No, we can’t borrow our way out of this!

Borrow enough to fund a new energy infrastructure based clean energy won’t work.

Gaining control of the banking system and issuing loans to tackle global challenges may appear attractive. Advocates suggest that the debt could be repaid over centuries, with future generations managing repayment with ease due to low interest rates and the expectation that inflation would diminish the debt’s real value over time.

Borrowing within certain limits is feasible, as the government often operates with a sustained, manageable deficit. However, borrowing trillions to address every societal issue would be counterproductive. Such extensive borrowing would lead to significant currency devaluation and uncontrolled inflation, stalling the economy and disproportionately impacting the poor.[1]

Can borrowing from banks, essentially printing money[1], effectively finance the import of clean energy and green products?

While limited borrowing to finance imports is feasible, the fairness of this approach is debatable. It risks shifting the problem abroad without generating domestic employment, and there is no guarantee that foreign corporations will produce green products without contributing to greenhouse gas emissions.

Excessive reliance on borrowing to pay for imports could lead to severe economic consequences. If imports significantly exceed exports, the currency could collapse, making imported goods prohibitively expensive for both the rich and the poor, ultimately destabilizing the economy.

Excessive borrowing, whether by the Federal Reserve or private banks, to finance domestic spending can severely damage the economy through high inflation.

History has shown us the dangers of excessive borrowing. Many countries have mistakenly equated the printing of banknotes with economic productivity. While this approach may provide short-term relief, it ultimately leads to long-term instability. For instance, Germany’s hyperinflation in the 1920s and the economic turmoil caused by loose monetary policies in the 1970s resulted in significant job losses and economic downturns.

Borrowing, in essence, involves increasing the money supply, but without a corresponding increase in goods, the economy risks currency devaluation both domestically and internationally. When the supply of money exceeds the production of goods, inflation erodes the value of currency, ultimately diminishing people’s savings.

The foundation of a healthy economy is built on hard work and production, not on the “monetary illusion” of printing money. It is a dangerous misconception to believe that borrowing alone can finance the production of green goods that do not yet exist.[1]