Our economy, and our national character, are being destroyed by addiction to debt, spending and speculation. Consumerism, greed, and a government that actively promotes both, have ruined the value of our currency, and left our nation and its citizens awash in an ocean of debt. As I have pointed out before, there is seemingly no way out of the mess we’ve created. Public and private debt in this country have reached staggering amounts, unimaginable just a few years ago. And no one has the political will or courage to lead us out of it, while precious few in this country are willing to reject the notion that the government can or should “fix” our problems. Sadly, the best lack all conviction, and the worst are full of passionate intensity.
As our economy descends into the swamp that inevitably follows fiscal recklessness and irresponsibility, our goverment, and the quasi-governmental masters of our monetary policy, offer up nothing but more debt, more borrowing, more bailouts and more central planning. There is seemingly no limit to how far they will go to prop up and protect businesses and industries that deserve economic punishment for their sins. There is seemingly no limit to how much more debt they are willing to incur, at our expense. Those few who complain about a loss of market discipline, or the “moral hazards” associated with interference in markets, are drowned out by fresh cries for more corporate welfare.
Nationalization of the housing and energy industries is being openly discussed in Washington. Hank Paulson, vying to be a Hayekian strongman, calls for the creation of a super-regulator, then positions himself for the role. Congress and the President are mere lapdogs of he and Helicopter Ben Bernancke, while the nation frets over Christie Brinkley’s divorce.
The bailouts of Fannie Mae and Freddie Mac are radical steps in a country founded on free enterprise and free markets. The idea that the public funds should be used to buy stock in privately-owned, publicly-traded, for-profit entities, and that those entities (insolvent by all accounts) should be given an unlimited line of credit, courtesy of the American taxpayer, is shocking. As Jim Rogers put it in a recent interview, “(Bernacke and Paulson) are ruining what has been one of the greatest economies in the world. They are bailing out their friends on Wall Street, but there are 300 million Americans who are going to have to pay for this.” And this is just the tip of the iceberg. With every bit of bad news, the complicit and corrupt system cedes more authority and power to those who caused the problem in the first place, and an ignorant, frightened population acquieses. The path we are following is exactly what Frederick Hayek called it in 1944: a road to serfdom.
Hayek saw that collectivism and central planning lead ultimately to tryanny and a loss of freedom. “Hayek’s central thesis is that all forms of collectivism lead logically and inevitably to tyranny, and he used the Soviet Union and Nazi Germany as examples of countries which had gone down “the road to serfdom” and reached tyranny. Hayek argued that within a centrally planned economic system, the distribution and allocation of all resources and goods would devolve onto a small group, which would be incapable of processing all the information pertinent to the appropriate distribution of the resources and goods at the central planners’ disposal. Disagreement about the practical implementation of any economic plan combined with the inadequacy of the central planners’ resource management would invariably necessitate coercion in order for anything to be achieved. Hayek further argued that the failure of central planning would be perceived by the public as an absence of sufficient power by the state to implement an otherwise good idea. Such a perception would lead the public to vote more power to the state, and would assist the rise to power of a “strong man” perceived to be capable of “getting the job done”. After these developments Hayek argued that a country would be ineluctably driven into outright totalitarianism. For Hayek “the road to serfdom” inadvertently set upon by central planning, with its dismantling of the free market system, ends in the destruction of all individual economic and personal freedom.” (I just lifted this from wikipedia–thanks to the anonymous author of it.)
Creation of more and more debt, to prop up and support a mountain of bad debt and malinvestment, is almost literally insane. There can be little doubt where all this inevitably leads us. At some point it will become necessary to monetize the debt, and whatever imaginary value the dollar has retained to that point will be completely gone. The game will be over: the inevitable result of entrusting politicians and “central bankers” with a national credit card with no limit, and a printing press for so-called money–unsupported by any finite commodity.
There are only two solutions that I can think of. First, our leaders and those empowered by them, could repent of their fiscal sins. Congress could refuse to spend money we don’t have. The President could veto any unfunded spending bill. The Federal Reserve could begin adhering to its proper role as the protector of the currency, and quit acting as the protector of the NYSE and artificially inflated real property values. We could allow markets to function without government interference. We could allow property and asset values to adjust to reflect reality. We could allow malinvestment to be liquidated. We could allow interest rates to rise above inflation. If our nation demonstrated that kind of fiscal discipline, oil and food prices would plummet as the the value of the dollar rose. Real prosperity could return to this country.
But that’s not likely to happen.
The second solution lies with us, the people. We could take it upon ourselves to become as industrious, frugal, independent, virtuous and self-reliant as our ancestors who founded this nation. We could render government increasingly irrelevant, and make centralized planning, and the power grabs that accompany it, pointless. We could refuse to surrender our incomes to an out of control welfare/warfare bureacracy. We could practice our liberties, and if need be, defend them.
We could begin to act and think for ourselves. We could declare those who would forsake our liberties for phony money and their own power to be tyrants. And we could say to those who refuse to join us, in the words of the patriot Samuel Adams:
“If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsel or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen.”
Grace and Peace