Collectivism and Currency Debasement: There’s Always a Silver Lining
Mar 11th, 2009 | By Whiskey Contributor | Category: Featured, Macro Economics, Politics
Here at Casey Research, we are trying not to be overly pessimistic, but there’s no denying the mass of bad news coming to us from all fronts: the forces of collectivism are using the cover of the crisis they largely created, aided and abetted by capitalism’s quislings, to roll over the individual.
Even so, contained within the dire reportage is also some very good news for you personally.
The Bad News
As fully anticipated, with its first budget plan, the Obama administration has fired a salvo into the side of the productive classes. (For those of you who are not U.S. citizens, feel free to use Team Obama as a proxy for what is likely to occur where you reside.)
Yes, we expected the $1.75 trillion budget deficit, which will, by the time all is said and done, come in a lot closer to the $2.5 trillion number anticipated some months ago by our Chief Economist Bud Conrad.
Yes, we expected the government to begin raising taxes, which they are proposing to do with vigor – starting with an increase of $1.4 trillion on the people who earn in excess of $250,000 a year. “Right on!” shouts the mob, on the way out the door to burn Porsches (which, Bloomberg reports, is now becoming something of a trend in Germany’s capital, Berlin).
For no other purpose than to keep the record straight, it’s worth noting that thanks to the government’s steady dose of inflation, $250,000 today will only buy you 77% of what it would have in 1998… and 56% of what it would have in 1988.
A decade from now, given the inflation rate we expect, the dollar’s purchasing power will erode by another 50%, and probably a lot more than that. In fact, at the current rate of money creation, by the time the dust settles, $250,000 might be the annual wage commanded by burger flippers.
But, hey, look at the bright side, at that point everyone will be rich!
The further details of Obama’s budget plan are a hodgepodge of this and that, some of which we even agree with (like cutting business subsidies). On the whole, however, the overarching mandate appears to be to thrust the hand of government, like some motion picture kung fu villain, deep into the heart of American enterprise.
And government’s expansion is far from over. The news continues to pour in…
- Citigroup to get another $25 billion bailout from the U.S. Treasury.
- Treasury officials work on bailout plan for auto parts manufacturers.
- President Obama exploring automatic workplace pensions and an expansion of unemployment insurance.
- AIG, now a government lap puppy, takes another big loss, and is again looking to its master for another handout.
- Speaking of lap puppies, Fannie Mae, has lost another $25 billion and is looking for $15 billion more from the Treasury. The value of this zombie institution’s net assets is now a negative $105 billion, and eroding. Great investment of your tax dollars, eh?
- Then there’s the new administration’s cap-and-trade green tax… a stunning new initiative that will bring many U.S. businesses to their knees.
There is more, so much more, including a $638 billion reserve fund for healthcare reform in the president’s budget that loudly broadcasts that, “Yes, we’re going there.” There being nationalized health care.
However, there’s also some good news to be found in the way things will be.
The Good News
My fellow citizens of planet Earth, it is now abundantly clear that the trend toward socialism in all its many disguises is about to, once again, shift into high gear.
We’ve been here before, encouraged by the words of Karl Marx, a distinctly unsuccessful individual (to read his life story is to read of almost unending misery, poverty, and discontent) but a decidedly successful phrase-coiner, knocking the world off its axis with his “From each according to his ability, to each according to his need.”
While no one with any real sense of history, not to mention economics, can take any overt joy at the prospect of the dark clouds of collectivism looming high in the sky above us, there is, if you pay close attention, a very big opportunity in all of this.
Namely, we are now presented with a relatively rare chance to see with some clarity into the future.
Imagine if eight years from now you could step into a time machine and zip right back to this very moment. How much money do you think you could make?
Well, just because the chattering masses have the blinders on as they march forward to their collective penury doesn’t mean we need to join them. And, if we are even a little bit careful, we won’t.
So, what is it about the future we can now see? Some broad strokes…
- Currency depreciation.
- More taxes.
- Rising interest rates.
- A price capitulation in real estate, with a collapse in commercial.
- Exchange controls (now that Team Obama is raising your taxes, you don’t really think they’re going to let you pick up your wealth and leave, do you? The window for global diversification will soon be closing.)
- The return of mega-labor unions.
