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In Ten Years Your Life Will
Probably Be Terrible (Without Ron Paul, that is)
Mark R. Crovelli
Lew
Rockwell.com
Tuesday November 13, 2007
That’s right, you read the title of this article correctly,
I am indeed predicting that your life ten years from now will
be extremely awful. "How on Earth," you are probably
wondering to yourself, "could Crovelli, whom I’ve never
met or even heard of, know what my life will be like tomorrow,
let alone ten years from now?" If you will indulge me for
a few minutes, however, I think I will be able to furnish an argument
that will convince you that your life ten years from now will
indeed probably be miserable.
My argument about how awful your life will be in ten years takes
as its starting point the fact that the American economy is in
seriously dire straits right now, and will continue to deteriorate
over the next few years. I hope I don’t need to convince
you that the American economy is at present suffering from a serious
credit malaise (which, I might add, I predicted a full eight months
before the housing market began to deteriorate in earnest) but
I probably do need to convince you that this serious economic
problem will persist over the next few years. How, then, can we
know that the American economy will continue to deteriorate?
We can confidently predict that the American economy will continue
to deteriorate over the next few years because we know that this
credit problem can only be addressed by the Federal Reserve in
one of two ways: 1) continuing to lower interest rates to appease
Wall Street and bail out ailing banks, or 2) leave interest rates
where they are (or even increase them) and let banks and investors
suffer the consequences of their malinvestments. The fact that
there are only two options available to the Fed is important because
both of these courses of action will result in continuing economic
deterioration in the United States for at least the next few years.
In other words, no matter what the Fed tries to do to combat this
credit problem, the American economy will continue to deteriorate.
(Article continues below)
This last statement might surprise you, especially if you listen
to economic commentators like Jim Cramer who view the first of
these alternatives as a panacea for the current credit crisis.
Just lower interest rates, according to this line of argument,
and everything will reverse itself, sending the credit, equity
and bond markets through the roof. This is not, however, what
will happen if the Fed continues to lower interest rates in order
to try to combat the credit crisis. On the contrary, if the Fed
decides to lower interest rates (i.e., pump more paper money into
the economy) this will only serve to temporarily bail out ailing
investors and banks, and it will certainly decrease the value
of the U.S. dollar vis-à-vis goods and services. In other
words, since a decrease in interest rates by the Fed is simply
another name for increasing the money supply by injecting newly
created cash into the banking sector out of thin air, this new
money will necessarily serve to decrease the value of the dollar.
What is more, this decrease in the value of the dollar vis-à-vis
goods and services (i.e., price inflation) will eventually force
an increase in interest rates on its own, because banks and other
lending institutions will be forced to add an inflation premium
to their loans in order to make their credit transactions profitable
as the dollar loses even more value as a result of the new money.
(For example, if you were going to lend five dollars to your friend
for one year, but you knew in advance that the dollar was going
to lose 25% in value over the course of that year, you would tack
on an additional 25% premium to the loan, in addition to interest,
in order to recoup the value of the loaned money you originally
lent out.)
What all this means, in other words, is that the Fed will ultimately
be impotent to keep interest rates low over the next few years.
If the Fed refuses to bow to Wall Street whining and bank pressure,
then the credit crisis will continue to spread as the housing
bubble continues to deflate (driving many people, like myself,
out of work in the housing sectors), credit continues to dry up
for businesses and consumers, and consumer spending (especially
credit-financed consumer spending) consequently dwindles causing
even more trouble for ailing businesses. If, on the other hand,
the Fed tries to combat these serious credit woes by lowering
interest rates (again, by pumping more money into the credit markets)
this new money will eventually percolate through the economy,
raising prices for goods and services in the U.S., decrease the
purchasing power of the dollar abroad, and eventually make its
way into the credit markets as an inflation premium on loans.
In short, the unsustainable economic boom of the 1990’s
will inexorably cause an economic bust that cannot be combated
by the Federal Reserve – no matter what pundits like Jim
Cramer say. The continuing credit crisis, however, is just one
reason why your life in ten years will probably be extremely awful.
