We're Broke!

December 16, 2002

Check out the papers. California is $21 billion in the red. All states are in the red. Counties, cities, towns, and even villages are broke. Ford stock hovers around $7, and United Airlines stocks which got almost to $100, now are worth pennies. They're broke also. Continental Airlines, and all of the others, except those who are run decently, are broke as well. Qwest has debts of $25 billion, and Kroger super markets are heavily in debt. The county in which I live is struggling, as is the whole state. Tourism is so far down, that thousands of tourist oriented businesses are broke, for sale, or hovering at that point.

Highway construction is shuttered in many places, because the department is broke. Airlines have cut travel agency commissions so severely, that hundreds of them have simply quit, because they can't make it. Building permits are so far down in most places, that hundreds of layoffs in those departments around America have taken place. Construction outfits, contractors, and manufacturers of construction items are down, down, down in their businesses. Auto sales are dismal, even with zero percent financing. Trucking companies have gone bankrupt, and thousands of drivers are laid off. Wanna buy a cheap tractor? Take over the payments…please! Rail freight traffic is way down, and lots of railway employees are on furlough.

McDonalds is in trouble, and a holder of over 500 Burger King franchises is bankrupt. Bankruptcies are up double percentage points everywhere. PBS (perennial begging system) is pleading for help, as the usual contributors can't afford it of late. K-Mart is almost a memory, thanks to poor management and China Mart competition. China Marts aren't even doing too well. Locally, a long time discount chain, Gibsons, bit the dust after doing nicely for several decades. Layoffs by the millions have bankrupted tens of thousands of families.

It is so sad. Millions of IRA's and 401K's are but a fraction of their former values, thanks to the stock market's tanking. Millions of people approaching retirement have little to look forward to, thanks to the stock market.

This reminds me of a few decades ago, when I was in the theatre business, and the entire industry was in the doldrums. The joke was: a caller asks, "When does the next feature start?", and the manager replies, "When can you get here?"

The plain fact is, there are no shortages of anything, and that's bad for an economy. E-Gold keeps e-mailing me, telling me my account is something or other, and that is strange because I wouldn't open an e-gold account for all the tea in China. It's their way of trying to get a rise out of me, so they can open one for me. It won't work. It's shortages of things that makes an economy buzz. Shortages make prices go up. Shortages of space on cruise ships, tourist trains, or hotels, makes the economy prosper. There are no shortages of anything. Plenty of movie seats, restaurants aren't full, and Greyhound isn't doing too well either. They just moved out of a $475 a month station here in my town, and had been there for 10 years. They couldn't afford it, and moved into a cubbyhole for half the price…just to try to show a profit.

With all businesses operating at far less than capacity, the entire economy is bad, and with a bad economy, tax collections are so far off, that state, county, and city governments are in deep trouble.

Notice, I didn't say a word about the federal government.

The fed is doing just fine, thank you. Thousands of new hires, expanding bureaucracies, and the military-industrial complex Ike warned us about, is going full throttle. DC is booming, and if, as a premonition of hyper-inflation, the presses are rolling. Officially 8% a year in increases of the dollar supply, but maybe a lot more, because of the "off budget" things, which aren't part of the official record. None of the bureaucracies can balance their checkbooks, but it doesn't matter, because there's plenty to make up any differences or shortages. DC drones don't have to worry about a shortage, as does a home owner, businessman, state, county, or city. If you make $25,000 a year, and bring home $20,000, you have to live on $20,000.

If you are a governor of a state, you can't print the dollars to pay your bills, and United Airlines can't print the mazuma to bring it out of the depths. The federal government will never go down, because it can produce what it calls "money," out of nothing. One of Sir Greenspan's newer henchmen said so a couple of weeks ago, lest we doubt the power of the fed to fill the coffers of the bureaucrats with all due haste. I'll bet the owner of those 500 plus Burger Kings wishes he could print his way out of bankruptcy. Credit cards maxed out, and 3 million unemployed doesn't make for a Merry Christmas. I'm playing Santa at a Christmas show on Dec 18th, and I'll shout Ho Ho, but inside, I am worried sick about America's economic future. Gold is up $5 today, and silver 7 cents. That's an indicator to me.

