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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Jim Cook
August 8, 2011
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NO WAY OUT

Here’s just one reason the U.S. has to keep inflating and debasing our currency. Author Richard Mills writes, “The first ever GAO (Government Accountability Office) audit of the U. S. Federal Reserve was recently carried out . . .What the audit revealed was incredible:  between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments by giving them U.S. $16,000,000,000,000 – that’s 16 TRILLION dollars.”

Rolling Stone Magazine reported, “The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Island addresses.” 

Understand one thing, the U.S. will continue to inflate until it can inflate no more.  In order to pay its bills the government creates new dollars and in its fruitless attempt to goose the economy it creates even more new reserves.  The Keynesian economists who run our monetary affairs believe that inflating is a sound policy.  The New York Times columnist Paul Krugman, who does the economic thinking for lockstep liberalism, calls for even more money printing and stimulus.  Inflating money and credit are the preferred prescription for the left.

Author Hunter Lewis described John Maynard Keynes’ argument. “Full employment should be our goal.  The market system will not get us there; it requires government help as well as guidance.  This means, in practice, that government will continually print money, in order to reduce interest rates, ultimately to zero, and also borrow and spend as needed.  Booms are good, even economic bubbles are acceptable.  Recession and bust must be avoided at all cost.”

Numerous economists have pointed out that you cannot create wealth and prosperity by printing more money.  In fact the boom in housing created by loose money eventually caused a loss of wealth for homeowners.  The full employment that Central Bank inflating was supposed to bring about caused just the opposite – high unemployment.  These realities are lost on the left.  They will say and do anything to keep subsidizing social schemes for their underclass adherents.  Deficits don’t count with them.   No matter what the costs of entitlements and transfer payments they insist they continue come hell or high water.  Apparently they never look at the negative results, which among them is the relentless decline in the character of the subsidized.

These entitlements are the chief reason we will inflate into oblivion.  Once enacted social schemes like Medicare, Medicaid, food stamps, housing, disability payments, unemployment and welfare are impossible to rescind.  They just keep growing.  This month $50 billion in Medicare and Medicaid payments will go out.  This one area of entitlements threatens all the cost cutting initiatives of Congress.  Expensive new drugs, procedures and technologies propel medical costs upwards.  The more you subsidize health care the more demand for heath care you get.  Adding new health benefits and new beneficiaries insures that costs can’t be controlled.  This is the back breaker in the socialist agenda.

Unquestionably we will continue our failing Keynesian monetary prescriptions until the bitter end.  A collapse is a certainty.  However, deflation and depression will be forestalled by whatever amount of money printing it takes.  Ultimately this debasement of our currency will cause price rises that promote panic buying of tangible assets by the public and sets off runaway inflation.  A cessation of inflating would cause interest rates to soar,  curb lending and choke off economic growth.  Either outcome leads to deflation and depression.

Inflating will continue because as the great economic thinker Leonard Read wrote in 1946, “Inflation makes the extension of socialism possible by providing the financial chaos in which it flourishes.  The fact is that socialism and inflation are simultaneously cause and effect; they feed on each other.”

Despite any talk to the contrary inflating continues today on what author Graham Summers calls a “vertical trajectory.” The Fed continues to print money despite the end of QE2.  The great economist Irving Fisher (1867 – 1947) wrote, “Irredeemable paper money has almost invariably proved a curse to the country employing it.”  A curse it will be.  When the day comes that we can no longer bail ourselves out through inflating the curse will be in full flower.

What will happen when the government checks purchase little or nothing?  What happens when they bounce?  What will happen if they are cut by a half or two-thirds?  What happens when the welfare transfers end?  As we have seen in Madison and Greece no one gets nastier than someone who has had their subsidy taken away.  Enjoy the inflating while it lasts.  Enjoy the final days of our golden age before it turns into a nightmare.  Protect yourself with the knowledge that it must end badly.  There’s no good way out.