Thursday, January 10, 2013
A Message to advocates of government (Social Security, Military, etc.) spending
Though I do not question your good intentions, your fundamental misunderstanding of basic market principles undermines your argument.
Whether it is the financing of (questionably justified) wars overseas, the financing of welfare entitlement programs for the poor, or welfare entitlement programs for Wall Street, this reckless spending is unsustainable in the long run.
We need only to look across the Atlantic at our Club Med friends to see the most recent example of social security spending gone wild.
The U.S. can postpone this fate due to its global reserve currency status by issuing more debt. BUT, this economic hegemony exists due in large part to the U.S. global military force projection.
Using any type of metric, dollars, euros, ounces of gold, etc., if the amount of non-productive spending outweighs the amount of productive spending for too long, economic turmoil ensues. Which is exactly what we are seeing right now!
The laws of supply and demand exert their influence, and the higher this fiat bubble gets blown, the bigger the pop will be when it finally bursts... The pages of history are filled with numerous examples (but never on such a massive scale).
It would be naive of me to expect that my words would change anybody's opinion on the matter... So I'll let the unfolding reality take care of that!