Gold and Central Planning

 

Big Government is inflationary.

It used to be that Central Planning was the opposite of Free Market Economy.  Now the world's premier Free Market Economy- the United States of America - is becoming all about central planning.

It used to be that the both political parties were Free Market First - but then had their own Centralized Priorities.  Then in 1913 after a particularly violent market crash the Federal Reserve Bank was invented to be the Central Planning Mechanism for Interest Rates which control the flow of money.  America was on the road to socialism.

Still, there was a mechanism that controlled the flow of money over and beyond the artificial setting of rates.  That was the fact that all money had to be convertible into Gold.

Then came the great crash of 1929.  It seemed the Fed was still not capable of averting crashes.  So a few years later, in 1933, during the ensuing depression we made private ownership of gold illlegal.  This consolidated massive power in the hands of the Fed and the Banks that owned the Fed (yes the largest banks own the Fed).  And of course in the hands of the Treasury.  Because the Treasury is the only entitiy that can legally print money.

By 1971 we had printed so many dollars that it was no longer possible to convert dollars into gold.  So we closed the gold window.  

And the Dollar Hegemony began.  But this consolidated even more power into the hands of the Fed, the Banks that own the Fed, and the US treasury. We were on the road to full blown Socialism - even though Free Market Priniciples still prevailed - at least for the larger coroporations.

At this point we still had two parties Democrat and Republican.  Democrats at this point believed in Free Market but thought that the Government ought to be involved in social justice and the Republicans said they believed that that role of the Governement outside of the Centrally Planned macro economy should remain as small as possible.

Then came the inevitable inflation of the 1970's.  Paul Volcker temporarily killed it with 18 percent interest rates.  But Government didn't get any smaller.

And then in 1980 Alan Greenspan and Ronal Reagan instituted the final nail in America's turn towards socialism - perpetual deficits and perpetual negative real rates.

Government became larger and larger (even as lip service to "Small Government" became louder and louder.)

Along with Government the largest Banks and Shadow Banks became so large that TOO BIG TO FAIL was born.  And with it Perpetual Bailouts.  And as long as too big to fail and perpetual bailouts is the central policy of a centrally planned economy the largest institutions can take unlimited risks - because there is no consequence.  Ansd they get larger and larger as the Government gets larger and larger and the folks who control it all get richer and richer.

Now both Government and Debt is so large that there isn't even lip service to Small Governement.  The Democratic Party wants unlimited funds for its social justice campaigns and the Republican Party wants unlimited funds for its Religious Justice Campaigns and the only argument is who can spend more on what.

40 percent of GDP is government spending.  That's using the funny money accounting of the government itself.  In  truth the Treasury issues debt that the Fed buys and the Government uses the proceeds to instill the illusion that the economy is still growing by whatever small percentage they can manufacture.

The truth is that inflation is so out of control that only the top ten percent of the population - that owns 90 percent of the wealth - ( top 1 percent own close to 1/3 of all the assets in the country) - can afford to comfortably navigate the massive inflation that makes everything more and more expensive day by day.

The problem is that as the other 90 percent gets more and more desperate they seek greater and greater centralized conrol to give them relief.  Fifty two percent of the population believes Amercian Democracy has failed and they would be comfortable with a strong man leader to save them from this failed democracy.  In other words they expect that an even greater centralization of the government will save them from the failures of large central govenment.  They hope to solve the problem with more of the same that caused the problem in the first place.

That is the definition of insanity.

More central planning to solve the problems of central planning.

It's also the defintion of inflation.

Inflationary policy is insane.

Inflationary policy is intensifying.  And most of America wants more inflationary policy to solve inflationary policy. 

Maybe consider protecting yourself with a little of the old fashioned sanity that is gold.