Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. On the Highway To Hell

Politics / US Politics Aug 28, 2012 - 02:19 AM GMT

By: Chris_Kitze

Politics

Best Financial Markets Analysis ArticleMonty Perlerin / EconomicNoise.com

The Role of The Government in The Economic Crisis

At this point, everything the government is doing – and not just the US government but governments everywhere − is not only the wrong thing but exactly the opposite of the right thing. They’re passing more laws, raising taxes, creating more currency and incurring more debt. They should be doing the opposite. We’re currently still in the eye of the storm. Their actions guarantee that when we go back into the hurricane − the trailing edge of the hurricane − it’s going to be much worse and will last much longer than what we saw in 2007 to 2009. Doug Casey


How nice it would be to argue that Mr. Casey is wrong. No matter how much I wish he were, that is unlikely. We are in for very tough times ahead.

Recently I wrote about the insolvency of the federal government and its upcoming default. Mathematically, it is impossible for government to meet its obligations. There simply is not enough income or wealth for it to confiscate. It cannot satisfy the spending path it is on and the promises made.

Cutting spending is a political non-starter. As Mr. Casey argues it is politically impossible:

… just as in Greece, or most of the EU for that matter, most US government spending is on entitlements and welfare programs of various types − mainly Social Security, Medicare, Medicaid, so-called Income Security and pensions. Those things are politically and legally impossible to cut; in fact, they’ll grow. Most of the rest of spending is on so-called “defense,” which alone is 25 percent of the budget. As much as Americans love their military, that’s not going to be cut; in fact, the Republicans, idiotically and unbelievably, want to increase it. The other functions of government − the police, justice and regulatory agencies − are really just a tiny portion of government spending.

Impossible might be a bit strong. There will be talk of cutting spending, but it will be token in nature. No politician can afford to truly cut spending. Even Paul Ryan’s “draconian” budget had debt growing over the next ten years.

The Ebbing Away of Freedom

The Constitution, the document upon which this country was founded and upon which it rose to greatness, is for practical purposes nothing more than a historical artifact. It is now a quaint part of our history. Unfortunately, it provides little constraint on government these days. To the extent that it has remaining significance, it is usually considered an unnecessary barrier, impeding government from what it wants/needs to do, at least in the eyes of the ruling class. The Constitution is mostly ignored with claims that it is no longer relevant to our “complex” world. As Casey put it:

Any part of the Constitution that deals with maintaining liberty for the individual against the state − which is to say the important parts of the document, the parts that made it unique − are now meaningless. In fact, anyone who quotes the Constitution now runs the risk of being jailed, in the interest of “national security,” as a subversive, a dangerous anti-government radical or perhaps sent to an institution for psychiatric procedures.

What has not changed over time is human nature. The Founders and the document they presented recognized man’s insatiable desire for power and willingness to abuse it. George Kennan described it thusly:

The fact of the matter is that there is a little bit of the totalitarian buried somewhere, way down deep, in each and every one of us. It is only the cheerful light of confidence and security which keeps this evil genius down. . . . If confidence and security were to disappear, don’t think that he would not be waiting to take their place.

The State Unchained

John Adams

Addressing this problem and preventing it from corrupting the political class was the primary focus of the Constitution. Now the Constitution is considered outdated because it does not allow for an all-powerful State. Arbitrary power is what John Adams feared:

Nip the shoots of arbitrary power in the bud, is the only maxim which can ever preserve the liberties of any people. When the people give way, their deceivers, betrayers, and destroyers press upon them so fast, that there is no resisting afterwards. The nature of the encroachment upon the American constitution is such, as to grow every day more and more encroaching. Like a cancer, it eats faster and faster every hour. The revenue creates pensioners, and the pensioners urge for more revenue. The people grow less steady, spirited, and virtuous, the seekers more numerous and more corrupt, and every day increases the circles of their dependents and expectants, until virtue, integrity, public spirit, simplicity, and frugality, become the objects of ridicule and scorn, and vanity, luxury, foppery, selfishness, meanness, and downright venality swallow up the whole society.

The deterioration in our governmental educational system has dumbed-down the electorate. Most have little sense of history or understand the issues of the day. The capacity of the average voter appears to be limited to voicing opinions on who will win American Idol or Dancing With The Stars.

