When All You Have is a Welfare Check…
Matt Welch is — sigh — depressingly on-the-money:
In fiscal year 2000, Clinton’s last as president, the federal government spent $1.77 trillion. Multiply that number by two, and you’re almost to federal spending in FY 2010: $3.72 trillion in Obama’s first wholly owned budget. If we had limited government’s growth—not actually cut government, mind you, but limited its growth—at the rates of inflation and population-expansion, the 2010 federal budget would have been a much more affordable $2.50 trillion. Instead of “fiscal cliff” on Jan. 1, 2013, we’d be facing a federal budget surplus.
Faced with the overwhelming evidence that the debt and deficit problem is definitionally a spending problem, negotiators and commentators are talking about everything except cutting the size of government.
We’re talking about talking about maybe reforming entitlements somewhere down the line. No cuts, mind you, just a reduction in growth. But Obama has already proposed to increase welfare spending by another 30% over his final four years — even while assuming economic growth and Americans getting back to work.
The economy is in the tank? Jack up welfare spending. Happy days are here again? Jack up welfare spending some more.
We live in the Welfare State. Act accordingly.
It eludes most…
But in a fiat money economic system government spending IS taxation.
The taxes not collected in a more traditional way: excise, income, tariff, estate (death transfers) are topped up by official money-printing.
While it is denied — such money-printing is definitionally hyper-inflationary.
Hyper inflation, as a term, is mis-construed to mean that final phase of currency destruction so emblematic of governments funded by the printing press. When, in fact, the process has been going on, completely unchanged, all along.
In the Wiemar case, the German currency had been utterly trashed by hyper-inflation before the dawn of 1923. Compared to 1918, the price level had already zoomed at least fifty times over, even more if the items were imports.
America, as a constitutional republic was established entirely due to currency abuse and trade wars between the colonies after their war for independence. They discovered that they’d over done it. Hence, the US Constitution started out as a trade document — prohibiting cross tariffs and fiat monies only to morph into the document we know and Barry abuses.
During the early phases of hyperinflation, it operates as a political narcotic.
Which see, the post and quote above. ^^^^^^
Jocularly known as the Opiate of the Politicians/ Elites — historically no polity has ever been able to shake it/ go cold turkey until a systemic crash — flat-lining the currency. Which, of course, destroys commerce, comity and currency nominated assets — particularly debt-assets.
It always surprises the masses, but real estate crashes in hyperinflation. (It fails to hold value.) Real estate has value in normal times because it can command worthwhile rents and offers asset leverage.
Both situations collapse during hyperinflation. Commercial space goes begging. Tenants fail to pay their rents. And, above all, absolutely no-one will advance mortgage credit towards real estate acquisitions. Leverage goes to unity: all deals are all-cash deals. In real terms, real estate simply craters. Renters are turfed out and lenders are gone; no-one is willing to take the associated continuous tax liabilities off ones hands — and maintenance goes completely to hell. The country-side looks like a war zone — almost like Detroit.
(Do note the home pricing there at this time. It’s a window on the future.)
And, of course, who could forget the Confederate Dollar. From the first, the CSA attempted to operate a defense budget — without taxation — but with a printing press.
Even Nero, of burning infame, was able to destroy the Denarius — and didn’t even need to lose a war. Mere overspending was enough. Lacking a printing press — he hyper-inflated the Denarius via the ‘dip.’ Whereas Roman coin had been made of silver — of reasonable purity — Nero authorized coinage that was copper — clad in a quick dip of silver. These were the coins that caused everyone to pick up the habit of biting specie. The dip was soft — whereas the substrate was stiff. So, one’s mouth could quickly determine that the shell was pure silver — and thin — as against the traditional high silver alloy.
Which is all a long way of saying that you can blow up your currency — even if every other factor is in your favor — including the courts, police, army and navy.
It is of note that the retail public is dumping stocks/ equities to purchase bonds/ IOUs. It’s the worst imaginable trade to make, so no-one is stopping them.
Bingo. Too many economists fail to make the distinction between “normal” inflation (which is driven primarily by the supply and demand for economic output) and hyperinflation, which is driven primarily by a lack of confidence in the currency as a store of value. Under the right circumstances, “normal” inflation rates can be higher than a hyperinflation.
It’s really important to note also the chaotic nature of hyperinflation. I’ve heard stories from Argentina’s hyperinflation of people trading a condo or house for a crappy old car. Why? Because they could move in with relatives, but they absolutely had to have the car to get to a job. Perhaps farmland retains its value (unless regulations or a lack of required inputs makes farming impossible). Perhaps precious metals retain value (unless strict enforcement of ownership bans makes it difficult to use as money). Perhaps fuel retains its value (unless the economy crashes so hard that the supply of fuel is greater than demand). It’s hard to tell until it happens.
Act accordingly.
Tell a shrink you hear voices and can’t get out of bed to go to work. Spit the meds out when you leave his office. Go get on SSDI and quit your job. Keep telling them you take the meds. Do odd jobs under the table for extra spending money. Relax and enjoy your life: reading, hobbies, what have you.
It’s called going “schlock Galt.”
I’m waiting to see just how bad my first paycheck in Jan will be. But at that point I have every intention of applying for food stamps.
They voted for it so I’m going to avail myself of it.