Sometimes it takes a while to get the big picture, to see things coming into focus. Now, I am not much for conspiracy theories, but if anything looks like it is being driven by design, this is one. The theories driving it were formulated many lifetimes ago. The people whose sick minds spawned them are long dead. For the life of me I do not understand how any egomaniac could possibly get his jollies from a trend he might have started but maybe not even his great-grandson might see coming to fruition. But there it is, a hundred year timeline on several fronts.
Destruction of money
Confiscation of gold
Going off the gold standard
No longer reporting data on the money supply
Zero interest policy
America had long fought the idea of a central bank. We lost the fight when the progressives managed to push through the law that created the Federal Reserve, putting them, not Congress, in charge of minting our money and setting its value — in clear violation of one of the powers enumerated in the Constitution. The game, of course, is the manipulation of the money supply, theoretically in such as way as to keep the value of the dollar constant and allow the economy to grow at a healthy pace — in strict analogy with the blood supply in your body needing to increase as you grow from a baby to an adult.
But of course what sounds good in theory does not work out that way in practice, and when in a perfect storm of a number of economic calamities hit us in the form of the stock market crash in 1929, the Smoot-Hawley Tariff Act in 1930 and the great depression that came as the direct result, it was the perfect excuse for the fascists to confiscate gold from everybody, and to melt down gold and silver coins that were in circulation. Gee, do you think inflation started to heat up a bit as a result? Nah… perish the thought.
It took a “Republican,” Nixon, to finish that job. He simply took the dollar off the gold standard. This time no one can deny what happened soon afterwards — unprecedented runaway inflation. That was how America paid for the “guns AND butter” policies of LBJ, when he refused to pay as you go either for the war in Viet Nam or for his hugely expensive new social welfare program known as the Great Society.
Under Reagan or thereabouts, the government once again allowed common people to own gold. When the change in policy was announced, officials were embarrassed by the sudden drop in the relative value of the dollar and tried to defend themselves by insisting that gold is just another commodity, subject to the same fluctuations as pork or beans. Yea, sure; they have six thousand years of history on their side to prove them right…
Sometime in this time frame the Fed has simply declared that they will no longer publish their data on M1, the basic money supply. Remember, that was their job, to keep the money supply at a healthy level — but failed to do so and inflation was all too obviously out of control. So, good bureaucrats that they are, they decided to save themselves from continuing embarrassment and simply hid the data that measures the extent of their failure, And of course doing so also leaves them free to do whatever the hell they please.
And they do. When foreigners and others failed to buy up US government debt as fast as Obama insisted on issuing it, the Fed stepped in and declared a program of repeated “quantitative easing,” which sounds like they thought the economy was stagnant because there was not enough money in circulation (what? somebody is hoarding pretty pieces of paper?) but in fact they were and they ARE just creating “money” out of keystrokes on a computer keyboard to “pay” for Obama’s unconscionable spending.
At the same time the Fed is pursuing a “zero interest” policy. How this is supposed to stimulate the economy is anybody’s guess, because what it does is discourage saving, which means stopping capital formation; it discourages lending which means starving the producers of the money they need to borrow to invest in expansion and growth. What they seem to want to do is to leave us no choice but to spend, spend, spend. We are losing money if we save because the interest rates are so low, and we are losing money if we just sit on it because inflation is eroding its value — so we might as well spend it. But as we have seen over the past 4-6 years, irresponsible spending either by public or private entities does NOT lead to increased demand for goods to promote any kind of growth in the economy.
The net result of all this is that the value of the dollar today is about the same as a penny a hundred years ago, when gold and silver coins, and gold and silver certificates as the paper money, were the medium of exchange. This is easy to see from indicators such as the cost of goods and commodities; for example, the typical car cost 6 months pay then and so it does today — except the numbers are a hundred times larger. But at the rate the Fed is “printing” bogus money, you know that sooner or later we’ll be like the Weimar Republic or any other east European country after WW1 and WW2, or Zimbabwe after the destruction of Rhodesia, and we too will use bushelfuls of hundred billion trillion dollar bills to buy a loaf of bread.
