Picture the hunter who is a poor shot. Picture the wounded deer, who has limped off into the woods to lick its wounds. The hunter goofed, and isn’t going to go home with the venison. The deer is mortally wounded, and is doing the best it can to survive. It can’t, but continues licking its wound, and actually drinking its own blood, in a feeble attempt to prolong life or cure the wound. Its brain tells it to do nothing else. I know, here we go again with these stupid analogies, but if you don’t like it, click on some graphs or charts, because my computer doesn’t do them, and I don’t watch them anyway. I am a basic kind of guy, and the wounded deer is a superb example of what’s going on, and eventually coming down. I only wish it weren’t so, but it is.
The US debt is now, (counting Social Insecurity, Medicaid, et al), over $44 trillion, and that figure is so incomprehensible to even the numbers crunchers in DC, that no one can even begin to imagine its scope. $44 trillion, is impossible not only to imagine, but to pay. A good income 50 years ago was $10,000 a year, now it is maybe $200,000. A good car 50 years ago was a bit over $1,000, and now a bit over $30,000. Does this mean that the “debt” will be paid off in cheap dollars, just as one pays off a mortgage, in ever cheapening dollars? (No, I will NOT call dollars “money,” as they have no value, and money is supposed to be valuable). This will not happen, because as the dollars lose purchasing power, the debt will grow, because the medical care and Social Insecurity payments will grow also. $44 trillion and growing, at the same rate as the buck declines, in other words. It isn’t going away with inflation, but following it.
Now think of that poor deer in the woods, transferring its blood from its veins to its stomach. As I said last week, as a sort of siphon. When the blood is gone from its arteries, it dies. Blood in a stomach, will not prolong life. Printing gazillions of dollars will not prolong their life. The deer keeps on trying, which is a natural instinct. The politicians and Greenspanites who got us here, keep on trying, which is their natural instinct, even though they should know better. Death has to be the eventual result of the dollar economy, just as that wounded deer has to die. What kind of law is it? Maybe it is the law of the siphon, or Stott’s law even, (The more of anything there is, the less they will be worth), or the law of something. You invent a law, but with a debt of $44 trillion, one just has to think of Germany in 1924. The German economy went the way of all flesh, because of the so-called “Treaty of Versailles,” which the Germans never signed. How is a “treaty” a treaty, when it is unsigned? That is for history to discover. The “treaty,” said that Germany must pay for the damages they caused in the war, not in gold, but in paper money. How convenient. It did just that, and the presses rolled, just as the Fed’s newest member, Bernake, has said that the fed, “ has the power of the printing press.” The German economy was doomed, thanks to the unsigned treaty, but they paid in full with printing press “money,” reducing the Reichsmark to a value of absolute zero. People were insulating their walls and starting fires with Reichsmarks, not to mention taking them to the outhouse for other uses. The folly of inflating a currency was plain then, because there were no computers, instant transfers, credit cards, and other modern stuff, which now hides the facts. It was out in the open there, but electronically hidden today, which fools a lot of the masses. Were the three tractor trailer loads of hundred dollar bills Saddam had, counterfeit or real? It doesn’t matter really, because even the fake ones add to the supply.
The US economy, in 2003, has debts of $44 trillion, which debt will increase at the exact same rate as the dollar decreases in purchasing power, due to the purchases, going up in dollar price, at the same rate. If the dollar loses 50%, the debt will probably be $88 trillion. Most of the federal budget, (more than 50%), is for handouts to doctors, old and poor people. Now they are going to begin paying the pharmacists too, which will further exacerbate the situation. How can the economy in America and the world, be compared to any other than a deer, mortally wounded in the woods, drinking its own blood? The presses are rolling, computers clicking, and checks being written, just like in Germany, in a slower motion. There is no currency in circulation in the world, that is backed by anything, or is true money. None. When Germany bit the dust, there were a lot of them. In 1924, most of the world’s currencies were backed with gold and silver, with coinage being made of silver. Today, there are none, and the Fed, like other “Feds” around the world, “have the power of the printing press,” and that power ONLY.
A time frame, no one can predict. The US, and even the world’s economies and currencies, cannot have any stable, increasing, or lasting purchasing power, any more than water can run uphill. The various governments have sold and leased most of their gold, and will never get it back. All the manipulations, gimmicks, stoutish proclamations, promises, exhortations, charts, graphs, threats, or whatever, cannot change the basic fact that governments have nothing of value to back their currencies, are spending like there is no tomorrow, and their only power is the “power of the printing press.” Denying these facts, and storing surplus assets in failing currencies or currency denominated things like bonds, CD’s, and savings accounts, is the height of stupidity.
I do believe that things, when they are certain to happen, will happen quickly. The stock market didn’t go down slowly, or without warning. When economic disasters occur, there have always been warnings by the minority, and loud assurances of the impossibility of it by the majority. It has never failed, and won’t fail this time either. The entire world is printing today, not just Germany. The entire world’s currencies are just fluff. Unbacked fluff. The deer is drinking its own blood, in an effort to forestall death. The world’s governments are printing themselves to death, and taking the majority of their citizens with them. The governments are the deer drinking its own blood, they with their printing presses, checkbooks, and computers, issuing worthless scrip, and desperately trying to make it all hold together just a little while longer. Logic has to tell you that a piece of paper gloriously imprimatured with artistic faces, serial numbers, and waterproof paper, that is a “Federal Reserve Note,” does not connote value. The bills say they are “legal tender,” but we all know that. They say, “In God We Trust,” and a few other utterances and designs, but they don’t indicate any value. No where, in any currency in the world, are any promises of value, stability, or convertibility indicated, as was true in days of yore.
Do you believe in Santa Claus, the Easter Bunny, or Tooth Fairy? They must be true, because we found the quarter under our pillow, and the presents and eggs were there, weren’t they? As children, we believed, but we grew up, and discarded that nonsense. We stopped playing hop scotch, dodge ball, and hide and seek. Why is it, that the world’s citizenry, still places faith in trillions of pieces of paper with ink on them, with silly titles, such as “pesos,” dollars,” francs,” or “lira?” What are these titles supposed to mean? Do they convey value, or merely infer such? There’s a big difference between inference and actuality. For 5,000 years, silver and gold have been true money, true value, true security, and a safe place to store surplus assets. These metals have, within a certain range, always purchased the same things, for the same number of ounces, come depression, collapse, inflation, or prosperity. Why do people believe in fictions such as the dollar, but deny Santa? Santa, Easter Bunnies, Tooth Fairies, and currencies of value, are all wonderful memories of childhood and times long gone. Wake up, and cease attributing safety to an unbacked piece of paper. Protect yourself.