Monty Pelerin, in his article It’s All Coming Apart published yesterday in American Thinker, shares his views on our current debt crisis. If you have never read Pelerin, you are in for a treat. You may not like what he has to say; but you will love the way he says it. This article and the one Pelerin links below should be considered must reading.
After blowing away the smoke that the political elite use to obscure the gravity of the current economic situation, Pelerin tells us, in no uncertain terms, that America and many other countries are in a debt death spiral and there is no escape, in his opinion. i want to share with you five considerations that Mr. Pelerin thinks should be of concern to every American. Then I will offer up some thoughts of my own.
1. An Incompetent President - The President is inexperienced and incompetent. He is likely a fraud, as evidenced by his guarded and unknown past. He is incapable of leadership, honesty, or management. Virtually every one of his policy initiatives has been harmful to the economy and country. His intentions are clear; the degree to which he will be able to drive us further down the Road to Serfdom is not.2. An Incompetent Political Class - The political class attained power via Santa Claus economics, providing gifts to constituents in return for votes. Both parties are guilty. Politicians have conditioned themselves and their constituents to “free-lunch” governance. Few know how to govern in any other fashion. Most are indistinguishable from prostitutes — vote for me and I will do “that” for you. Both parties want to preserve the welfare-warfare State, disagreeing merely on the means of doing so.
3. An Incorrect Paradigm - The Keynesian model of spend and spend has been good for politicians but disastrous for the economy. Over time, it has encouraged loose credit, overspending, and living beyond our means. The failures are obvious to all but Statists and so-called Keynesian economists. The political class cannot stop “free lunches” without suffering severe political consequences. Hence, the abuses will continue until resources are exhausted. Like Rome of old, we will soon run out of bread and circuses.
4. An Unhappy Ending - Current economic problems cannot be mitigated or solved without incurring another Great Depression. Whether it is preceded by a deflationary collapse or a hyperinflationary blow-off is moot. The ending is inevitable and as more people understand this ending, they take more extreme steps to protect themselves — spending ratchets back, savings increases, and businesses refuse to engage in new investment or hiring.
5. A Dangerous Prelude to the Ending - Government is insolvent. It would be bankrupt without Federal Reserve Quantitative Easing. As a cornered, wounded animal will do anything to survive, so will Government. Does that mean confiscatory tax rates, capital controls, IRA investments forced into Treasury Bonds, “excess profits” taxes, a national sales tax, etc., etc.? It could mean any or all of these and more. Government will not roll over. It will do whatever it can to continue, regardless of how illegal, immoral, unethical, or harmful it may be for the country.