Maybe this should be “How?” rather than “Why?,” I don’t know, but the nation is literally evaporating before our eyes, at least economically, and the “how” is because of politicians debasing the currency, as I said last week. As far as “Why?” is concerned, it is a matter of CYA, or “cover your ass.” Admitting you are wrong is difficult. Very difficult! Impossible for some. It takes guts to admit you have erred, mistaken, or in some way goofed. Especially if you have taken a family, business, corporation or nation down with your errors. Enron no longer exists because of foolhardy spending, investing, and management. General Motors gave in to unions for years, and made a product that is inferior to Japanese cars. It has all come back to haunt them. The CEO and other of management, made huge mistakes at GM, and now it is actually, if not technically bankrupt. Their liabilities outweigh their assets, and still the stock is $23. Why? Beats me.
Millions of household heads have made horrible mistakes with their credit cards, purchasing habits, home buying, and investing. This is also coming back to haunt them, bankrupt them, and make their lives intolerable sooner or later. All actions have re-actions, and in economics, this was never more obvious. Another proverb is that “We reap what we sow,” and that also is a grand truism. The United States of America, since the Presidency of FDR, has been on a continual decline. No question about it. The dollar has been declining in purchasing power, and governmental debt has been escalating. The process has been on a virtual continuous line, other than when the nation has been thrust into wars, thanks to the D.C. Gang. When we have been at war, the dollar has declined in purchasing power faster, and debts grown larger, on a much steeper line. The graph of dollars going down and debts going up, has not been reversed at any time. The two lines, one going up, and the other going down, other than increasing during wars, have been steady.
While households, corporations, businesses, state, county, and city governments have been held responsible for their mistakes, the federal government has been able to partially cover up, and fool the populace. They have fooled themselves too. Even today, most Americans actually believe that prices are going up, rather than dollars going down. Inflating and increasing taxes have been government’s way to cover its indiscretions, and it has worked pretty well so far. Now that is coming home to roost, just as have the mistakes of the rest of us. The American dollar, which is still, barely holding on as a ’reserve currency,’ is now being disposed of by those who have been loaning to us for many decades. They’re doing it gradually, so as not to upset the apple cart and lose all of their fictitious ’equity.’ Actually, a sovereign nation loaning to America, is like a mortgage outfit loaning on a house for more than its value, when the borrower is a bad credit risk. It can be a sure loser. Would you loan to the US government? They’re a really bad credit risk. When you buy T-bills and US bonds, that’s what you’re doing. You’re loaning your dollars to an entity, which prints them to repay you, thereby reducing their value. Makes no sense, does it?
In order to cover their mistakes, the politicos and DC Gang in general have, with few people noticing, raised taxes on just about everything you buy and use. The biggest tax of all however, is the simple fact that as the currency debases and loses value, the prices and wages go up. I remember when a former President was in office, he said they were ’fighting inflation,” and he wore around a big button which said, “WIN.” Of all the nonsense and lies I have ever heard, that was it. The way to ’fight inflation,’ is to stop printing, but it will never happen, because it is simply out of control. As the wages go up, guess what? Everyone is placed in a different tax bracket. Not only are all the hidden taxes going up, but your actual taxes are too, because with your raises, you are in a different bracket. See tax tables on your 1040 form for confirmation.
How much longer can this charade go on? I have no idea. In 1980, when the prime rate was 13%, mortgages 21%, gold was $850, silver $54, the hostages were being held in Iran, and we were paying to get rid of the Panama Canal, we all thought it was over. It wasn’t. Jimmy Carter was defeated, and Ronnie began spending like no President had ever spent outside of a war. He was such a nice guy, and an excellent speaker! It all calmed down, and the debts continued to rise, taxes continued to rise, dollars continued to go down in purchasing power, and everyone thought it was all solved. It wasn’t. When OPEC was formed in the early 1970’s and oil ceased to be about $2 or $3 per barrel, and went to $10, lots of people thought Armageddon was at hand, with lines at gas stations. It wasn’t. Now oil is $65 per barrel and gas at least $2.50 per gallon. A couple of years ago, it was a dollar a gallon. Is the end at hand? I have no idea.
I do know this much though. (1) Rising wages are not keeping up with rising prices. (2) Foreclosures are at record numbers. (3) The national debt is so high, than the human mind can not conceive of those numbers. (4) The debt can only be paid with the printing press, which is all that dollars are now. (5) Foreign nations are gradually getting rid of their dollars. (6) It is a fact that when no one wants to buy our debt, we print it and buy it ourselves, which further increases dollar numbers. (7) American currencies have already become worthless three times in our brief history, and there is no law or way to prevent it from happening again. It is all a supreme con game, and when the confidence runs out with enough people, and they turn to other forms of wealth preservation such as gold and silver, or stop paying their taxes, and when word gets out and faith ceases to exist it’s over for the dollar and American economy.
Will we not be here any longer? We’ll still be here. Will we be invaded or taken over? No. There’ll simply be a new currency, called the ’liberties’ or ’freedoms’ or other such nonsense. They’ll probably be red, white and blue, and people will be fooled all over again, but for a shorter time period. “You can fool all of the people some of the time, and some of the people all of the time, but you can’t fool all of the people, all of the time.” That’s a lot truer than you might imagine. While I get new clients all the time, and tens of thousands of you read the columns I write for Gold Eagle and on my own web site, they will never change a civilization, or even a small percentage of the population. Why? Because they have faith and belief in their government and the scalawags in D.C. Why? I have no idea, but they do. There are hundreds of Christian religions, which believe differently. There are lots of other religions as well around the world. All adherents to those religions have faith in them. Are they all right in their beliefs? Do the Indians go to the Happy Hunting Ground when they die? Do Muslims get instant paradise and 72 virgins if they kill an infidel? They believe it with all their mental capacity, and I will never argue about religion! The point is that Americans have faith in their government and its actions. They may hate Iraq, but how often do you hear newscasters talk about the debt or the trillions of dollars being printed? Never. So, the faith of the American public remains in place.
In my Kiwanis Club, there are a lot of fairly wealthy people. In my town, also are one other Kiwanis Club, one Rotary Club, and two Lion’s Clubs. As far as I know, only one of the members in any of these clubs, owns any silver or gold, and that one, bought from me 4 years ago, and has tripled his money on his small purchase, and will not buy any more. This is typical of America today. Unfortunately, extremely typical. All of these business people have their surplus assets in dollar denominated items or even cash. In other words, they aren’t protecting themselves, as you should. No one will do it for you. Not to sound repetitious, but protect yourself!