Principles of Monetary &amp; Financial Sustainability and Wellbeing in a Post-COVID-19 World: The Crisis and Its Management

Jesús Huerta de Soto,Antonio Sánchez-Bayón,Philipp Bagus

doi:10.3390/su13094655

Principles of Monetary & Financial Sustainability and Wellbeing in a Post-COVID-19 World: The Crisis and Its Management

Jesús Huerta de Soto, Antonio Sánchez-Bayón + Show 1 more

Open Access

https://doi.org/10.3390/su13094655

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Journal: Sustainability	Publication Date: Apr 22, 2021
Citations: 22	License type: CC BY 4.0

Affiliation: King Juan Carlos University

Abstract

This paper analyses the COVID-19 crisis and its management from the perspective of Austrian Economics. The attention focuses on the State’s coercive intervention according to the principles of political economy, capital theory and Austrian business economic cycles. The paper examines the specific case of massive intervention by governments and, especially, central banks in monetary and financial markets to deal with the pandemic trying to mitigate its negative effects. The paper offers a critical analysis of government tax policies and the increase in public spending, considered as the panacea and universal remedy for the social troubles. This review concludes with a proposal to change the mainstream paradigm, thereby proposing a more sustainable and wellbeing economics.

Highlights

Post-COVID-19 World: The CrisisThe World economy suffered a severe shock in 2020, which continues in 2021
In order to analyze these shocks and mitigate its consequences we must review how economies affected by an external shock, like a pandemic crisis, can recover and which conditions have to be met for this end according to the principles of political economy [1,2]
Austrian theorists have focused with particular interest on the recurrent cycles of boom and bust that affect our economies and on studying the relationship between these cycles and certain characteristic modifications to the structure of capital-goods stages

Summary

Introduction

In order to analyze these shocks and mitigate its consequences we must review how economies affected by an external shock, like a pandemic crisis, can recover and which conditions have to be met for this end according to the principles of political economy [1,2]. These economic principles suggest allowing for an adaptation process to the new circumstances with the lowest costs possible [3].

Theoretical Framework and Methodology

The Reaction of Central Banks to the Unexpected Outbreak of the Pandemic

Central Banks Have Gone Down a Blind Alley

The “Pièce de Résistance” of Public Spending

Proposal of Paradigm Change towards a Sustainable Model

Conclusions