I may have lauded governmental omniscience too soon — just today I found out that almost a year ago, in the eighth year of his missile-throwing, shoe-blocking sway, Mr. Bush formed the President’s Advisory Council on Financial Literacy. He did this by signing his 251st unclassified executive order.
No doubt, the president and his financial advisors definitely need to hear from an advisory council on financial literacy. Establishing such a group in the eighth year of horrendous growth of the warfare-welfare state, in the eighth year of a federal lavishness that makes the dead czars of Russia look as careful as dear Tonya Zhivago in winter after the revolution — well, that’s just George being George, I guess.
The council doesn’t actually advise the President. It looks like Paulson’s cheer-squad, a Treasury chorus, or maybe a chorus line. I guess it’s really a top level U.S. government effort to help educate common folk on money matters. Now that’s just rich.
In 2008, the Washington Times reports that federal spending went up 25% before the more obvious credit and financial sector meltdown, before the two trillion dollars the Federal Reserve made available to recipients who shall remain a mystery, and before the $850 bailout bill and other known bailouts.
As I read the article, I got more and more confused, not being overly familiar with official government Ponzi schemes. I mean, I know they exist, of course. The Times also explains "The deficit in fiscal 2008, which ended Sept. 30, was $454.8 billion, up from $162.8 billion in fiscal 2007. The deficit itself is expected to be about $1 trillion in fiscal 2009."
There is also a bit on future debt and obligations, especially the one relating to all those military veterans and other retirees, and their health care. This future spike in the future costs in veterans benefits was "unforeseen." That’s a euphemism for the two words the warfare-welfare state usually uses to explain itself to the rest of us.
A warfare-welfare state is precious, you see, and it has a price. Your freedom today, and your children’s tomorrow.
The hell we must pay for the obscenity of federal spending, federal monetary policy, including the Federal Reserve’s very existence is coming due. As it does, we discover that one of the gatekeepers was an SEC that instead of promoting vigilant justice jousts with those "at the margins" in Jim Grant’s words a few days ago on Bloomberg, while treating the elephants to all the comfort and coziness of a long marriage.
There is an alternative ending to this story, and we have examples from other places — even our own history — to show us how it might work.
Shays Rebellion comes to mind, shortly after the war for independence from Britain. There’s an example of soldiers expecting pensions and respect, and instead getting their property taken by the government in lieu of back taxes.
Zimbabwe is a case in point. Mugabe runs a political machine that ensures friends of the government have rule of law on their side. Mugabe’s megalomania has brought the Zimbabwean inflation rate to 11 million percent. That’s pretty impressive, as worthlessness goes! (Don’t tell George, he still has a few weeks!) But the interesting thing is that life goes on, and the central bank of Zimbabwe was recently forced to allow alternative currencies in country. It had no choice. Much like our own Federal Reserve, it had become fundamentally irrelevant.
Albania had a bad time some years ago, when the people reacted to a government-backed Ponzi scheme — and the loss of all their money — with the Rebellion of 1997. This rebellion was sparked by a loss of $1.2 billion, a loss that averaged $400 per Albanian. For that, they went into the streets and overthrew their lousy government.
Our government today owes something like $37,000 per American — which means, we the people must ultimately pay the bill, or default on the promises, mostly to each other. When the government defaults — obviously the payers shouldn’t mind — but the receivers will. That group of receivers is as large as the group of payers, but the trendline is in the wrong direction. As the fiat economy tanks, more and more people become dependent on the government’s largesse, and fewer — whether at the Bernie Madoff level or just the little guy, are actually producing value.
The tipping point could be inflation, and it would appear that the Fed is doing its best to make that happen. How to handle it? Call the Zimbabweans, if you can find a number to the one in thirteen who have a cell phone.
Will the point of no return — or a welcome return to real liberty and truly emasculated government — be reached as Americans lose their personal portfolios, their retirement promises, and their homes? The Albanians were already poor — and poorly educated — courtesy of their own warfare-welfare state. Communism had just fallen, and their hopes were high — it’s the worst time to disappoint people, you know, after they have had a taste of future change. As the Bush gangsters recede in the imagination of the people who were heard in the last election — we should keep in mind the Albanian experience. Of course, Albania was just a small, impoverished, unproductive kleptocracy. We are much larger.
In a country with a 20th century tradition of war, of celebrating men in uniform who boldly go wherever their politicians tell them to go, the stars could be lining up for some kind of replay of Shays rebellion — economically struggling veterans, promises broken, take it out on the government scammers. We got a glimpse of how this could happen some years ago when an unhappy veteran stole a tank from a National Guard armory and drove it around San Diego. Apparently unhappy people also steal bulldozers, and with all the new infrastructure construction planned for the next installment of Keynesianism, who can say which vehicle funded by the state makes a better, er, statement, if you will.
What may come of government facilitated and supported Ponzi schemes? We know that they collapse when they are discovered. Or maybe, they collapse, and then they are discovered. But what matters is that they fail, and fail publicly. It’s happening now. What to do? I am not a certified financial planner, but the stock value of Mises Institute and other free market educational websites and institutes is rising rapidly.
LRC columnist Karen Kwiatkowski, Ph.D. [send her mail], a retired USAF lieutenant colonel, has written on defense issues with a libertarian perspective for MilitaryWeek.com, hosted the call-in radio show American Forum, and blogs occasionally for Huffingtonpost.com and Liberty and Power. To receive automatic announcements of new articles, click here.