Tuesday, Jan 31, 2017
I hear some folks worrying that Trump will be worse than Obama when it comes to deficit spending, just as Obama was worse than Bush Jr, who was worse than Clinton, who was worse than Bush Sr, etc. Of course he will be, but not because he can’t manage money, he’s a businessman, after all, and knows about budgets better than the average politician. The problem is, ever-increasing debt is baked in the cake.
Imagine it’s 1913, and the fledgling Fed just printed its first federal reserve note and gave it to you, saying, “Congratulations, we hereby lend you this first-ever dollar, which you are obliged to repay… plus interest”. In your euphoria to get your sweaty mits on this dollar, you stop and think… hmmm, there’s this one dollar, which I am obliged to give back… but where is the money I need to pay the interest? It doesn’t exist!
And the second dollar rolls off the press, but it’s on loan as well, with interest due… and then the hundredth… soon, the millionth, the billionth… now over $20T and growing (and that’s just the money the government borrowed), and all of them on loan, with interest due that doesn’t exist, and cannot exist, ever.
And hence grows the national debt, to infinity apparently, without a chance in hell we will ever settle the debt. Today, it’s all we can do just to pay the interest, so we borrow that, as well, deepening the absurd pileup of debt and the burdens it places on future generations.
Yet, it’s all just imaginary monopoly money, backed by nothing, of little to no intrinsic value (I mean, it’s good-quality paper, but so covered with ink and pictures of dead presidents it’s useless for writing a note), yet we all faithfully agree to accept it as fuel for our economic endeavors, and work and sweat and sacrifice and bleed and fight wars over this fiction called currency.
And since it’s all a fantasy, there’s nothing substantial prohibiting the Fed from granting a debt jubilee, a write-off of the monetary units, destroying our shackles, slaying the dragon. But would it ever do that? Of course not. That’s not what central banks do. No, they play the game until they’ve siphoned off every bit of wealth, every resource they can seize, then they default, take their ill-gotten gains, and to hell with the masses.
Then… they just start a new central bank, and the cycle begins again. This time they’ll want to go global, so it will probably have something to do with the IMF, with their “Special Drawing Rights”, a decidedly unappealing name for a currency. And unless we, the debt slaves, wake up and refuse to play their game, it will end up just as it always has in the past: the banking elite will continue to be our masters, and we their reluctant pawns.
What to do? A good start is to buy precious metals, gold and silver… it’s real money, and cannot be counterfeited by central banks.
