In Jim Cook's Archive


After years of wasteful spending European countries have no choice but to accept austerity.  It will either be forced upon them or it will be voluntary.  These countries (including the U.S.) remind me of people who suddenly make a lot of money, get bigheaded and blow their fortune on high living.  Usually they wind up suffering through financial reversals and a lengthening period of personal austerity.  They are humbled by these struggles.  Often we hear that these painful experiences changed them for the better.

Perhaps the same rules apply to countries.  A country that experiences austerity and bankruptcy may emerge from this humiliating period with its people more self-sufficient and its industries more productive.  In that sense this national comeuppance, with all its agonies may be a good thing.  The people come to understand there is no free lunch.  They work more and play less.  Behavior and character improve.

Here in the U.S. we have reached a level of excess that betrays our legacy and ensures our collapse.  Public and private debt, runaway government spending and fiat money have hit the wall.  We can’t go back and going forward invites retribution.  A national humbling and painful austerity are inevitable.  The ferocity of the crisis will be correlated to the degree of excess, so it will be large and painful.

Taxation will be high but it will harvest little.  The handouts will have to go.  No more green energy, farm and corporate subsidies.  No more food stamps, housing, welfare, unemployment and disability.  Reduced veterans’ benefits, Social Security and Medicare are certain. Student loans are no more.  Pension and retirement programs shrivel and consumers freeze up.  Bankruptcies explode and famous financial firms fold when the government’s lifeline runs dry.  Crony capitalism dies.  Government layoffs turn into an avalanche.  Underfunded lobbyists, foundations, think tanks, government consultants, trial lawyers and political demonstrators disappear.  Charitable donations plunge and the recipients of charity are hard pressed.  Property crime increases.  Austerity lays the nation low.

Jobs become more valuable and the work ethic improves.  Lower wages bring more jobs.  The culture changes.  Entertainment wanes and self-improvement gains.  Art becomes understandable and music harkens to an earlier age.  Self-reliance replaces the dole.  Survival needs force painful changes.  Struggle and suffering forge a new morality, stronger character and a rebirth of the rugged individualist. When the going gets tough the people rally. American exceptionalism overturns the naysayers.

In many ways the best thing that could happen to America is for the government to go broke.  You won’t find many people who share that view.  In fact, you can hardly find anyone who thinks we are in serious enough trouble that the government can’t fix it.  Most people don’t even think about such things.  That’s the way it was in Greece and Spain up to a few months ago.

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