Destruction of privacy
War on Mafia
War on drugs
War on terrorism
Along with The Fed, the progressives gave us the income tax; that is, the tool by which government bureaucrats delve into the minutest most private details of your life. You all filled out 1040s, I don’t need to tell you more.
The war on organized crime gave us the rule that cash transactions at the bank and at the car, boat, art and jewelry dealer must be reported to the IRS. Wise guys pay cash, you know…
The war on drugs gave police the power to “arrest” your property; and of course inanimate objects have no civil rights so there is no legal issue here, right? All they have to do is declare that your property is “ill-gotten gains” from or was used in the commission of illegal activities, such as theft, larceny or dealing in drugs and stolen goods, and they don’t have to prove that either you or your property are “guilty,” they just take it and sell it to benefit the department and its charities. Who can argue against money from bad people going to a good cause?
And of course the war on terror… Nothing more to say about that, except that, as you can see on any crime show on TV, government agents have unlimited real time access to all the records of your entire life — credit cards, bank and brokerage accounts, phone and cell phone calls, domestic or international. The feds have bullied the Swiss and others formerly famous for their bank privacy to open their books to the IRS.
What if anything is left? Is this something WITHOUT any economic impact? On what planet?
Destruction of real estate
Community Redevelopment Act
War on “redlining”
“Liberalization” of mortgage lending standards
So, you can own gold at the whim the government — can’t you just see Obama following in the footsteps of FDR?
So what is left? Well, real estate, of course, right? People have to live somewhere, there is only so much living space here on Earth, and the human population is still growing; how could you lose? Well, since 2006 we have seen how we could and did lose.
This story starts in the days of “malaise” in the Carter years. That was his term for run-away double digit inflation, interest rates, unemployment rates, welfare costs, tax hikes, and no growth in the economy. They decided that it is not fair that only rich white folk can afford to buy a house and live in their own home. They decreed that this part of the American dream must be accessible to the poor. They threw out the existing, prudent, conservative mortgage lending standards that used to hold up what was once a robust savings and loan industry — 20-30% down, local job, local credit, local lender, local property — and ordered lenders to be more flexible. Nice theory and I approve of home ownership for all, as it tends to make people politically more conservative. Go for it.
When the statistics did not measure up to expectations — the lenders still wanted some measure of assurance that the buyer can afford to stay in his home — the government accused the lenders of discrimination, and under Clinton went on a war against “redlining,” the supposed practice of refusing to lend in run-down, crime infested and therefore high risk neighborhoods for purely racist reasons. The hook was that such neighborhoods are home to mostly black and other minority residents. Heavy fines were imposed administratively on lenders who failed to meet the quotas set by the bureaucrats.
So of course the lenders complied — by eventually repudiating all common sense and eliminating ALL lending standards. At the height of this madness, they did not verify incomes and credit ratings, they did not care about appraisals; they even lent 125% of the sale price, on the theory that the buyer needs money to move in and spruce up the place.
Do you think anything like this could possibly lead to a BUBBLE? Nah… Housing “values” were accelerating at double digit rates. Lenders saw no problem with their irresponsible loan standards because home prices were rising so fast. Anyone in trouble could sell out at a profit, or just walk away and the lender could “flip” the house before the next payment was due. (“Predatory” lending still makes the news, as if there were bankers running around holding a gun on people, “take my money or else.”)
Lenders who were too heavily invested in these mortgages sought to minimize or eliminate their risk by repackaging their mortgage portfolios as “mortgage backed securities” and reselling them to foreign and domestic investors, like shares in a mutual fund. How could you possibly lose on investing in American real estate, in a hot market? Well,… The bubble burst when someone in government let the cat out of the bag and squealed on live television. These securities contained a mix of good and bad loans, and, as was inevitable, eventually the bad loans were defaulting at a rate higher than the market could absorb. Uh oh. It evoked a lot of huffing and puffing and blaming everybody but the real culprit that started it all.
We all know how this story ended. Massive defaults. People just walking away. Entire neighborhoods of empty homes falling apart due to lack of maintenance and vandalism. Oversupply of homes for sale, lack of buyers, lack of money to lend. Home values still 1/3 to 1/2 below the peak. Massive unemployment. Local businesses and governments still struggling to stay solvent.