Government has created dependency as a means to increase power and attract votes. There is little hope that the US can return to its Constitutional moorings through the normal political process. The number of dependents almost outnumbers the producers, ensuring that they vote for whomever promises them the greater gifts. Furthermore, dependents now believe they are entitled to live off government largess.

The reality is that no one lives off government. Government lives off the productive class and re-distributes a portion of what is confiscated to dependents in exchange for their votes. ”Vote for me and this is what I will give you” has become the slogan of both parties, although the Democrats have used it more effectively.

No Political Solution Possible

There is no political solution possible to the spending problem because any attempt to cut programs is equivalent to committing political suicide. The current spending path, nevertheless is unsustainable. So, how does it end? It ends as most failed countries end, in a dictatorship accompanied by martial law. The government will eventually run out of money. Markets will do the job politicians are unwilling to do. They will cut off government funding via a bond market rebellion and an economic collapse.

At this point chaos and civil unrest likely break out and a dictator arises to “rescue” the people from their difficult situation. The political class will be only too happy to accommodate, although there will be contention over which party and who ascends to the role of supreme leader.

Regarding the coming election, it does not matter much in the larger scheme of things. If Romney defeats Obama, there will not be much change. Perhaps the rate of decline slows temporarily, but not enough to avoid the ultimate outcome. Sadly, our political system has not offered the possibility of change for years. Just review the last five or so presidential elections. Does anyone believe that either party put up a truly qualified candidate?

Mr. Casey bluntly describes the situation:

… if you vote the bums out you are just going to get a new set of bums. What kind of people do you think want to be politicians? Primarily sociopaths. The elections are a ridiculous charade performed every four years. People imagine that if you vote for Tweedledum, that he will somehow be an improvement over Tweedledee. There is vanishing little difference between the left wing of the Republicrat Party and the right wing of the Demopublican Party; they’re really the same thing. They are both philosophical statists and collectivists.

Even if, by some miracle, a non-sociopath were elected and set about to change the course of the country, he would be removed from office either by voters or Congress. Neither will allow the drastic change necessary to alter the bankruptcy of government or the collapse of the economy. Politicians are like whores, willing to perform whatever trick the voter wants. Few politicians have either courage or integrity. Even for those who do, they will be overruled by their brethren.

So how does this end? Benjamin Franklin foresaw what would happen long, long ago:

… I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, and can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other.

I suspect the run of the US exceeded Mr. Franklin’s expectations. Once we dropped the notion of a Republic and began to act as a democracy, we were lost. John Adams commented on this outcome:

Democracy… while it lasts is more bloody than either [aristocracy or monarchy]. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.

What Happens

Something, either a major war or a collapse of the economy, will occur that triggers chaos. The former likely ensures the latter, and the latter is likely the catalyst for dictatorship. When sovereign bankruptcy occurs, people will riot when they don’t receive their government checks. Stores will be looted and lives will be lost. It is this environment which will enable, in Hayek’s terms, the worst to reach the top.

Martial law and the suspension of whatever remains of Constitutional law, the Rule of Law and normal liberties will be ordered to “save” the country. The economy will cease to function. The military will be deployed to keep law and order and, likely, to deliver food and other necessities. At a minimum the military will be called out to protect whatever remains of our economic delivery system.

A sovereign bankruptcy means that there is no more money to pay out by government. Initially, the political class will try to keep things going by printing money. If so, matters will be made worse. The Depression will be preceded or accompanied by hyperinflation which will destroy the wealth and savings of the middle class, rather like Weimar Germany.

Presumably, these conditions may jolt enough people to their senses. But by this time, it will be too late because elections will have been suspended as a result of the “national emergency.”

That is the path we are on. The outcome of this next election may alter marginally the rate at which we decline, but not the ultimate destination. Sadly, I see nothing that will change our outcome.

http://www.economicnoise.com

http://beforeitsnews.com/....

By Chris Kitze

A long career in digital media led to Before It's News, the People Powered News site that is quickly becoming a leading source for alternative news. We've got a great team of very bright and hardworking people with an incredible market opportunity that's been handed to us by a corrupt media and government. We're here to help you get your news out, that's why this site exists.

© 2011 Copyright  Chris Kitze - Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in