Adam Smith, the father of capitalist theory and modern economics, proposed in his book “The Wealth of Nations” in 1776 a different capitalism that could work for the common good if the market was left to regulate itself without government interference. Since its inception, capitalism has never worked as Smith envisioned. It has been just an idea in the eye of the beholder.

When the housing bubble burst in 2008, they rescued some boats and sank others. Who are they? Central banks. For example, the Federal Reserve in the USA bailed out some big corporations and financial institutions and let others fail like Bear Stearns and Lehman Brothers. By rescuing some boats and letting others sink, central banks have deliberately failed capitalism and unanimously agreed to change the “ism”.

With the arrival of Covid-19 in Dec 2019 and the imposition of the lockdowns around the world last March 20, capitalism has officially died. They have put it to sleep. Interventionism has become the new economic system, the new doctrine that is governing the markets. It is not the intervention by the state, it is the intervention by the central banks which run the governments. Because the printing presses are owned and run by the central banks not governments. Money creation is central banks’ business.

The current “Ism” of interventionism, namely Keynesianism has superseded capitalism. The printing presses of the central banks are operating at full capacity especially after the lockdowns. In the coming post, we will discuss how interventionism will not bring prosperity to the world’s nations. Interventionism is the onset to an economic disaster.