Principles of Monetary & Financial Sustainability and Wellbe- ing in a post-COVID-19 World: the crisis and its management review

This paper analyses the COVID-19 crisis and its management, under the Austrian Economics. The attention is focused in the States’ coercive intervention, to evaluate the positive or negative effects of pandemic, according to the Principles of Political Economy and the theory of capital and 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 by seeking to lessen its effects. Also, it is offered a critical analysis on simultaneous government policies involving taxes and an increase in public spending which are presented as the panacea and universal remedy for the evils that afflict the society, instead of promoting the transit to Wellbeing Economics. To conclude the review, there is a proposal of paradigm review, in the way to offer a sustainable model.


Introduction
The economies affected by an external shock, like a pandemic crisis, they require a preliminary review of conditions and functions according to the Political Economy Principles [1,2]. These economic principles suggest to let the economy in an adaptation process to the new circumstances with less cost (real and opportunity cost) [3]. Once the pandemic has been overcome, it is necessary to promote a healthy and sustainable recovery, also in terms of wellbeing economics [4,5]. The result of this review, under the Austrian Economics theory of capital and economic cycles, it helps to understand that the pandemic crisis and its management, it has been a pretext for an increasing lack of fiscal and monetary control by Governments and Central Banks. Let´s see the exposition and explanation of the key-points to understand the agenda and its process.

Theoretical framework and methodology
This review uses the Austrian Economics theory of capital and economic cycles, and some other main principles of Political Economy (from traditional monetary and currency schools). In this way, there is a powerful economic theory to understand and to interpret the social reality and its development. Therefore, the most appropriate economic-policy approach or road map for dealing with a pandemic and, especially, recovering from that is quite clear. Some of its essential principles are widely known, and others are an "open secret," especially to all of those who fall into the trap of fueling populist demagogy by creating false and unattainable expectations among a population as frightened and diso-riented as one would expect during a pandemic. For more considerations, about the fundamentals and methodology applied here, it suggests the consultation of Mises´ contribution [6,7], and as complement, the authors´ bibliography about the issue [8,9].

Review key-points, results and discussion
3.1. Dynamic efficiency as a necessary and sufficient condition for the Economy to recover from a pandemic Some previous considerations are required to study the pandemic crisis and its management, and its monetary and financial sustainability. For this review, there is an emergence to consider the possible structural effects that could result from a pandemic in the short, medium, and, eventually, long term and the role the natural increase in uncertainty (caused by the pandemic) initially plays in the increase in the demand for money and in its purchasing power: In the context of (sectoral or general) confinement in which productive activity is temporarily halted, it is particularly important that there be an accompanying decrease in demand, to free up consumer goods and services so that all of the people who are forced to suspend their productive or work activity can continue consuming the minimal amount they need. In other words, the rise in cash balances and the fall in nominal prices make it easier for consumers and economic agents to adapt to difficult circumstances, and at the same time, they enable them all to respond quickly once they can see the light at the end of the tunnel and confidence begins to return. In any case, the economy must be "dynamically efficient" [10], if it is to uncover the opportunities that begin to emerge and make it possible for them to be seized and for the recovery to get off the ground. The conditions for dynamic efficiency are provided by everything that permits and facilitates the free exercise of (both creative and coordinating) entrepreneurship by all economic agents such that they are able to channel available economic resources into new, profitable, and sustainable investment projects focused on the production of goods and services which satisfy the needs of citizens and are independently demanded by them in the short, medium, and long term. In an environment like our present one, of strongly controlled economies, the process by which prices characteristic of the free-enterprise system are formed and set must run smoothly and with agility. For this to occur, we must liberalize markets as much as possible, particularly the market for labor and other productive factors, by eliminating all of the regulations which make the economy rigid. In addition, it is essential that the public sector not squander the resources companies and economic agents need first, to cope with the ravages of the pandemic and survive and, later, when things improve, to make use of all their savings and idle resources available to bring about the recovery. Therefore, it is imperative that we proceed with a general reduction in taxes which leaves as many resources as possible in the pockets of citizens and, above all, lowers as far as possible any tax on entrepreneurial profits and capital accumulation. We must remember that profits are the fundamental signal that guides entrepreneurs in their indispensable, creative, and coordinating work. Profits direct them in detecting, undertaking, and completing profitable, sustainable investment projects that generate steady employment. And it is necessary to promote, rather than fiscally punish, the accumulation of capital if we wish to benefit the working classes and, particularly, the most vulnerable. This is because the wages they earn are ultimately determined by their productivity, which will be higher, the higher the per capita volume of capital in the form of equipment goods entrepreneurs make available to them in ever-increasing quantity and sophistication. Regarding the labour market, we must avoid any sort of regulation which decreases the supply, mobility, and full availability of labour to quickly and smoothly return to work on new investment projects. Hence, the following are especially harmful: the setting of minimum wages; the rigidness and unionization of labour relations within companies; the obstruction and, particularly, legal prohibition of dismissal; and the crea-tion of subsidies and grants (in the form of temporary labour force adjustment plans, unemployment benefits, and guaranteed minimum income programs). The combination of these can discourage people from looking for work and from wanting to find a job if it becomes obvious that for many, the more advantageous choice is to live on subsidies, participate in the underground economy, and avoid working officially [11]. All of these measures and structural reforms must be accompanied by the necessary reform of the welfare state. We must give the responsibility for pensions, health care, and education back to civil society by permitting those who so desire to outsource their benefits to the private sector via the corresponding tax deduction.
Therefore, the most appropriate economic-policy approach or road map for dealing with a pandemic and, especially, recovering from one is quite clear. Some of its essential principles are widely known, and others are an "open secret," especially to all of those who fall into the trap of fueling populist demagogy by creating false and unattainable expectations among a population as frightened and disoriented as one would expect during a pandemic [1].