Now the Muslims are going to try to bury us with their gold dinar. They say it will kill capitalism, because their dinars will be made of, and backed by real gold, and become the only true money in the entire world. That may sound ominous, except for one thing. In order to produce gold money, you have to have the gold to do it. Muslims aren't the richest people in the world, and as a generalization, they are probably close to the poorest. Where are they going to get the dollars or euros to buy the gold to make their dinars? It's easy to say, "I am going to coin gold money or gold backed money and kill you capitalistic pigs," except it would take quite a few trillion dollars to do it. Sure, they have oil, but they spend it as fast as they get it. Those opulent palaces the sheiks live it aren't cheap. The rest of the rabble seems to live on the brink of extinction. Which country will produce the dinar? Whose capital will provide the gold? What denominations will it be in? How do we know it will be backed by gold? Who would believe them? If enough gold dinars are made out of real gold, to make them accepted around the world…to kill us capitalistic pigs of course… they'd have to buy thousands of tons of gold, coin it, distribute it, and then change the prices of everything. Let's see now, that Hershey bar is a 350th ounce of gold, which is the size of a pin head probably. Coins this small would be lost continuously, and become a joke. Maybe a silver dinar? That Hershey bar might be a 1/5th ounce of silver, or a dime size. That would work, except the amount of silver added to the gold required to formulate an entirely new currency known throughout the world, is impossible. No one has that many dollars or euros to buy the gold and silver. There aren't any gold and silver mines near those oil wells. I doubt that the dinar will ever harm the dollar or euro. They are harming themselves, because they are merely pieces of paper with ink on them.

In summers, while we were kids, we'd get the hose out, and squirt everyone and everything. Water was cheap. We'd go to the beach and build sand castles, and splash to our hearts desire. Endless amounts of water and sand for the taking, to amuse us. Just like the federal government's supply of dollars. They can have anything they want, just like the sands of the seashore. Just issue more dollars to pay for it. How wonderful! Why, we can go to war in Iraq with fancy, and technical arms of unimaginable sophistication. Drone planes shooting things up, and no pilots in danger. Only a million a pop. Expensive? Who cares? We can print all the dollars needed, and never you worry. Let's send $30 billion to Brazil, and spend hundreds of millions in Afghanistan. Bail out, subsidize, and spend, spend, spend, is the D.C. agenda and practice. They know no limits. Iraq? It'll cost a mere $200 billion…at least initially. "Hey Rube, print some more T-Bills."

The more they spend and print, the less yours will be worth. Too bad, you'll have to work longer hours, or get a second or third job to make ends meet, because times are tough…except in Washington D.C. You must make more. The more decreasing value dollars you have to make, you are automatically in a higher tax bracket. The dollars are going down the tubes, and you are working your head off to break even…and you find yourself in a higher tax bracket. Marvelous. Isn't out of control government wonderful? They print and spend, and you work and pay your higher taxes. They prosper, and just about every other entity, be they private or governmental, is in trouble. They can't print. The fed can, and the more it prints, the less yours are worth. Solution? Get the hell out of those absurd dollars, other than for day to day expenditures. Save in gold and silver. Save in antiques. Save in homes that are underpriced. Save in anything but dollars. I wonder if new presses are ordered yet. When inflation gets out of hand, as I honestly believe it is about to, there is always a shortage of fiat paper money. The prices go "up" so fast, that it takes a lot more paper money to buy the same stuff, and they always have to increase press runs. Yes, it's true, the new bills are being replaced again. This time in color, and supposed "re-design," which means they will print more billions. Surely I am not the only person who knows what's going on, am I? Protect yourself, and not with Technicolor $50 bills stored under your mattress. Do so with $50 Gold Eagles stored under your mattress. The paper money will automatically decrease in value, even while stored under the bed. A $50 Gold Eagle will buy the same or more in 25 years, even if you never touched it. Naturally, the $50 Gold Eagle is more than $50 in funny money, but it's still a bargain compared to its price in 6 months…I'll bet. You should have sold your United Airlines stock at $90, because it's worth 90 cents now. Protect yourself.

The total world's holdings of gold could be transported by a single solitary oil tanker.

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