first majestic silver

What can Government do?

February 21, 2002

President Bush was recently in Japan. He offered homilies to the Japanese, and his best wishes, but this will have no effect in the dreadful depression that now engulfs them. The Japanese look to government for help, to escape their economic miseries. Americans look to givernment. The Germans looked to Hitler, and the Japanese looked to Tojo and Hirohito for help in World War II. Victims look to the police, even though they usually show up, after the fact, to fill out the reports. (Protect yourself with guns and security devices. Don't depend on the cops.) The Germans, after World War I, had their surplus assets stored in Reichsmarks, which eventually went millions to the dollar. They lost everything they had, as have a lot of Japanese. Americans have lost trillions in the stock market, but few think beyond that.

A fan of mine, just forwarded to me an article by a noted economist (urp) who works for one of Chicago's most prestigious banks. The article is rife with graphs, statistics, and his opinion about the Japanese yen. He loves paper 'money,' and cannot understand why the Japanese are buying so much gold, and not trusting the yen. He says, "After all, the Japanese yen is much easier to store than gold." They surely are. Eventually a wheelbarrow full of them might buy a cup of coffee in Tokyo, Mr. Economist. Everyone has their own set of hatreds. Mine are "economists."

No matter where one may look: The boob tube, the financial pages of the most revered newspapers, or advice from advisors, it's all the same. One advisor got some friends of mine to invest $100,000 of hard-earned dollars in a scheme that promised 10% a month interest. After a few months, it failed, of course, and they lost most of what they put in. There are advisors by the bushel. Degrees in economics by the hundreds are awarded each year from the sacred halls of academia. Why don't professors and teachers realize that the entire world's system of paper money is fatally flawed? It is like a building with a poor foundation. You can build a magnificent building with a poor foundation, and the first time a little quake or flood comes along, it will all come tumbling down.

Economics doesn't take a college course to understand. Von Mises defined it in two words: "People Act." Another one might be: "Governments always self-destruct, and take their citizens with them."

Almost everyone in the world places faith in paper money, financial figures and statistics based upon the various currencies of their particular nation. Watch Louis Rukeyser, Friday evenings on PBS, and midst the hokey formality, everyone talks about stocks and dollars as if they were the Rock of Gibraltar. The good old days of dollar stability are long gone. When I was a kid, the small decline had escalated with WW II, and by the war's end, the dollar's purchasing power was half of what it had been 4 years before. My Dad bought a new '49 Ford for $1989, in October, 1948. His new Plymouth had cost less than $700 in 1940. The Ford had overdrive, a V-8, radio, etc, whereas the Plymouth had neither, but the price comparisons are startling, to put it mildly. People continually speak about how they bought their house for $35,000, and now it is worth $100,000, as if they had scored a huge bonanza. They have gotten nowhere. It is the same house. Only the "money" has lost its value.

Most think the givernment is wonderful. All those bureaucracies to 'protect' the people. Nonsense! The various bureaucracies protect themselves, enlarge their bases, hire more buffoons, and spend more dollars. Are we better off, with the huge givernment we have now, or the small one we had before FDR? If we are so much better off, why has crime escalated through the roof, as has illegitimacy, racial hatreds, destroyed cities, filthy air, virtual illiteracy, and a host of other ills we didn't have before enormous government, and debased currency. Hundred dollar bills are as common now, as dollar bills of 60 years ago. When governments run amok, as they have all around the world, the victims are its subjects, who have to pay and pay and pay for all the "benefits." The higher prices go in currencies, the higher wages go also, and the higher tax brackets the victims are placed. A double whammy. The morons who think government is so wonderful, now espouse one world government. If we have one government over everyone, we will have arrived at Shangri-La, they honestly believe. More like the gates of hell. If a national thing is bad, how is a world wide, all powerful one, better?

The poor Japanese look to government, but what can it do? Nationalize the banks? What for? Is a government run bank better than a private one? If it prints even more money, it will become worth less and less. If it bails out the banks for all their loans, which seemed prudent at the time they were made, the same result will happen…total debasement of the currency. If the Japanese pass laws forbidding withdrawals of yen, nothing would be accomplished, other than further mistrust, and lack of confidence. After WWI, the German government kept the presses running night and day, because there was a 'shortage of currency.' Of course there was a shortage! The more they printed, the shorter the currency supply became, because the more they printed, the more it took to buy stuff! American dollars are being printed faster and faster, as are all the world's currencies. There are far too few physical dollars around, and banks are always short. Try to get a large cash withdrawal without notice, and you will see. The more they print, the more they need, because the more they print, the less they are worth, and the more it takes to buy things. It is an endless problem, under an inflationary economy, and the entire world is inflating.

The inflation is not the fault of you or me. During the Carter Presidency, slogans were rife about "fighting inflation." Posters and ads everywhere, urging the citizens to "fight inflation." How absurd! We have no control over inflation. Inflation, resulting in the continual increase in prices, is purely the fault of government. I don't print money, do you? Inflating the money supply, is one of the oldest historic tricks of governments to save themselves from improvidence and bankruptcy. The politicians spend and spend and spend, in order to get re-elected. Budgets are continually out of balance. Governments sell more bonds and notes to pay its bills, and every bond and note it sells, increases the money supply, thereby decreasing the value of the currency. It is all a gigantic hoax.

"Economists," and financial gurus continually urge their clients to invest in "secure" government paper. There are long college courses and tests required, to be a 'licensed' financial advisor. Should I get a license? The government requires education, so the 'educated' can advise their clients to buy the government's paper. Students are taught how "secure" government paper is, but are never taught that the more they sell, the less the currency will be worth. Every bond or T-Bill sold, increases the currency supply by that much, and decreases the value of the currency a bit more. In a sane situation, no government would be able to sell ANYTHING, because they could not spend more than they took in, and the presses would only run as often as the paper currency wore out, or the amount of gold or silver increased in government vaults. IN A NON-INFLATIONARY ECONOMIC SITUATION, THERE COULD BE NO GOVERNMENT PAPER FOR SALE. When government sells debt, it is a flashing warning sign. Japan can sell debt to bail out the banks, or take them over, but the problem cannot be solved by government.

It's high time we stopped looking to any government for anything other than as a gigantic roadblock to freedom and happiness. Giving, spending, and printing, are destroying the economic base of savers, retirees…and everyone else…for than matter. Bush is trying to beat Clinton in forming new bureaucracies and spending. Do we need sky marshals, or armed pilots and stews? Do we need the ATF, or elimination of gun laws? Do we need the INS or just seal the borders? Do we need an additional $48 billion for the military, or to become neutral and bring the troops home, and station them on the Mexican border? We are seriously ill people. Seriously. We are on death's door, economically, and all the manipulations to keep the precious metals low, and the paper acceptable, will soon fail completely. I'll collect my $50 bet when the Dow goes to 5,000. Any one want to bet me on how high in funny money, gold and silver will go? Someone else forwarded me a piece on how to protect America's gold reserves. What reserves? Another myth.

Just protect yourself, because you must realize givernment isn't in the protecting business. Get out of their cash trash.


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