Is it possible, that any government agency, at any level, but especially at the federal level, will be going away? Can you imagine the local planning department, zoning department, parks and recreation, or any government entity leaving? Locally, the various governmental departments have to depend on federal handouts, or tax increases, to survive. Since taxes are already at the point of open rebellion, local governments hire "grant writers," to filch dollars from the federal government.
The feds, of course, have no problems with funding, as they can create endless streams of dollars out of nothing. When the grant applications come in from local governments, hoards of federal employees read the grant applications, and to make themselves feel and appear important, change them in some way, before funding them. Dollars flow from DC to all local governments, and especially the school systems, when property taxes don't fill their needs. The school systems always need more and more money too, being as they are a government entity. There's always a need for new classrooms, a new gym, and of course the windows need to be made double pane. Where I live, the increase in public school attendance is microscopic, but they always need extra millions each year. The test scores don't improve, but the physical plant, and teachers' salaries always get larger.
When governments create "money" out of nothing, as every government in the entire globe is now doing, spending never even slows. Dubya's spending is so outrageous, that it should make Bill Clinton blush. He just decided to send $5 billion in additional foreign aid, not counting what is already being wasted on existing foreign aid, plus endless billions to the World Bank, and IMF. Republicans were so totally against Clinton's version of the Peace Corps, that they became extremely vocal about it, and even took ads out against it. Dubya now is gung ho for it, and more hundreds of millions will go to it, plus of course the $350 million to 'encourage marriage,' $21 billion to New York, and on it goes.
I know I am preaching to the choir, but Stott's law must not be forgotten: "THE MORE OF ANYTHING THERE IS, THE LESS THEY WILL BE WORTH." This includes dollars, and the way dollars are going everywhere, their ultimate demise is assured. I continue with this preaching, because every week I get calls and e-mails, telling me of how this or that reader of mine, and Gold Eagle columns, keeps trying to convince their friends, brothers, sisters, wives, or whatever, of the absolute soundness of getting out of dollars, and into tangibles, and it goes to deaf ears. Forward this to them, or print it, and give it to them, because it is already happening in Japan.
Japan is slowly grinding to a halt. I know, the Nikkei was going up, and approached 12,000, which is less than a third of what it was a short few years ago, and the Dow was also flirting with 11,000. Both Japan and America have Plunge Protection Teams that consider it their patriotic job, (with full government salaries of course) to do everything in their power to boost the stock market, keep gold and silver down, and continue the ruse of paper money having some value, other than for day to day trading at the super market, or gas station. You'd be amazed at the influence a thousand "puts" have on the price of gold, and "calls" on a stock's price, regardless of the worthiness of the stock, and the true, historic value of gold and silver.
The Japanese are buying gold like there is no tomorrow. Sales exploded upward SEVEN FOLD last month, and 21% of their savings accounts in banks have been closed. Japanese debt is 140% of GNP, and remember, GNP includes government spending! 67-year old Yujiro Isoda said recently, "I have experienced WWII, and survived the postwar high inflation. I know that paper money can turn into rubbish…nothing. But, gold can survive any time in history." It has hit home in Japan, because their government is going to drastically reduce insurance on bank accounts, and the Japanese are beginning to realize the yen is merely a piece of paper. America take heed.
Here in America, as the government continues to spend, spend, spend, and print, print, print, the lag time will catch up eventually. There is no program that is not worthwhile to Bush and the Congress. No spending is too much, or too ludicrous. Narrow minds fit well into ruts. The rut, is that the dollar is worth something, and immune from debasement at a far faster rate than has been seen so far. WWI cost the buck 50% of its purchasing power, because the war was fought in the main with printing press money. The same thing happened in the Revolutionary War, War Between the States, WW II, Korea, Viet Nam, and now the "war on terrorism," that no one knows where, or how to fight. We have various shades of "danger," running from green to red. Please tell me, how I am supposed to act when it is yellow, orange, or red? Am I to go out on my porch and scream DANGER? If it is green, should I fly the flag? It is just more gobbledygook that costs more dollars. Neither police, the FBI, CIA or colors of danger, can halt terrorism, because like thieves, burglars, rapists, and other criminals, they operate by night, in the shadows, and are virtually invisible. The cops come to fill out the forms, and the government arrives to install a new program…this time with colors of danger. How stupid!
I don't know how much the 30% of foreign dollars that are counterfeit will add to the decrease in dollar purchasing power. I don't know how fast the lag time between inflating the dollar amounts, and radical price increases in dollars for merchandise will take place, but China Mart, Home Depot, et al's continuous infusion of Chinese merchandise, will slow it a bit. Saying the dollar will remain strong, when it has already been debased by 98%, is playing with words. "Strong," compared to the rest of the paper money in the world, isn't strong. Comparing water soaked cardboard with wet newsprint, and calling the cardboard "strong," is a gross misuse of the word. A "strong" dollar would buy a gallon of gas for 20 cents, and a new Ford for $600, as it did 60 years ago. A "strong" dollar would buy a new Model T Ford for $275, as it did 85 years ago. A "strong" dollar would buy a sturdy brick row house with high ceilings, and hardwood floors for $2500, like it did a hundred years ago. The dollar is not "strong!" Shopping for a higher interest rate in a savings account, is the utmost in futility. The supposed low consumer price index doesn't include food, fuel, or housing, and is a figure once again designed to fool the public. You get 2% interest in a savings account, or 5% on some other device, pay taxes on it, and the real inflation rate is over 12%. Does that make sense? Does it make sense to close your savings account, and buy stocks with a price/earnings ratio of 56, as the S&P now is? Historically the P/E ratios should be from 10-12, not 56! Stocks are grossly over-priced, and saving in dollars is absurd. What is there to do? Follow the Japanese, and drive us gold and silver dealers up the wall! Have something beautiful, tangible, compact, fungible, and of historic wealth in your hot little hands, and get out of those paper monies. You'll never regret it.
Speaking of gobbledygook and government excesses and lies, does anyone know what the Al-Qaeda is? Various "officials" and broadcasters pronounce and even spell it differently. Is this Al-Quaida (?) real, or some mysterious group cooked up to rally American fervor for war? I have tried to search the internet, but can find nothing. Where is its headquarters? Who is its head? What does the term mean? The usual journalists "W's" of who, what, where, when, and why, have not been answered, or as far as I can see, even researched. Since the government can't tell the truth about Pearl Harbor, plane crashes, inflation, and a hundred other items, is America being dragged into war, à-la-FDR for no reason, other than the make the populace place trust in government's decisions and actions? Are we headed for another 50% devaluation, because of war, not to mention casualties? Is there nothing government will not do to keep their subjects believing in it and its currency? Bush isn't satisfied with the $48 billion for the armed forces, and now wants more. What can the future of the buck possibly be? Protect yourself!
March 20, 2002
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com