Depletion of the Extremely Lax Monetary Policy in the Years Prior to the Pandemic
Let us now focus on the current COVID-19 pandemic, which we have been analyzing and using as our main example in this paper. We could highlight a very significant peculiarity which conditions and impacts the future economic evolution of the pandemic more negatively than would be necessary. In fact, this pandemic emerged and spread throughout the world beginning in 2020 in a context in which central banks worldwide  policy, since the latter produces apparent expansionary effects only when just a few sectors, companies, and economic agents initially receive the new money, which is accompanied by all of the collateral effects of an increase in inequality in the distribution of income in favor of a small group (as it was mentioned before, this group in connection with the effects of quantitative-easing policies as a determining factor in the enrichment of actors in financial markets). In any case, it is certain that, sooner or later, and to the extent that it is not sterilized by private banks 3 and unmotivated entrepreneurial sectors, the new money will end up reaching the pockets of consumers and generating inflationary pressures, as the Hume effect of an inexorable loss in the purchasing power of the monetary unit appears. And this effect will become increasingly obvious as the initial uncertainty of households is gradually overcome and their members no longer feel the need to maintain such high cash balances or they are simply obliged to spend the money they receive in the form of subsidies to subsist while they are unemployed and unable to produce. At any rate, everything points in the same direction: A growing monetary demand on a production which has declined due to the pandemic leads inevitably to an increasing upward pressure on prices [15]. For instance, the price of agricultural products has continued to rise and has reached its highest point in three years. Freight charges and the prices of many other raw materials (minerals, oil, natural gas, etc.) have also soared, even to record highs.

Central Banks Have Gone Down a Blind Alley
The first thoughts could not be more obvious. Central banks have truly gone down a blind alley. If they make a forward escape and even further advance their policy of monetary expansion and monetization of an ever-increasing public deficit, they run the risk of provoking a grave crisis of public debt and inflation. But if, in fear of moving from a scenario of "Japanization" [12] prior to the pandemic to one of near "Venezuelization" after it, they halt their ultra-lax monetary policy, then the overvaluation of public-debt markets will immediately become clear, and a serious financial crisis and economic recession will follow and will be as painful as it is healthy in the medium and long term.
In fact, as the "theorem of the impossibility of socialism" shows, central banks (true financial central-planning agencies) cannot possibly correctly determine the most suitable monetary policy at all times.
It is very enlightening, in the extremely difficult situation we now obviously find ourselves in, to pay attention to the reactions and recommendations which are ever more anxiously and restlessly (even it would say "hysterically" [1]) coming from investors, "experts", pundits, and even the most renowned economic and monetary authorities.
For instance, new articles and commentaries appearing continually (particularly in salmon-colored newspapers, starting with the Financial Times) invariably tend to reassure markets and send the message that zero (and even negative) interest rates are here to stay for many years to come, because central banks will not deviate from their ultra-lax 3 The relationship between monetary authorities and private banks is "schizophrenic": Monetary authorities flood private banks with liquidity to lend out but constantly threaten to increase their capital requirements and to very closely monitor their choice of borrowers. than of true economic theorists; this theory is wreaking havoc among our economic and monetary authorities [17,18]. Now we come to the last of the "bright ideas", one that is becoming increasingly popular: the cancellation of the public debt purchased by central banks (which, as we have seen, already amounts to nearly one third of the total).
First of all, the growing number joining the chorus in favor of this cancellation clearly give themselves away, for if, as they affirm, central banks will always repurchase at a zero interest rate the debt issued to meet maturities as they come due, no cancellation will be necessary. The mere fact that people are requesting it precisely now reveals their anxiety at the increasing signs of a rise in inflation and their accompanying fear that fixed-income markets will collapse and interest rates will go back up. Under such circumstances, they consider it crucial that the pressure on wasteful governments be reduced by a cancellation which would amount to a remission of nearly one third of the total debt issued by those governments. Such a cancellation, it is felt, would be detrimental only to an institution as abstract and removed from most of the public as is the central bank. But things are not as straightforward as they seem. If a cancellation like the one now being requested were carried out, the following would become obvious: First, central bankers have limited themselves to creating money and injecting it into the system through financial markets, thus making a few people exorbitantly rich without achieving any significant, real, longterm effects (besides the artificial reduction in interest rates and the simultaneous destruction of the efficient allocation of productive resources). 5 Second, the popular outcry against this policy would be so great were this cancellation to occur that central banks would lose not only all credibility, 6 but also the possibility of pursuing in the future their open-market-purchase policies (quantitative easing). Under these circumstances, central bankers would be obliged to confine themselves to giving money injections directly to citizens (Friedman's "helicopter money" [13]). These would be the only "equitable" injections from the standpoint of their effects on income distribution, but since they would lack any real expansionary effects observable in the short term, they would mean the definitive end of central banks' capacity to influence economies noticeably in the future via monetary policy.
In this context, the only sensible recommendation that can be given to investors is that they sell all their fixed-income positions as soon as possible, since we do not know how much longer central banks will go on artificially keeping the prices of these securities more exorbitant than they have ever been in history. In fact, there is more than sufficient evidence that the most alert investors, like hedge funds and others, by the use of derivatives and other sophisticated techniques, are already betting on the collapse of fixedincome markets, while, officially, they continue to leak reassuring messages and recommendations to the press through the most prestigious commentators. 7 This should come as no surprise, since they wish to get out of the debt markets without being noticed and at the highest price possible.