Destruction of entrepreneurship and incentives
The 20 rules for independent contractor status
The 50 employee limit
Conversion to part-time status
Unlimited unemployment benefits
So far the government has destroyed your money, property and privacy. What is left? How about your ability to earn a living, that’s what…
In the 1980’s Silicon Valley was the “last bastion of free enterprise” in America. It was the heartland, the happy playground of inventors and venture capitalist to help them fulfill their dreams. It was full of small start-ups and small businesses that have successfully made the transition from start-ups. It was home to armies of independent contractors who roamed freely from job to job that needed to be done, could be done and was best done on contract by an expert whose services were not needed on a long term, full time basis — free of the restraints of full time employment and the rapidly increasing regulations on employment.
Except that some contracts were long term and tended to be renewed. And so in 1987 the IRS, looking with jaundiced eyes at the juicy payroll deductions that eluded them, decided to put an end to all this and issued their infamous Twenty Rules, anyone of which instantly transformed you from contractor to employee. Except it did NOT. All it did was immediately put all contractors out of business, until the various industries sorted things out. But the damage was done and it was permanent. The little guy was starved out, herded into job shops with the rest of the temporary clerks and such. The bastion fell to the big guys with their political connections.
The other half of this picture is the fate of the start-ups and small businesses. The typical start-up was small, with head counts in the tens. If with any luck they survive and actually manage to grow, they hit a wall put in their way by a supposedly understanding and benevolent government. That wall is the 50 employee limit, below which businesses are immune from many laws, regulations and therefore a considerable financial burden — which hit with the full force and vengeance of the regulators once the business hires employee number 50 or 51 (I forget which). The government switches from a role resembling a helper and supporter to get you going, and becomes this insatiable leech that can’t wait to punish you for your success, to suck you dry once you have succeeded. So what do you think happens? Small businesses struggle mightily to stay under 50 because the quantum jump in expenses is too great. If you think this hurts growth, you are correct. If you think this keeps them from hiring people who, in the government’s view, need a job, you are correct. If you think they will try to finesse the 20 IRS rules on contractors, you are correct. And if you think they will even move overseas,… you are correct again. I’ve seen it too many times to count.
But now do you think they are done yet? Think again. No way no how not on this earth.
Look at all the stories about all the companies now responding to obamacare with… what else? reducing if they can their head counts to below 50, and reducing the hours of the employees who remain from full time to part time — simply and only because they don’t do enough business per capita to afford the exorbitant health insurance requirements imposed by obamacare as it is being phased in. How does THAT help the little guy whom the Democrats claim as their primary concern and motivation to impose some social justice? What a load of crap.
And just to make sure they take away all incentive to work, the great humanitarians are coming to your aid with extended unemployment benefits — payments NOT to work. And if you make it to the end of whatever eligibility period they decree, don’t worry, you will go on disability and you still won’t have to work. Isn’t your inability to find work by itself alone proof that you are disabled? I thought so. In the meantime, statistics show that as if by magic most people manage to find a job in the one or two weeks before their benefits run out — regardless of how long they were eligible to receive the payments.
Another example on the war on the incentive to work is the case, documented in the news recently, where a welfare recipient with the full range of benefits has more cash income than the net take home pay of someone making sixty or seventy thousand dollars at a real job.
Can you just hear Ronald Reagan delivering his favorite line, I am from the government and I am here to help…
And they are not done yet! While they were busy screwing up employment law, they were also messing around in key sectors of the economy, the foremost being energy. Just like you can’t run an economy without a universal means of exchange, that is, money, you also can’t run civilization itself without energy. And so it is inevitable that government would succumb to the irresistible temptation to meddle.
As big a mess that Enron was, the wrong guys went to jail. It was regulators that set the rules which Enron and others used in their schemes to make money from the temporary and localized shortages and surpluses in supply. But it is so much easier to blame those evil capitalists than to approve the construction of more refineries, electric power generation plants, transmission lines and pipelines. It is so much easier to deny increasing supply in the face of rising demand.
