No Free Lunch

No Free Lunch Thinking you can get something for nothing is not exactly new. Nor is the idea that the state (the government) can create real 'money' by cutting down trees and printing up pieces of paper with dead presidents on them.     Nor is the idea that the feds can use this 'money' to 'Build Back Better'…by 'investing' it in worthy projects. These are not new ideas. They are simply old crackpot delusions. Someone should tell her. The Argentine government has been practicing a kind of MMT (Modern Monetary Theory) fiscal policy for decades. It prints money, lots of it. It uses the money – as all politicians claim – on 'what matters most.' But boo hoo…by the end of the year, about half the value of every new peso it prints will disappear. Another couple of years and it will be all gone. What kind of money is that? Can you really use it to make investments that will pay off for future generations? Apparently not. There used to be an expression: 'as rich as an Argentine.' No one has heard that for years. And just look at America's big public 'investments' of the last half century. Campaigns against drugs, poverty, terrorists…money printing extravaganzas that left people poorer than they were before. The feds were ready to "invest" someone else's money – in safer streets…in stronger GDP growth…in healthier citizens…in better schools and smarter kids…in fighting racism…in promoting equality… …but are the streets safer? Are the schools better? Are the kids smarter? Are we healthier? Happier?   Fatter, Sadder, Less Productive The whole idea of investing is to give up something – current consumption – in order to get a payoff later. A profit. An advantage. You should be richer after making the investment, not poorer. Between 1999 and 2023, the US feds made net 'investments' (beyond current income from taxation) of $27 trillion. That's how much federal debt increased during that period. If those investments had been remotely profitable, they'd be paying a dividend. Where is it? Instead, we're adding to US debt at the rate of $5 billion per day over the next 10 years. The latest 'investment' scam comes to us from the Biden bunch – the Inflation Reduction Act. With a straight face, The Economist reports: Big investments have begun. Most of the money spent under the IRA goes towards combating climate change. The earliest data show that companies that make clean-energy kit (like wind turbines and solar panels) are ramping up production. The American Clean Power Association, a trade group, says that 83 manufacturing plants have been announced since the bill's passage. More than 50 will produce solar-power equipment. The rest will make wind-turbine parts or batteries. Together the projects represent $270bn of investment—equal to the previous seven years of clean-energy investment combined, according to the trade group. Firms have also announced $53bn of investment in factories making electric vehicles (EVs) and components they use, like batteries and chargers, according to a tracker run by Jay Turner of Wellesley College.      Many clean-energy projects will go to red states, be it to wind farms in the plains or hydrogen hubs in Texas or Utah (consortia in both states are bidding for the latter). Mr Turner's tracker finds that $47.5bn of EV investments are heading to Republican districts, compared with $6.7bn destined for Democratic ones. That means—at least with Mr Biden in the White House—that the IRA is probably safe from serious Republican opposition.       BILL BONNER AND JOEL BOWMAN