income for all while providing free health care, but also other socialist benefits such as free education.
Since, after the end of the pandemic, the objective will be drastic economic growth, this will require new economic planning for each country.
What it seems is that the pandemic wrongly leads much of the Western political world to adopt a model of strengthened state sector with a main difference from socialist practices that the state should no longer undertake to run businesses (nationalizations) but play a central supporting role of the private sector and all citizens at the individual level.
But the right path to growth in the Euro area/EU is another which, as Trust Economics, we have summarized in our analyses entitled «The Eurozone/EU Economy for the Next Decade (2021-2030)» & «The Problematic Course of the Eurozone (EU) Economy and the Proposed Corrective Policies».
