UNCLE SAMDUSKY
Even if you don’t believe a word of what I have to say today, it may come back to you as events unfold. From reading most newspapers, you would not think that the world financial system is crumbling. Sure, Europe has big problems now, and the U.S. is probably entering another recession. But we have always recovered from these periods of economic trauma. Why shouldn’t we come out of this one eventually? Almost no one in America understands what the FED is doing to give us the appearance of recovery and stability in this election year. In reality, our economy looks stable only because many other countries in the world are in even sadder shape, and we have “resources” that they don’t have. Eventually I believe that more Americans will come to realize that Uncle Sam is really Uncle Samdusky.
Uncle Samdusky has been giving us candy bars for so long that we have become comfortable with him sitting next to us. In fact, as a nation, we crave Uncle Samdusky’s candy. The filthy rich folks, Wall Street, the corporate welfare folks, the corporate farmers, the “too big to fail” banks like Uncle Samdusky’s Santa Claus money just as much as the “poor”. Neither Republicans nor Democrats are interested in distancing themselves from Samdusky. Both parties game the system for different reasons. Both parties mostly represent the interests of different people who want money or benefits that they did not earn and someone else has to pay for.
I believe that almost every financial calamity in my lifetime can be traced back to the Federal government choosing winners of Santa Claus money. Whatever the government meddles in with Santa Claus money ceases to be a free market, whether it’s housing or manufacturing motor vehicles. Most of the gyrations of our stock market and our economy can be traced back to massive intrusion of the government on the laws of supply and demand. The Federal government causes bubbles when it dumps huge amounts of Santa Claus money into the economy for any reason. Congress initiated the housing bubble by forcing lenders to lend money to people who had little chance of making monthly payments. Sub-prime loans and the housing bubble would not have existed if Uncle Samdusky had not decided that almost everyone was entitled to a house, even if he had no down payment and little chance of making monthly payments.
Much of the years of prosperity we enjoyed before 2008 were built on the illusion of endless credit and Santa Claus money from Uncle Samdusky. Any time you hear someone start a sentence with “Any country that can send a man to the moon and bring him back safely can afford……,” grab your wallet and run. Another of my favorites is, “Every other civilized country in the world has national healthcare, so we should be able to do it.” Excuse me, aren’t those other countries either bankrupt and/or pay as you go national healthcare? Obamacare is not pay as you go. The U.S. can’t pay anything as we go. We haven’t even had a budget for the last three years. Uncle Samdusky has no savings whatsoever. Many people in America don’t understand the difference between Santa Claus money and tax revenue. And they apparently don’t care as long as they “get theirs.”
Santa Claus money gives Uncle Samdusky the opportunity to control more people, to pick winners and losers in business, and reward people for being lazy and self-destructive. Santa Claus money has allowed such things as “earmarks,” pork money for the voters, campaign contributors, and friends back home. Our government has subsidized self-destructive behavior and laziness for decades, while Congress lined its own pockets. Guess what? We have more self-destructive and lazy people than ever. In truth, we have not had a free market in this country in many years. Do you actually believe that individual investors have a chance against the Fed and Wall Street, holding hands in some high rise building in NY, trying to think up another way to rig the game? Our government’s accounting practices would get any legitimate business thrown in jail. Their behavior discourages honesty everywhere.
To all those who depend on Santa Claus money from Uncle Samdusky, party on while you can, both Republicans and Democrats. But you are ignoring history. Our slide has been a long one, but we are near the end. Don’t take my word for this. Read the evidence I will present and decide for yourself. No country in the history of the world has been able to save its currency having reached this point. Our greenback has lost 95 per cent of its value since it was first issued. Most of that damage was done with Santa Claus money, money printed and borrowed far out of proportion to U.S. economic activity or the tax revenue we take in. Most of this money went to satisfy some special interest, an ideological adventure, or greed. Our founding fathers had in mind limited government, pay as you go. Only in times of war was deficit spending to be temporarily tolerated.
In 1887 Alexander Tyler, a Scottish history professor, had this to say about 2000 years of experience with prior democracies:
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidate who promises the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, (which almost) always is followed by a dictatorship.”
The average age of the world’s greatest civilizations from the beginning of history has been just over 200 years. We are right on schedule. Think about the enormous power our government already has, the businesses it owns, the banks it sleeps with every night, the mortgages it holds, the land that it owns, the resources it controls, the new powers that our president has created for himself, the imminent takeover of healthcare, and the enforcement arm of the IRS. I dare you to look up the definition of Fascism.
