The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

Fiscal support is the more straightforward of zombie-creation methods to detect. Any firms that receive direct government support, and the vast majority of firms that are alive thanks to selling their products to the public sector, are effectively zombies. Had these firms been productive to society, free individuals would have willingly parted with their money to pay for their products. That they cannot survive on voluntary payments shows that these firms are a burden and not a productive asset for society. But the more pernicious method of creating zombies is not through direct government payments, but through access to low-interest-rate credit. As fiat money has slowly eroded society's ability to save, capital investments no longer come from savers' savings, but from government-created debt, which devalues existing money holdings. In a society with sound money, the more a person saves, the more he is able to accumulate capital and the more he can invest, meaning that capital owners tend to be those with lower time preference. But when capital comes from government credit creation, the allocators of capital are no longer the future-oriented, but members of various bureaucratic agencies.