The next reason why your life will be awful in ten years stems
from the fact that politicians and central bankers tend to respond
in similar ways to economic crises like the one we are only beginning
to pass through. Politicians and central bankers tend, quite simply,
to try to spend their way out of credit crises. It is thus quite
predictable that the Fed will indeed try to combat this credit
crisis by lowering interest rates over the next few years in an
attempt (albeit futile, as we’ve just seen) to "stimulate"
the economy. This attempt to spur the economy with more cheap
credit (rather like trying to heal a boil by injecting more pus
into it) will only serve to make your life extremely miserable
in ten years when you face a dollar that won’t purchase
even a fraction of what it will purchase today. If you are a baby
boomer on a fixed income, living off the savings you thought was
sufficient to last for years, you will find your hard-won savings
account buying less and less and less. If in ten years you are
unfortunate enough to have to work for a living (while simultaneously
trying to shoulder the enormous national debt, the debt from this
war, Social Security for the baby boomers, Medicare, Medicaid,
et cetera) you will find the need to renegotiate your wages or
salary almost monthly in order to keep pace with inflation to
afford your daily bread. You will also find it extremely difficult
to save for your own retirement (and you can absolutely forget
about ever getting any Social Security) because any cash you stash
away in a savings account or under your mattress will rapidly
lose value against the goods you want to buy, in addition to the
momentous fact that taxes will need to be increased dramatically
to fund Social Security and Medicare for the then-dwindling baby
boomer generation.
If in ten years, moreover, you are a business owner trying to
make a living, you will be in an equally unenviable position.
You will be forced, on the one hand, to pay continuously increasing
prices for the factors of production that go into your products
as the dollar continuously falls in value against those factors,
while at the same time you will find it difficult to obtain credit
to finance these increasing costs, because banks will be forced
to heap the previously discussed inflation premium on your business
loans. At the same time, your workers will harass you continuously
for wage and salary increases to keep pace with inflation. If
your workers are like those of previous generations, moreover,
they will probably ignorantly blame you alone for their miserable
lot, variously calling you a "capitalist exploiter,"
and a "profiteer." These misdirected insults directed
toward you simply for trying to make a living will undoubtedly
provoke Congress, ever opportunistic to reap political rewards
for "rescuing labor," into passing increasingly draconian
economic restrictions, and price and wage controls. You will probably
be forced to pay arbitrarily high legislatively-enacted minimum
wages, while you are simultaneously prohibited from charging increasing
prices to keep pace with inflation. The end result of this predictable
farce will probably mean bankruptcy for you, unemployment for
your workers, and credit being taken for the whole episode by
the wretches in Congress who will proclaim that they succeeded
in "protecting labor," but really they will only have
succeeded in crippling the economy still further.
Enough about the economy for now, because there’s still
more that that will make your life miserable ten years from now.
While we know that the U.S. economy will continue to deteriorate
over the next few years no matter how hard the Fed tries to avoid
it, we can know with similar certainty that the world ten years
from now will not be devoid of "terror." Consequently,
we can predict with a great deal of confidence that between now
and then our government will find no shortage of nations to invade
and people to kill in its futile attempt to stamp out "terror."
We can look forward to potential conflicts with Iran, Pakistan,
North Korea, Venezuela, and maybe even Russia and China over the
next ten years if our government resolves to seriously tramp around
the world stomping out "terror." You will not be surprised
to learn that any and all military adventures between now and
2017 will have to be financed somehow, either by increasing the
tax burden on you or by increasing the money supply with more
freshly printed dollars (which, of course, will still further
depress the economy and the value of the dollar ten years from
now).
Have I succeeded in convincing you that your life will be absolutely
awful in ten years? Your dollars will by then be increasingly
worthless shreds of green paper, and your tax burden will probably
have increased dramatically. Your wages will need to be renegotiated
constantly in order to avoid constant pay cuts, and the economy
will probably be stifled by more and more legislatively-enacted
price and wage controls. Your savings accounts and cash reserves
will get smaller and smaller as inflation increases, and credit
will become increasingly expensive with inflation premiums tacked
onto loans, and the supply of real loanable funds will have shrank
dramatically by then as more people find it impossible and unprofitable
to save and loan their money. You may, moreover, find yourself
living under a government embroiled in costly and pointless wars
with a score of other nations, passing the costs of those wars
onto the future you. Is there no hope that this spiraling into
economic backwardness and socialized barbarism can be averted?
There is indeed hope, and it lies with the political fortunes
of Dr. Ron Paul. Dr. Paul is virtually the only politician in
the last half century to understand the two most important economic
and moral truths for a political leader to grasp: 1) war is extremely
costly in both blood and treasure, and thus ought to be undertaken
only in self-defense against an imminent aggressor (and only against
the aggressor himself), and 2) money is the lifeblood of human
commerce, and thus must be backed by something more than green
paper and government promises. If elected, Ron Paul would return
this nation to the gold standard, thereby removing from the government
the unrestrained capacity to depreciate the U.S. dollar through
the printing of green paper, and the related insidious capacity
to fund wars at our expense simply by printing billions in crisp
new green paper. Ron Paul further understands that the ultimate
source of our current economic woe lies precisely in this capacity
to issue credit un-backed by any commodities whatsoever. There
is thus hope for both you and the United States as a whole in
2017, and that hope depends upon you and I backing the only man
and the only money that can reverse the tide of economic depression
and war. These are, respectively, Dr. Ron Paul, and gold.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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