The Enron mess lead to massive revisions, called the Sarbanes-Oxley bill, that ‘reformed” well established and time honored accounting rules. This one piece of nonsense, followed by Dodd-Frank on the investment side, is directly responsible for start-ups failing to meet the ever changing and ever more severe rules, and thereby not being able to go public. Yea, that sure helps grow the economy and increase employment…
But the crown jewel of all this destructive interference by far is obamacare (on which I wrote a few articles in the category “obamacare”). Yes, it will increase employment — in the several hundred new alphabet-soup agencies it is creating. It may even further increase the federal head count when, as intended, it will destroy the very concept of a private health care industry — private hospitals, private clinics, doctors in private practice — as well as all shreds of a private insurance industry, and all these people will simply be civil service employees paying dues to the SEIU.
Unlimited future liabilities
Bail outs, stimuli, take-overs
Explosive growth in spending
Explosive growth in deficits
Explosive growth in debt
Are they done yet? ARE THEY DONE YET? Oh, sigh, there is more…
You still can’t destroy a country unless you also drown it in insurmountable debt. So we got, in the name of social and economic justice, of course, the New Deal a few generations ago. Using two clauses in the Constitution — interstate commerce and due process — FDR threw out every hint, every scrap of the concept of limited, enumerated powers, and gave us Social Security and the very same domestic programs that were imposed by Mussolini, Hitler and Stalin (and later, Mao and Castro) on their peoples. But THEY were totalitarian fascist dictatorships, and WE were the land of the free… Ah huh. Sell me swamp land in the ‘glades while you’re at it.
Of course Social Security only kept retirees alive but not well. So the great issue in the 1960s was the ruinously expensive medical care for the elderly. Tah-dah, here come LBJ and the Democrats with their Great Society — Medicare first and foremost among all the new programs. Social Security grew to include survivor benefits, supplemental security income, etc. Aide to Families with Dependent Children. Earned income tax credit — “refunds” to those who pay not a penny in taxes. School milk, school lunch, school breakfast, and soon, if advocates prevail, school dinner. The job of the school nurse grew to include primary health care and abortion facilitation services. Etc., etc., ad infinitum, ad nauseum.
Depending on whom you talk to or who compiles the statistics, either Social Security or Medicare alone have enough unfunded liabilities — commitment to current and future beneficiaries alive today — to bankrupt the next two or three generations. That is because the number of beneficiaries is increasing and the number of taxpayers is decreasing, in terms relative to each other; that is, fewer and fewer are supporting more and more. (See https://peter5427.wordpress.com/2013/01/09/social-security-what-lock-box/) Do you think that’s enough? There is still more…
Nobody ever explains why, but total government spending jumped dramatically under Obama, while the government’s collections stayed the same since Bush. Obama alone added 6 trillion to the national debt, and is projected to add a trillion more each year forevermore under the best of scenarios. The GDP is now smaller than the debt, and is well on its way to doubling in less than a generation. Sure, it sounds easy, just tax everybody at 100% for a couple of years and the debt is paid off; except for one tiny detail — people do have normal living expenses.
Destruction of debt
The trillion dollar coin
And so we come to the final, ultimate expression of the utter moral bankruptcy that has taken hold of our national leaders, especially on the Democrat side. With total flip glib arrogance, they are actually, seriously proposing the minting of a platinum coin and stamping it One Trillion Dollars (an ounce of platinum goes for about $1600 in 100 ounce lots).
What IDIOT could they sell it to, for one trillion dollars? Oh, I know. The Fed. I guess they still had not punched enough zeroes on their magical keyboard. It’s that easy in that magic kingdom known as Washington, DC.
What do you think the result will be? Even your sacred government bonds will be worthless; who’d be stupid enough to honor them? Who would EVER lend a penny to the government after such an obvious act of theft?
So, the government has destroyed your money, your property, your privacy, your incentive to work at a productive job, It has loaded you down with unbearable regulations and insurmountable debt. It has taken away your future and your children’s and grandchildren’s future.
How long, do you think, before Atlas WILL shrug, before ALL atlases will shrug? And when they do, what about the rest of us? Will we respond as Americans in 1776, or as the French in 1789? Do we still have a third choice — throwing the bums out in the next election or two?