The "Pièce de Résistance" of Public Spending
The last recipe offered, in this review, as essential for overcoming the crisis caused by the pandemic and returning to normalcy: Forget about putting the public accounts on a sound footing or trimming unproductive public spending from them. Forget about reducing tax pressure or lightening the burden of bureaucracy and regulation for entrepreneurs so they recover confidence and embark on new investments. Forget about all of that; the exact opposite is called for: We must rely on fiscal policy as much as possible and increase public spending even further -disproportionately -although, we are told, priority should be given to investments in the environment, digitalization, and infrastructure. But this new death throe of fiscal policy is procyclical and disturbingly counterproductive. For instance, by this summer (2021), when the "manna" of 140 billion euros provided to Spain by the European Union on a non-reimbursable basis begins to arrive (of a total program of 750 billion organized by EU authorities and expandable to 1.85 trillion in loans), it is more than probable that the economies of both Spain and the other EU countries will already be recovering on their own [19,20]. Hence, these funds will absorb and divert scarce resources essential to the ability of the private sector to initiate and complete the necessary investment projects which, because they are truly profitable, can, by themselves and without public aid, generate a high volume of sustainable employment in the short, medium, and long term. Such jobs differ strikingly from the bank, to keep it from becoming the owner of a significant portion of the real economy when, as it was suggest, the debt is exchanged for the banking assets which now offset demand deposits. invariably precarious work which depends on political decisions that lead to consumptive public spending, even if on grandiose environmental and digital "transition" projects. And we need not even mention the inherent inefficiency of the public sector when it comes to directing resources received and the inevitable politicization of their distribution, which is always highly vulnerable to those seeking the benefits and maintenance of the political spoils system. We all remember, for instance, the abysmal failure of "Plan E," which involved the injection of public spending and was promoted by Zapatero's socialist administration to cope with the Great Recession of 2008 [21,22]. We also remember the unfortunate failure of Japan's fiscal policy of large increases in public spending, which has had no other noticeable effect than to make Japan the most indebted country in the World.
In short, history repeats itself again and again. Economy. In this way, Prof. Huerta de Soto always has defended the necessity to come back to a gold standard for a healthy financial and monetary system, and also a full version of Peel Act (Bank Charter Act of 1844), extending for banking deposits and other financial and monetary instruments (with 100% fractional reserve banking) [11]. In this review, we want to pay attention to other point more, which helps to promote a sustainable system: independent deposit insurance.

Proposal of paradigm review for a sustainable model
Under the current system, the banks are allowed (also encouraged) to lend or/and invest most of the money deposited with them instead of safe-keeping the full amounts (with a low fractional reserve banking, e.g. in Europe the reserve requirement is just 1%, as minimum amount to keep from bank-deposits  [25], also it is necessary to rethink the banking system in favor to the financial freedom of the people, than the safety of the banks (to control the past bank-runs). Also it could be time to talk seriously about the State-Bank wall of separation in a post-COVID-19 World.

Conclusions
Traditionally of it all -that is, in spite of governments and central banks, a few years from now the COVID-19 pandemic will merely be a sad historical memory that will soon be forgotten by future generations, just as no one remembered the "Spanish flu" of a century ago and the far greater toll it took on the economy and the health of the population. Now, like then, we will get through thanks to our individual and collective effort in striving to creatively get our life projects off the ground in the small areas which, in spite of everything, remain open for free enterprise and the uncontrolled market.
Definitively, as it was said in this review, it is time to rethink the sustainability of the financial and monetary system: the solution is not a biggest intervention for further control of the system (making it more rigid) and the socialization of the cost; it is necessary to adapt the system to the wellbeing economics formulas (aimed at improving pleople´s financial autonomy and satisfaction, instead of protecting bank from their unjustifed risks and the continous moral hazard).
Funding: This research received no external funding.