Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
In the same category

Now We Can Stop Paying Attention

IMG Auteur
Published : November 08th, 2012
836 words - Reading time : 2 - 3 minutes
( 7 votes, 4.9/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Editorials

 

 

 

 

Two years, billions of dollars worth of political ads, and a nearly infinite number of platitudes and lies later, the election is finally over and we're...back where we started, with a divided government run by the same people, likely to pursue the same policies and spend a similar amount of time in gridlock. Not all that surprising when you think about it, since the country is evenly split between two outmoded but antithetical worldviews.


What is surprising is that anyone thought the outcome of this election mattered in the first place. The sad reality is that the institutions that dominate the system no longer care who is "in charge." And all it takes to illustrate this point is a quick glance at the following chart of America's total debt, which is the sum of federal, state, and local borrowing, home mortgages, credit cards, student loans, business loans, etc.




Note that between 1980 and 2008 it rose steadily under both republicans and democrats. Even during the supposedly fiscally responsible Clinton years (1990 - 1998), while government debt fell a bit, total debt soared. Why? Because there are two ways for a government to fund its overspending: The first is to borrow, as happened in the 1980s under Ronald Reagan. The second is to convince individuals and businesses to do the borrowing and to buy stuff with the proceeds, thus producing taxable income that helps balance the government's books. Either way, systemic debt goes up.


In the 1990s the Clinton administration chose the second strategy, using easy money to fuel a housing boom and tech stock bubble. The result was a torrent of borrowing, spending, and IPOs, which boosted federal tax revenue and produced a few years of balanced budgets. The government - for those who were focused only on the public debt - looked well-run. But to the tiny handful of Austrian economists out there, the fact that total debt was soaring, and that the average loan was becoming more and more speculative, led to the conclusion that we were creating a debt bubble that could only end with an historic bust.


That bust came in 2000, and republican George W. Bush was forced by its magnitude to leverage both the public and private sectors, producing a housing bubble combined with record government deficits. That bubble burst in 2008, leaving incoming democrat president Obama with a traumatized private sector incapable of leveraging itself further. He saw no option but to run deficits that a generation ago would have seemed physically impossible.


The system, in short, demands ever-increasing amounts of debt and couldn't care less whether republicans or democrats provide it.


Someday the markets will put a stop to the borrowing, but until then it really doesn't matter who we elect or what they promise. Debt, after it reaches a certain level, is all that matters - not immigration policy or health care or marginal tax rates or short term interest rates or gay marriage. All are irrelevant compared to the institutional momentum of increasing leverage.


Total debt is now about $175,000 per citizen, or $700,000 per family of four. The average family's income is something like $50,000, so it's clear that we've long since passed the point where a return to a 1980s version of placid normality is a viable possibility for the country, any more than it would be for a typical family that woke up to find itself $700,000 in debt. Going forward the choice is to inflate or die.


So Why Bother Watching?


This story is at least a decade old, and it's getting tiresome for all involved. For the majority who expect positive change from each election the disappointment must be exhausting, as each inevitable compromise moves their latest hero one step closer to impotence. For the small number of people who see the underlying truth, this show is even harder to watch because the obvious, inevitable ending just won't come. The zombie that should have died for good after the 2000 tech stock crash keeps shambling along, wreaking havoc or boredom, depending on whether you're in its path or watching from a safe distance.


The solution? Accept that time spent obsessing over a process with a predictable result but unpredictable schedule is time wasted. So just stop watching. Make the right - and by now obvious - financial and lifestyle choices and then tune out. Turn off the TV and stop reading the business and political sections of the paper. Use the resulting time to develop yourself and cultivate your community. You know what's going to happen, more or less: A decade hence your gold will be worth a lot more and everything else quite a bit less. And you know your friends will suffer and need your help. So prepare for the things that you can predict.


Once the markets stop providing unlimited leverage and the system crashes for good, then tune back in and add your voice and your capital to the debate over what to build in its place.



 

 

<< Previous article
Rate : Average :4.9 (7 votes)
>> Next article
John Rubino is the author of The Coming Collapse of the Dollar (co-written with James Turk), How to Profit From the Coming Real Estate Bust (Rodale, 2003), and Main Street, Not Wall Street (William Morrow, 1998). A former Wall Street financial analyst and columnist with theStreet.com, he currently writes for Fidelity Magazine and CFA Magazine He lives in Moscow, Idaho
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Why we should abandon the State
28 Julovertheedge
What a gigantic pile of horse excrement. Cherry pick everything that has gone wrong. Completely discount the hard fact that the author and ...
Iran Agreement Boosts Peace, Def...
26 Julkeith95
How about the US invading Afghanistan in 2001, Iraq in 2003 ... leading to the current unrest in the middle east while supporting the 'Saudi's' ......
Take Possession of IRA Metals We...
24 Julericgolub
Internal Revenue Code 4975 language suggests that whether the gold is held directly by the IRA or by an IRA LLC (which is nonetheless still subject...
Gold Miners Nearing Rebound
24 Julsonora69
Silver has already made a 50 cent down and up round trip as of 3:30. This is happening on a Friday, with the stock markets failing to make an advan...
Why Pensions Are A (Big) Black Swan
25 JulS W.1
No (pensions) are not a black swan, which is totally random unforeseen event.
Iran Agreement Boosts Peace, Def...
23 Julsonora69-2
Doesn't anyone remember the Iran hostage crisis, when Iran held 52 American diplomats and citizens hostage for 444 days in 1979-1981. How about 198...
What Do Greece and Louisiana Hav...
23 Julovertheedge
"The US financial system isn’t any better. ... , Actual currency is just a little over $1.36 trillion. ..." And it is assumed that about h...
Why Are We Here?
23 Julovertheedge1
No "woe is me" here. Just another buying opportunity. Using leverage is not buying, it is borrowing. It ain't bought til it's paid off....
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Claude Resources(Au-Cu-Ngas)CRJ.TO
Provides Date for Q2 Results and Conference Call
CA$ 0.60+7.14%Trend Power :
Corporate news
Richmond Min.(Ur-Au-Gems)RMD.V
- Exploration Update
CA$ 0.09+0.00%Trend Power :
Corporate news
Arianne Phosphate(Ur-Mo-Ti)DAN.V
Extends the Term of Warrants
CA$ 0.84-4.55%Trend Power :
Financings
Anaconda Min.(Au)ANX.TO
Reports 12.83 g/t Gold Over 4.38 Metres and 8.55 g/t Gold Over 4.97 Metres from Channel Sampl
CA$ 0.05+25.00%Trend Power :
Corporate news
Capstone Mining(Ag-Au-Cu)CS.TO
Second Quarter 2015 Financial Results
CA$ 0.95+5.56%Trend Power :
Financials
Taseko(Au-Cu-Mo)TKO.TO
and Soda Creek Indian Band Sign Participation and Cooperation Agreement
CA$ 0.67+1.52%Trend Power :
Corporate news
Tinka Resources(Ag)TK.V
commences 10,000 metre drill program at Ayawilca zinc project, announces new IP results & tar
CA$ 0.17+0.00%Trend Power :
Corporate news
Sandstorm Gold(Cu-Mo-Au)SSL.V
Files Early Warning Report
CA$ 3.20+1.59%Trend Power :
Corporate news
Crown PointCWV.V
Provides Operational Update and Announces Executive Change
CA$ 0.13-3.70%Trend Power :
Corporate news
Cardero Res.(Ag-Au-Cu)CDU.TO
Announces Acquisition of the Advanced Zonia Copper Oxide Project in Arizona
CA$ 0.02+100.00%Trend Power :
Corporate news
Comments closed