Fatal Flaw

Nobody wants to see a deflationary downturn anything like what we experienced last fall. That was scary. Nevertheless, mild anxiety over that possibility affects everybody. The consumers are pulling in their horns. Credit card debt keeps falling while savings are taking a dramatic upturn. That’s the sign of a worried public. Meanwhile, the government is stuffing the banks with money. Unfortunately, the banks refuse to lend. Some banks are giving cowardice a whole new meaning. They don’t even want to renew loans for their old customers.

None of this bodes well for a recovery. Further liquidation of debt including underwater commercial real estate mortgages may cost the taxpayer untold billions more. Bad employment news for August, could put assets under the gun once again. Money printing, debt monitization and government engineered liquidity are being pumped into the system to induce a recovery. It’s free market deflation against government inflating. The Feds will throw money out of helicopters if they must. The dollar’s going to take its lumps.

How it will play out nobody knows for sure. We suspect high inflation in the future but not until the economy recovers. The government heedlessly storms ahead with its reckless spending as if unaware of the threat of currency debasement. Apparently they don’t care about inflation if their social schemes will just get enacted.

The current economic machinations are played out against the backdrop of larger world changing trends. We worry about the day to day (micro) events but they are nothing against the sweeping macro tide of socialism that engulfs us. The greater share of our income and profits are taxed to fund government subsidies and wars. Throw in the money that’s borrowed or created from thin air to fund socialistic schemes and we are two-thirds collectivist and one-third capitalist, with capitalism on the losing end of the trend.

You know about the camel’s nose under the tent. That’s how socialism begins. Once it’s in the tent all hell breaks loose. You can never undo its damage. You can never roll socialism back until it’s too late. Take Social Security, Medicare, Medicaid, Public Housing, Unemployment and Welfare: all are socialism’s foremost objectives. Once they begin they can’t be stopped. People come to rely on them. In our society no one questions their necessity. Every year brings new subsidies for this or for that. Gasahol is socialism’s fuel. Airports built in nowhere places are socialism’s economic stimulus. But socialism has this Achilles heel: it does not produce it only consumes. It is not an architect of growth and prosperity. It is a destroyer of economic health and well-being. It corrupts and corrodes the society that embraces it, eventually bringing lasting ruin.

The columnist, George Will and the politician Jeb Bush, recently discouraged the use of the word socialism. Isn’t that what the socialists (liberals) in America would like? Don’t call a socialist a socialist? Hey, call them socialists all the more. Use the term liberally every chance you get. It aptly describes what they are.

Socialism gives us unsound money. It sponsors inflation and currency debasement to pay for its costly schemes. The socialist monstrosity is unaffordable. Social programs we rely on eventually break the budget. The free stuff is too expensive. A day comes when the checks bounce. Socialism causes a nation to go broke and that’s where we are heading. It’s called national bankruptcy. It ends on the scrap heap of history.