We’ve all heard of surgeons who leave a sponge in a patient after operating, or doctors who prescribe the wrong medication. The medical industry actually kills hundreds of thousands each year. Drunks kill people, as do criminals and carelessness. None of these are responsible for the death of a nation, however. Am I getting into deep water? I don’t think so. The eventual death of a nation, is always caused by its government, and ours is no exception. I am going to explain how this nation can die simply because of fiscal irresponsibility, which has been going on since at least the Presidency of FDR. While WW I under Woodrow Wilson was a fiscal disaster, America had its debts pretty well paid off by the time FDR took office.
When someone spends more than he makes, he eventually will have to declare bankruptcy. In our age, such a move can be postponed for a long time because of credit card reserves, borrowing, and the length of time it takes for the machinery of justice to operate. Even after ceasing making house payments, the defaulter can usually stay free for almost a year. But eventually the debts will mount up, and the credit of the debtor is ruined. Such will last for seven years on his or her credit report, I understand, and then all is forgiven supposedly.
America is in the midst of the final stages of its currency debasement, and I am afraid that seven years will not erase the debts. The fading dollar can be held responsible for our troubles. It isn’t the dollar’s fault, because it is merely a piece of paper, which is un-backed, and the product of a printing press. It is those who administer and spend it recklessly, who have caused its demise, and who are wrecking our economy and nation. What repercussions does a dollar debasement have? Let’s examine them. Remember, it is in no way the fault of the citizenry. It is totally the fault of government and the D.C. Gang. All of us are merely the victims.
When a currency is debased, it requires more and more of it to buy things. This is known as inflation. It also requires an ever increasing income of the citizenry to exist. If milk, gas, electricity, and clothes cost more, everyone will have to make more to buy the same stuff. That is only logical, and obvious by going to any store to buy something. If jobs require ever higher salaries to make things and sell things, what will be the obvious result? Self serve gasoline is a classic example. I understand that Wal Marts now have a lot of self checkout lines which require no cashier, thus saving payroll. I have often wondered why more restaurants don’t do the same, other than the Chinese buffets and a few others. The savings in labor to dispense stuff by self service, is a classic example of dollar debasement and a needed savings to keep retail prices low enough so that customers can purchase them. This savings also reduces the number of jobs, and especially the unskilled jobs.
When factories have to continually raise wages, and the cost of materials continually goes up all in failing dollars it is obvious what happens next. Never thought of it this way? Then start now. Other lands, such as China, India, Mexico, etc, have no exorbitant taxes on everything, and while it is easy to say “Their money isn’t worth as much as ours,” the exact opposite is true. Chinese labor, at a quarter an hour, raises their living standard, and ours at $10 an hour, reduces ours. Whose ’money’ then, is worth more? Obviously, I am not considering the sizes of homes, luxuries, and other pertinent things in foreign lands, which have taken U.S. jobs.
If the facts are considered, there are several things for consideration. First are taxes, which in the US are huge, and on everything. Not just wages, but on utilities, fuels, property, and materials. Labor has huge Social Security and Medicare taxes, plus income, unemployment, insurance, etc. I estimate that a guy who makes $18 an hour, only brings home $10. Couple that with the taxes he pays on everything, plus continual currency de-valuation, and every single worker is slowly being decapitalized. Locally, the teachers got a 2% wage increase. The New York Transit Workers, by a narrow margin, decided not to take a similar increase, because they knew it was not enough. It isn’t. Not nearly enough.
As the dollar devalues, white and blue collar jobs go to lands where the ’money’ buys more, and the taxes are lower. That’s not nearly all there is to it though.
Annuities pay the same amount of money year after year, as the value of the payments goes down. Thrifty people thought to protect themselves by buying an annuity to keep them solvent in their old age. It isn’t working because the stronger dollars they contracted for to be paid in, are going down, down, down. What are they to do? I have no idea, but an annuity, in times of currency devaluation is silly, as are ’whole life’ policies, which are merely savings accounts in fading dollars.
When dollars go down, a certain percentage of the citizenry refuse to save in them. Unfortunately, far too few. Why save in dollars or dollar denominated policies or contracts? It is utterly futile. In Germany, as I said in my book (free by e-mail. gold@gwe.net) a man’s father had bought a whole life insurance policy in 1905, for his old age security, and he cashed it in after making payments for 20 years. It bought a loaf of bread. Is there any reason why that same situation isn’t typical today? Is that absurd? Of course not. Just look at prices and wages of 20 years ago, and you will see that the wages are 4 times as high, and prices are four times as high. The payments on an annuity or whole life policy bought 20 years ago, are not four times higher. They are going to be, or are, exactly as contracted for.
Those who saved in the fading dollars or contracts of fixed payments in fading dollars, are going to be terribly sorry, even if the dollar decline doesn’t increase in speed or decline, which it will. Saving in dollars then, is stupid. Saving, is losing your capital. What to do? Cash out immediately is my suggestion, and get out of dollars, and into tangibles.
Those workers whose employers placed a portion of their wages in a pension fund, are also going to be in for hard luck. Why? Because as the jobs and manufacturing go overseas, due to the declining dollar, the factories and companies often don’t put the required amounts into the funds, just to stay in business. Pensions are sort of like futures contracts in a way. The worker feels that in his future, the money he has either voluntarily or forcibly ’invested’ in a pension plan will yield nice dividends. Especially when his boss has supposedly placed an equal amount in the plan. While his wages were regularly deducted for the pension plan, his boss more often than not it seems, failed to contribute his share.
As if that weren’t bad enough, the pension plan is mostly invested in stock of the company worked for. If the company goes bust, as maybe GM, the stock becomes worthless, and all his savings in the plan, even if GM did put in their share, is all gone with the stock’s price. Workers at Enron lost it all when the stock became worthless. Their savings were gone. If the pension plan is turned over to the government agency, which supposedly protects pensions, it is woefully undercapitalized, pays but 45%. When it goes broke, the 45% will be in ever faster declining printing press ’money.’
No time to finish this week. More next week, but it is all so simple. A once wonderful, powerful, generous nation is failing, because its money is failing. Dollars are going down and prices up. Why save in them? You may not be able to save the U.S. or change its course, but you can protect yourself.