- Trade wars, shooting wars, and other forms of heightened geopolitical tension.
(This is a topic we are discussing at greater length, backed up with specific recommendations, in the March edition of The Casey Report, released on March 3. Among its many highlights, Doug Casey has contributed an article titled “Street Fighting Man” about the prospects for social unrest.)
Provided you keep your personal wealth profile low (there was a reason Sam Walton, founder of Walmart, drove a beat-up pickup truck), your financial powder dry, and, maybe most important of all, retain your sense of humor, the opportunities in the unfolding crisis will be abundant.
Whatever you do, don’t be complacent about what’s coming.
We are long past the point where doing nothing is an option. Review your personal finances, cut out unnecessary expenses, talk to your accountant about tax planning, and, if you’re a U.S. citizen, consider moving at least some of your wealth out of the country while you still can (but please, don’t try to hide it… that’s a fool’s errand). If you own gold, only you and your spouse, if you have one, should be aware of it.
Ask yourself, “If I just dropped in from eight years in the future, what measures would I take?”
Now, take them.
Regards,
David Galland
Managing Editor, The Casey Report
March 11, 2009
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Propping up failing big businesses and banks…redistributing wealth…inflating the currency…
One day we’ll all look back on this and la-a-augh…
A Shooter writes: “Come on guys! If the socialist leader you’re referring to is Obama, you’re behind the curve. He took great pains to deny to a journalist that he was a socialist. I have to agree he’s not a socialist; he’s been trained by communists.”
Duly noted.
“Gary,
“Not all Canadians dream of ‘evolving into full human potential.’ Although I am a proud Canuck, I can tell you that socialism is a tax on creativity and innovation. The justification for socialism is what makes it so appealing — ‘educate the children!’ ‘Healthcare for all!’ These sound noble and wonderful, and they can be, providing that people use them responsibly. I got a great education in Canada. Having said that, I went to school with people who were making a career out of being students. Hey, it’s cheap, so why start working? One of the guys I went to university with worked salmon fishing in British Columbia in the summer, and then went on unemployment while he went to university (salmon season’s over — he was unemployed).
“So personally, I think that socialism is great if you have people that appreciate it and use it to better themselves, but unfortunately those people are few and far between — you get way more people that feel that they are entitled to those benefits. Although having to endure American arrogance could be very painful (a lot of them came up to Calgary for the Stampede every year), I do agree that having the liberty to keep your own money, make your own choices, and succeed or fail on your own merits is vastly preferable to having someone else decide those things for you. If I wanted a parent, I’d move back in with mine.”
Socialism does indeed work great for angels. Not so good for humans. The humans that would benefit are the same ones who’d refuse it. Oh the irony…
“Gary,
“Your response to the Canadian writer today on her impression looking south onto the devastation was off the mark. I’m an American living in Germany — another one of the misguided ‘socialist’ countries. I don’t understand what you and your fellow rednecks are afraid of. I’m stress-free knowing my family will have full healthcare no matter what. Your disciples will reply with the obligatory whining about poor quality of healthcare and unbearable waiting for treatment and in your vacuum of knowledge and experience, you will be wrong. I say wallow in your ignorance while the world looks on and marks your shameful embrace of a failed governmental system with a victimized populace. Don’t fear good intentions — I know you don’t believe [they] always give the worst results.”
Actually, yes. Yes, I do. Another Shooter presciently comes to my aid…
“‘Too bad you were born with the dreaded Conservative gene. But soon modern medicine will be able to block it. Then you may be free to evolve into the full potential that human beings are capable of.’
“Whiskey & Gunpowder, Mar 10, 2009
“I generally ignore any comments liberals make but I’ll make an exception here.
“Liberals, like this one, typically use ad hominem attacks because they cannot defeat conservatives in logical, fact-based debates. Their brain has been marinated too long in socialist juices for them to imagine that some of us actually prefer taking charge of our lives and resent the government ruining them. We are not constrained by socialist dogma to behave in certain ways and think in certain ways. We can analyze global warming based on scientific evidence because we are not ideologically committed to it because our elders tell us to be.
“We don’t subscribe to a creed which demands to be taken care of. I submit that we are far more likely to achieve our human potential than are the socialists. They have surrendered their potential to become slaves to a dogma which has been proven a failure many times over.
