Musings

I have avoided making any financial-related posts for some time because in truth, what I saw coming was well, very depressing. Quite a while ago, I made a forecast as to when we might see the economy recover; In fact, I started a countdown clock in a sidebar to this blog.

I think I may have been too optimistic.

Figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts are shrinking for only the second time since 1940, and Medicare taxes will likely drop for only the third time ever. The last time the government's revenues were this bleak was 1932 in the midst of the Depression.

And yet, the current U.S. administration is on a spending spree that seems to be unending, and is obviously unsupportable. Already, the U.S. national debt exceeds $11 trillion dollars, nonetheless, the U.S. Treasury is printing near worthless currency like there is no tomorrow. The economists, with their heads in the sand, still label the current crisis as a ‘recession’, and see ‘green shoots’ in the economy.

Hogwash!

The fundamental problem is that over the last few decades, the U.S. economy has been re-engineered from being a manufacturing economy to a services economy which depends on full employment and non-stop consumerism in order to function. Until we wake up, smell this sewer and make the necessary changes, we will continue to spiral down into oblivion.

According to the Associated Press, “Meanwhile, the recession is taking a toll on fuel and industry excise taxes that pay for highway, mass transit and airport projects. Fuel taxes that support road construction and mass transit projects are on pace to fall for the second straight year. Receipts from taxes on jet fuel and airline tickets are also dropping, meaning Congress will have to borrow more money to fund airport projects and the Federal Aviation Administration."

It seems we cannot learn from the past.

Back in AD 161, when Marcus Aurelius was Emperor, the Roman Empire began its spiral into collapse. At that time it had about 80 million citizens, and the ‘Barbarians’ were at the gates all around its borders. So, the military was beefed up to contain their advances and invasions. To pay for this, they used the coin of the realm (the Aureus) that was made from more or less pure gold. Soon, they ran out of these, and desperate to continue payments to the forces, introduced the silver Denarius.

Both coins had ‘honest weights’, that is, gold and silver content worth the face value of the coins.

But, before long, these were both insufficient, so more new coins were introduced with inflated values. These coins had less and less gold and silver content, and ultimately, were made of base metals such as bronze and copper. Many issues were cleverly disguised to look like the real thing, clad with gold leaf and thin coatings of silver. Soon, the disparity between intrinsic and official worth became so glaringly obvious that the empire started to revert to the barter and trade economy of prehistory. No one wanted to take the junk currency.

In the third century AD, the empire accelerated its collapse as citizens were taxed heavily to support not only its massive army, but the now indolent citizens of Italy. Outside of Italy’s borders, the wealthy became as poverty-stricken as the lowliest citizen. The smart ones converted their assets into real estate as fast as they could get away with it, and before long, the upper class had holdings of vast tracts of land. Ordinary citizens had nothing, and became Serfs. In order to protect their holdings, the wealthy recruited private armies, and allowed the Serfs to occupy and till the land in exchange for 95% of what they produced, and free rein to molest the daughters and wives of the farmers at will.

Thus, the empire broke up and the Medieval or dark ages came into being. Do you think it can’t happen again? Don’t be too sure; while we are not supporting a massive army as the Romans did, we are supporting something worse---- A terrific transformation to socialism and the growth of a non-working class of yuppies and ne’er-do-wells.
Image courtesy of Moonbattery.com