The economist and author Henry Hazlitt (1894 – 1993) wrote this important message; “Chronic excessive government spending and chronic huge deficits are twin evils. The deficits lead more directly to inflation…But the total spending is the greater evil because it is the chief political cause of the deficits. If the spending were more moderate, the taxes to pay for it would not have to be so oppressive, so damaging to incentive, so destructive of employment and production. So the persistence and size of deficits, though serious, is a derivative problem; the primary evil is the exorbitant spending, the leviathan Welfare State. If spending were brought within reasonable bounds, taxes to pay for it would not have to be so burdensome and demoralizing, and politicians could be counted on to keep the budget balanced.”
This almost quaint advice was written 35 years ago. He writes about taxes. There is no mention of government borrowing to pay its bills. The thought that government would or could borrow trillions of dollars never occurred to him (or anybody else alive at the time). They thought borrowing must be limited to the amount of a country’s savings. Not so. Our government borrowed the savings of the world and much of what they printed. We expanded money and credit to buy goods overseas and when we ran huge trade deficits they loaned us the offsetting surplus. Now we borrow $16 trillion.
You can’t find anything in earlier economic texts that describes or explains this phenomenon. The government of the world’s biggest economy being in hock to its eyeballs has never happened before. We are breaking new ground while breaking all the rules of prudent budgeting. Wall Street and Washington talk about it like it’s old hat. Sixteen trillion doesn’t even phase them. Hello! Sixteen trillion. Anybody there?
Despite our debt, nervous Europeans continue to buy our treasury instruments. One reporter recently crowed about how we could forget austerity and keep spending because of this recent influx. Apparently he wasn’t worried that this European buying only meant we were going further in debt. We might appear to be a safe harbor to Europe but in Asia we’re more like the brother-in-law who needs to borrow a couple of grand.
In the first years of this new century we enjoyed the greatest money and credit expansion in history. We are still paying the price for this excess. Bigger spending and greater borrowing is supposedly the cure. I suspect that Mr. Hazlitt, who we quoted at the beginning of this article, were he alive today would have nothing good to say about our indebtedness. In fact, he would likely forecast the demise of the dollar, runaway inflation, soaring interest rates and a collapsing economy. He would tell us you have gone too far and there is no escaping the consequences. He would be surprised our economy hasn’t suffered more but he would be quick to tell us there will be much worse to come.
By James Cook
A television reporter in Indianapolis uncovered the fact that illegal immigrants from Mexico had figured a way to get huge checks from the IRS. Even illegal immigrants are required to file a tax return. When they file they claim an exorbitant number of dependents including all their nieces and nephews in Mexico. The TV report showed refund checks for $10,000 and $12,000. They claimed this scam was costing $2.5 billion a year. The IRS had no comment.
A different TV report revealed unbelievable abuses in the government’s free cell phone program. It showed a woman with 30 free cell phones in her bag. She said she got a new one every day. When asked if anybody kept track at the government’s free cell phone office, she said no. She could get one at any time. This boondoggle costs $2 billion a year.
You have to ask what is happening to our country? This kind of waste only proves that the government is more incompetent than ever before. They have no bottom line as does private business and so without any concerns for profit or loss they recklessly burn through money. No country can survive and prosper with this out-of-control spending. Giving people money and property they didn’t earn promotes fraud and waste. It also ruins the character of those who come to rely on it. It’s as if America has embraced a plan that insures its ruin.
A person can get angry over the constant stupidity and anti-capitalists drivel that emanates from Washington. At times you literally hate what you hear and walk around mad. At such times I harken to the advice of the late author and clergyman Henry Van Dyke, “be governed by your admirations, rather than by your disgusts.”
So instead of hating for long I channel these negative sentiments into efforts to convince people of the great blessings of free markets, capitalism and limited government. That’s all any of us can do and we should all be doing that. There are way too many people still on the fence. As for the people who make us angry; forget about converting them, just convert more people than they do. As my late and great partner Bernard Daley would often say, “It’s one mind at a time.”
You couldn’t have a more serious agenda. We are in for rough economic times and a dollar crisis of unprecedented magnitude. However if all that comes out of it is more socialism and the beginnings of totalitarianism then we the people have failed to preserve the gift of liberty and prosperity that our forefathers bequeathed us.
EVEN ALFRED E. NEUMAN IS WORRIED
By James Cook
Each time we hear the Greek and European crisis is put to bed, within days we get another outbreak of the problem. There’s no reason to expect this trend to reverse. Ultimately every country could be swept into the black hole of money destruction. One outcome could be runaway inflation and an explosion in the price of goods and services.
To insure your well being in the case of a national financial emergency you should have a healthy supply of silver coins and small silver bars on hand. These would be quickly recognized by the public and serve as a temporary medium of exchange. For several thousand years silver was money. It was valued by human beings for its beauty, malleability and resistance to corrosion and rot. In addition to its role as a medium of exchange it served as a unit of account and a store of value. The coinage of today would not be accepted by the public if it had not first been silver.
Silver could never be the government’s money again because there isn’t enough of it. However, there is enough to be used for exchange by thoughtful people who have prepared for a dollar crisis. We advocate you have a minimum of 10% of your net worth in physical silver that you own outright. Keep it in a safe hiding place, a bank box or a gun safe.
Do not be hornswoggled into buying on margin, pool accounts, overseas storage, newly minted rarities, coin dealer storage or delayed delivery of three to six months. Remember that most coin dealers are going to fail (90% every decade) so be exceedingly careful sending money to any company offering ridiculously low prices or selling at dealer cost or below. If they are making little or nothing on the transaction what scheme have they cooked up to snare the unsuspecting buyer so they can pay their bills? I wish you could hear a few of the heartbreaking stories of financial loss that people have conveyed to me over the years. That’s why I preach to get the metal in your hands or stored in your name. Our advice comes from forty years of experience.