“Maybe socialists don’t mind paying 40% of their wages in taxes so they can ‘socialize’ while they wait in emergency rooms and clinics for treatment. I do mind, paying the 40% and the long wait! That’s why I’m a free man, not a deluded acolyte. I like people who think for themselves and tell the government to go to hell.
“Finally, it is the height of arrogance and conceit to believe that another human being, mortal and flawed like everyone else, can dictate to another their idea of utopia. Their utopia is my prison.
“Liberalism is a form of insanity for which there is no cure. It is easier for a gay person to go straight than for a liberal to regain his self, a self surrendered long ago to indoctrination and propaganda.”
Might as well try to thread a needle with a camel, huh?
Personally, I could care less what other people do or believe, but when they insist that I do as they say (usually for the sake of some great lie), then we have a problem.
The Whiskey Room is figuratively covered in fantastic responses this week, much of which make it clear that there are some very good thinkers out there with a knack for writing.
You people really impress me. I am proud to be your editor. You’re a bunch of liberty-lovers, obsessed with limited-to-no government and sound money…and you’re not afraid to say what’s on your mind. There aren’t enough of you in the world and you need to be heard.
So your Whiskey Room editors have decided to start accepting submissions to be featured a few times a week on the website. We’ll be running these short (300-800 words) articles in the mornings ahead of our regular guest editors. Think of them as “starting shots” …served by you. So please e-mail your submissions to gary@whiskeyandgunpowder.com.
Looking forward to hearing from you.
Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder
I dont think we are on the socialist train yet. This is still America and I doubt liberals can take it over for any extended period of time. Once the economy turns around, the liberal extremism will die down.
Okay, here’s where Mom-Mom has smoke coming out of her ears. In my immediate family, alone, I am the daughter, widow, daughter-in-law, sister, aunt, cousin, and niece of career military officers. Never mind my forebears goin’ back befoah th’ War of Northern Aggression in this country alone.
It could be that the poster who is living in Germany is a civilian, but if we’re talking about all the magnificent promises the Army made my husband about “free” medical care for life and other wondrous things for himself and for me, all I can say is “Put not your trust in princes.”
I haven’t set foot in a military hospital in nearly twenty years. Why should I? They have charged patients’ private insurance for close to two decades, and while the care can be superb, it isn’t always, and the time spent waiting for treatment can spread to weeks. I quit when I needed a standard GYN visit, and was told that I could have an appointment to call for an appointment six weeks later, at which point it would be on the order of two months before I got in. I thanked the lady politely and called a private clinic. I saw the doctor that week at the same cost.
A grateful government cut my tiny Army pension 40% on my 63rd birthday, telling me that it was by Act of Congress. Anything the government can give you, it can take away, and frequently does. No country has ever remained, far less become, great by relying on the State from cradle to grave.
The most offensive part of the proposed government grab of medical care is that WE will be denied the right to seek medical assistance we are willing to pay for, and doctors will be forbidden to provide it. It wouldn’t be “fair,” you see, for some of us to have something that others cannot pay for.
I’m in remarkable health for my age, since my only woe is a low thyroid, but where does the government come up with telling us that we will just have to learn to live with the aches, pains, and problems of growing older because it costs too much to provide treatment, and then make it impossible to procure treatment legally? Is that under the “promoting the general welfare” clause, or is it part of the pursuit of happiness?
MY idea of the only happiness I haven’t got would be for the government to leave us alone and keep their hands out of our checkbooks.
Calm down, Linda. Think serene, beautiful thoughts. Tell the nice people about what the goats did today, in the hopes that it will calm their livers, too. Thunder, my prized buck, climbed triumphantly up the wood pile on a porch today…and managed to nibble the screen out of a door within his reach! “Look, Maaaah! It comes out!” Samson, AKA the Juvenile Delinquent, was sharpening his horns on the grill of another door nearby, and munching thoughtfully on the wooden trim around it. We all have our ideas of fun. Those are the goats’ and ours is bellying up to the bar to swap yarns and tidbits of rare philosophical truth. As Toby Keith “sangs,” “Ah luv this bar.”
Nice job, Canuck.
Gary, who wrote the splendid piece including ad hominem attack and deluded acolyte? Everybody likes a nice attaboy, so please provide monikers so that we can shout “Huzzah!”