The problems we face today come from an attitude that there is such a thing as a free lunch. Thought the majority of the people may endorse it, rarely do those who seek a free lunch bother to ask who ends up paying for it. It is not just the poor who are looking for a free lunch—the rich do so as well. It’s called welfarism.

Endorsing the use of aggression to achieve this redistribution of wealth is acceptable for those who believe they’ll benefit from it. Generally, that’s the majority of the people. Some know that the principle of welfarism is a scam in that one group, the recipients of the free lunch, will benefit at the expense of another—the producers of wealth.

Others believe it to be moral and the only way society can care for the poor, and therefore they endorse government force to redistribute all wealth in a free and equitable manner. They ignore the challenging question as to who will produce the wealth to be passed out.

Economists like Paul Krugman belong to this group. If we give Krugman and the philosophic allies the benefit of doubt the main selfish motive that drives their efforts is an intellectual need in gratification that their views must never be abandoned, or it will be seen as an admission of mistaken economic and social theories.

It is this intellectual stubbornness to prove they are right regardless that has driven our economy and much of the rest of the world’s as well since the 1930s Great Depression. The current fragility of the world economy is a consequence of that policy. Understanding the cause and effect of central economic planning, especially with the emphasis on central banking and fiat money, is required. If sound economic growth is to be restored, certain principles must be understood and followed.

One of the most important economic items to contend with is the need for a market rate of interest. This must replace the silly notion that the Federal Open Market Committee or even the chairman of the Federal Reserve alone is so all wise that they can know what the rate of interest should be to regulate the economy. This one policy of manipulating interest rates to a lower-than-market level has caused great harm to the economy. And the full effects of pretending our money managers have the wisdom to know what the proper rate should be, especially since the 2008 [recession] has not yet been felt.

The consequences will not be minor. Surprises will be many, since we are in uncertain waters and the world has never faced the gross misallocation of capital that exists today. The process is self-limiting. It will come to an end, and it’s not going to be far into the future.

Interest rates, which are the cost of borrowing money, when set by economic authoritarians are literally price fixing. Fixing prices fouls up the machinery of a smooth-running economy. Interest rates have a pervasive influence on all economic transactions. Fictitious interest rates assure that accurate economic calculation is impossible. While it may seem to work for significant periods of time, the results are fragile, requiring corrections to restore true economic growth.

Capital in a free market comes from savings and not from a central bank creating credit out of thin air. This in itself is inflation, regardless of what government optimistic reports of the CPI claim. The central bank’s ability to plan the economy in this manner is a fiction and only leads to problems that overwhelm the markets, eventually wiping out the middle class.

The credit and new money, when created by a central bank, is delivered to the market in a political fashion for which the one percent receive special benefits. It allows the pyramiding of debt to fractional reserve banking, which compounds the long-term problems.