Never mind, I’ll help you. Fascism is a system of government that advocates a dictatorship, typically through the merging of state and business, together with an ideology of belligerent nationalism. Keep in mind that America spends more than ten times as much as the next ten largest countries combined on “defense.” We can’t seem to enjoy peace. One could argue that America has more in common with Government Fascism now than capitalism or socialism. I believe that the current experiment with democracy is coming to an end before our eyes.
While we are watching artificially low interest rates controlled by the Fed and reading the lies of government accounts of GDP, CPI, and unemployment, taxpayers have been robbed blind by the loss of purchasing power of the dollar. Americans have been somewhat shielded from the effects of our government’s reckless creation of Santa Claus money, for reasons I will explain. We have been slowly boiled like frogs, which will stay in the water if the temperature rises slowly. The rest of the world is wounded every day by this monster, Uncle Samdusky. I realize that many people have never looked at our government this way, but let’s look at the evidence.
I am not predicting that America is going to cease to exist. However, the majority of us will feel real pain when Christmas (Santa Claus money) is over. The world has not seen such a fall since the Roman Empire and the Soviet Union collapsed. If history is any judge, ultimately price inflation will follow out-of-control monetary inflation. Mr. Obama and Mr. Bernanke account for one-third of our national debt, in only three and a half years. These dollars may soon come home to roost. Any number of events could be the trigger, but history says that the U.S. will join much of the world, especially democracies, in a long period of depression, where Uncle Samdusky will require more and more power to control us. Violence and lawlessness will become an every day event. Lots of people will be seeking help in emergency departments. That’s why I started this blog, to get our emergency departments secure and protect the caregivers as violence breaks out in every community.
History teaches us that our government must collapse before we can start over with sound fiscal and monetary practices. There is nothing wrong with our Constitution. Uncle Samdusky has corrupted and doomed this version of democracy by debauching our currency. There are no checks and balances among thieves. All three of our branches of government have failed miserably to preserve the real Constitution. Sooner or later, we will go out like every other country that took the Santa Claus path. We can’t grow our way out of it, producing more tax revenues, because our president is committed to withholding from the country our only possible source of massive honest amounts of money, the energy underneath our own soil and off-shore. We can’t tax our way out of it even if we eliminated all tax breaks. And lastly, we will eventually be unable to borrow to continue our lifestyle, for reasons I will outline.
Since the taxpayer is already nearly maximally screwed, and interest rates are near zero, government will likely screw the bondholders next, anyone who holds a security backed by the U.S. government. We can’t hold interest rates down once inflation gets out of control. Interest rates must rise above the level of inflation to halt hyperinflation. We are only able to pay the interest on our national debt because of extremely low interest rates. When rates rise to 10 per cent or 20 percent, the interest we must pay on that debt will consume much of the nation’s “budget”. How do I know that hyperinflation will follow this deflationary period we are in? There is a sinister process that has already started that you will not read about in the mainstream media. Once you understand it, I challenge you to come to a conclusion different from mine. I believe that the entire world is going to cut up Uncle Samdusky’s credit card. I will discuss exactly how and why this will occur, and you will have the opportunity to disagree, but first I would like for you to take a peek at what lies ahead when our creditors have no incentive to lend us more money.
Government employees and their unions should prepare to get screwed soon. The number of government employees, state, federal, and local, will have to be cut to a fraction of today’s bloated payroll. Entire federal government agencies will have to go. We will park some of our aircraft carriers and ground part of our air force. We will be forced to gut the manpower of the Marines and Army. Even after cutting entitlements to the bone and making Medicare and Social Security means tested (screw the old folks who saved anything), eliminating all tax breaks, confiscating private 401(k) and IRAs, and instituting wage and price controls, Uncle Samdusky will default on the debt and interest that he can never repay, probably by using his printing presses. Helicopter Ben is going to be busy.
The coming bad years, as painful as I believe they will be, are necessary to make Americans angry enough to throw out every aristocrat in Congress and reign in the Federal Reserve. Most of the world will hate America for its irresponsibility for years to come. But then, much of the world hates us already. Nobody will lend us any money for a long time.
When massive unemployment hits us and the cost of everything doubles, our society will lose a portion of its civility. Can you see why a dictatorial government is almost always necessary to maintain order when democracies collapse? Last week I promised to tell you the most important country in the world to the U.S. and our position of global domination. It is Saudi Arabia. Just recently, while almost no one noticed, Saudi Arabia demonstrated to the world how America would collapse. That’s next week’s post.
Charles C. Anderson
http://www.amazon.com/author/thrillerguy
