The Refrigerator and the Government
Don StottWe all have "ice boxes," (refrigerators) as my ancient vocabulary is wont to call them. The antique "ice box," is now a highly collectible, expensive item when purchased in antique stores, and especially if one is in good condition. For you youngsters, the "ice box", was a primitive refrigerator. (Us oldsters still call refrigerators ice boxes.) With two insulated doors and compartments, one placed the food in the bottom, and the ice in the top. Basic physics says cold goes down, and heat goes up. The cold from the ice in the top of the "ice box," goes down to keep the food cool. A refrigerator, on the other hand, mechanically removes the heat from the box, using an evaporator, and places it outside the box, into the ambient air, through a condenser. Refrigeration is a wonderful invention, and I know how it works, and have done refrigeration work many times, but this is not the place for a physics exegesis. "Ice boxes" and refrigerators, have always been made by private industry, with no government involvement, other than making freon illegal, which started a wonderful black market opportunity, but that's not the point here either.
The point is, that the mind of free men, not of a bureaucracy, has built, and constantly improved…refrigerators. The refrigerator of today, with its ice maker, efficiency, and sleek design, is simply wonderful, compared to the "ice box." Suppose no one was allowed to invent or build refrigerators, but government made them, and prohibited anyone else from doing so…perhaps like issuing "money." Know what the refrigerator would look like today? Probably, they would be inefficient, work poorly, be prohibitively expensive, break down constantly, and be about like government is today. Is government innovative, efficient, reasonably priced, and comparable to the modern refrigerator of today? Of course not.
"I don't know jokes; I just watch the government and report the facts." - Will Rogers
Government has a monopoly on the creation of what it calls "money." Government fiat "money," is about like an "ice box." It buys little, just like the "ice box" cooled little, and froze nothing. Government "money," and all other government agencies, are very similar to primitive autos, "ice boxes," or any other thing you can think of. The FAA, is still the largest consumer of vacuum tubes, and in some areas, it uses them for control of the air in which we fly. Anyone under 40, has probably never even heard of a vacuum tube, which is comparable to the "ice box," as far as electronics are concerned. Why do people trust the government? Why do they think government is the apotheosis of all things good and wonderful? As 7 million acres of National Forest burn each year, why don't people realize that government does nothing well, and destroys much of what it touches? In other words, why do they save in government issued dollars? Why are the masses so ignorant and unobservant, as to trust Uncle Sam to do what is right, efficient, cost effective, and appropriate? In what sector of government, at any level, is anything efficient and economical? We deal with economics here, and government has hundreds of "economists" on their payroll, who caterwaul platitudes and polemics about how wonderful it all is today. "Why, we only have 1.2% inflation, and the economy is on the rebound." They've been saying that for over three years; as more thousands get laid off.
"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." How true! Unfortunately, those who are fooled all, or most of the time, are the ones who get hurt the most. While we on this site, were preaching, "Sell those stocks," the majority were buying. We have been saying, "Buy gold and silver," for years now, and the higher they go, the more that will buy. Far more buy gold now at $345, than bought at $260. Far more buy silver now at $4.89, than bought at $4.25. As the months pass, and both go up radically in dollars, more and more will cease to be fooled with government promises and pie in the sky predictions from the "economists" on the government payroll. The more that buy, the higher prices will go. The more that buy, the more stress will be placed on supplies, also contributing to higher prices…in dollars.
Ludwig von Mises, the founder of the Austrian School of Economics, defined economics basically as, "People Act." That says it all doesn't it? I know, there's lots of theories and nonsense, which schools of economics say are important, but "people act," really says it all now, doesn't it? Stott's law, which says that "The more of anything there is, the less they will be worth," doesn't contradict von Mises at all, but compliments it to the ultimate degree. Since government doesn't make refrigerators, but does make the "money," does it make sense to save one's surplus assets in government "money?" Wouldn't it be better to save in refrigerators? Isn't it better to send one's kids to a private school, than a government school? Wouldn't it be better for the airlines to run their own traffic control systems, rather than government? Wouldn't it be better, and Constitutional too, for government to turn its forests over to the States to whom they rightfully belong, rather than to have them burn up every summer, due to a lack of care? Isn't it better to save one's surplus assets in gold and silver, which the government has none of, as far as I can determine, rather than in government issued scrip?
The proof of the validity of saving in gold and silver, is brought out by the fact that the government has gotten rid of all theirs, and buys it on the open market, to make its gold and silver eagles. They don't take it out of their vaults to make gold and silver eagles, because there is none in their vaults. They buy it weekly, on the market. Why do they make gold and silver eagles? Simple again. They do it because they make a profit on them. This may be the only thing the government shows a profit on…if it does. After all, gold and silver eagles, are far more expensive that other forms of gold and silver bullion. They either make a profit on them, or are so inefficient, that they have to charge a bundle to break even. Take your choice.
On A&E last week, was a show on Ft. Knox, where all the government's gold is supposed to be stored. The reporter was not allowed in to see the gold, and the officials, "neither denied nor confirmed that there was any gold there." The reporter talked to neighbors, who said that a lot of 18 wheelers with armed escorts were seen leaving Ft Knox many years ago. Maybe they weren't carrying gold, huh? They were heavily loaded and escorted by armed guards, because they were carrying a load of Bisquick to make biscuits and waffles for the White House, or a Treasury Dept party, maybe.
Doesn't it make sense, to save in things that one can hold, and which government doesn't want? Aren't you glad that government doesn't have a monopoly on, and make your refrigerator? Protect yourself.
July 11, 2003
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
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