Leave it to the Greeks to expose American liberals and the road to statism they continue to take our nation.

Over the past 20 years, how many times have we heard European statists extolling the virtues and benefits of the socialistic welfare state? Europeans have proven that socialism works, the statists have repeatedly claimed over the years. Just look at how successful all that free government dole has proven to be in Europe.

And then there is Greece, which everyone is conceding is only the first socialist European domino that is set to fall. Notice that there’s no talk about how deregulation, free enterprise, free markets, the bankers, the speculators, profiteers, or greedy people are responsible for the Greek debacle. Everyone concedes that the core of the problem is debt, massive amounts of debt that the Greek government has incurred to fund the ever-growing demands of the parasitic class, that is, those Greek people who are on the government dole.

Let’s go back to economic basics. The only way that government gets its money is through taxes and borrowing. If it borrows, the way it pays back its debt is by taxing people and then using the tax revenues to pay off the debt.

So, government is not like a private business, which creates wealth by producing goods and services that other people are willing to pay for. Instead, government confiscates wealth that is being produced by private entities in the marketplace.

Thus, a welfare state is based on the notion that the government should seize money from people who have produced it in the marketplace and give it to people who have not produced it.

Not surprisingly, given human propensities, over time the number of people who are seeking to go on the dole increases while the will of public officials to tax people diminishes. Giving out the dole to more people is fun but collecting the taxes to fund the dole is not so much fun because people tend to get angry over that sort of thing.

So, to fund their welfare state Greek public officials just began doing what U.S. public officials have been doing to fund their welfare-warfare state. They embarked on a massive borrowing spree, borrowing ever-increasing sums of money. Needless to say, Greek statists said the same thing that their counterparts here in the United States say about the national debt — that it’s no big deal because “we owe it to ourselves.”

But as the Greeks are discovering, it is a big deal precisely because “we don’t owe it to ourselves.” One group of people — the bondholders —are owed money by the government. And the only way the government can pay off the bondholders is by taxing another group of people — those in the private sector who have wealth.

The Greek welfare-state debt has grown so large that investors no longer want to invest in Greek bonds. Investors fear a default, meaning that the Greek government would not pay back its creditors in full. Why invest in debt instruments if you are confident the debtor isn’t going to pay you back?

There is an obvious solution: dismantle the welfare state and the massive spending and borrowing it requires. But that’s anathema to statists everywhere, including Greece. Meanwhile, Greece’s dole recipients are on the rampage, refusing to accept even modest reductions in their dole. Moreover, to pay off the massive amounts of accumulated debt will require the imposition of massive taxes on those Greeks who have money, thereby causing even greater economic burden on the country.

What to do?

Not surprisingly, every proposal involves keeping the welfare state in existence. What the Greeks are proposing is that German and American taxpayers (through the IMF) help them out with foreign taxpayer money. But even if that works, lurking in the background are more welfare-state dominoes, such as Portugal and Spain. Who’s going to bail them out? And who is going to bail out the bailors, such as Germany and the United States?

So, what are American liberals proposing? They’re proposing what they’ve done for decades here in the United States: Inflation! Consider, for example, the following two articles: Bold Stroke May Be Beyond Europe’s Means and The Greek Crisis by Dean Baker. The first one is a New York Times news article and the second one is a commentary on the liberal website Counterpunch.org. Both articles lament the fact that the Greeks lack the means to do what American statists have done for the past several decades — pay off government debt by inflating the currency.

The following is the essence of their argument: government has incurred massive amounts of debt to fund its welfare-state programs and lacks the financial means to pay off its debts. So, why not simply have the central bank (i.e., the Federal Reserve or the European central bank) simply print up the money and use it to pay off the debts? Voila! Problem solved!

So, why can’t the Greeks do that? Because they’re part of the Euro zone, which the Germans control. Germans have traditionally been ardent opponents of inflation, especially given their horrendous experience with hyperinflation after World War I. Thus, the German mark, which preceded the Euro, was always much more solid and sound than other European currencies. When Germany agreed to surrender the mark for the Euro, the last thing that Germany was going to do was accept a weak currency in place of the mark.

But American liberals think that such a sound-money policy is ridiculous. Baker himself chides a German official for saying, “Inflation never solves anything.”

Harkening to the standard Keynesian notions that American students are subjected to all across the land, Baker’s ideal would be for the Greek government to inflate at least part of that debt out of existence. It would revitalize the economy, he says. I wonder if he’s heard of Zimbabwe.

But wait a minute! Does that mean that there are no costs to inflation? Is it “free,” just like all the other benefits of the welfare state?

Alas, Baker doesn’t talk about the costs, perhaps because the consequences of inflation have historically fallen most heavily on the poor, the sector in society that liberals claim to love and be concerned about. For example, people on fixed incomes and low incomes. They’re the ones whose incomes are devastated by the ever-increasing prices that inflation produces.

Inflation is nothing more than a tax, but the reason that statists love it is because they know that the poor and ignorant won’t figure out that it’s a tax on them. They’ll inevitably blame rising prices on big business, free enterprise, private owners, free enterprise, greed, OPEC, service stations, speculators, bankers, capitalists, and maybe even illegal aliens.

Moreover, liberals simply block out of their minds that inflation is just another form of legalized welfare-state stealing. By intentionally paying off creditors with debased money, the government plunders and loots people who lend money in order to help out the entities, including the government, to whom they lent the money. Where is the morality and justice in that?

Inflation is just part and parcel of the big fraud and scam known as the welfare state, a way of life that is bankrupt in every sense of the word — morally, financially, and economically.

And that’s the road that American statists have taken us and continue to take us — the road to serfdom, the road to bankruptcy, the road to moral debauchery, the road to Greece, the road to the Roman Empire.

Jacob Hornberger is founder and president of The Future of Freedom Foundation.