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This is not a
political publication, has never been, never will be. However, I do spend a
reasonable amount of this effort analyzing policy and unfortunately, that
tends to suggest that I’m open to a discourse of the individuals behind
those policies. I am not. By and large political discussions are unprofitable
because people are dogmatic to a fault. The idea of the
‘undecided’ voter is probably the biggest joke in all of
statistical and polling history. It compares nicely to the concept of the
undecided juror in the O.J. Simpson case back in 1994. Everyone had an
opinion on whether O.J. was guilty or not. There were no
‘undecideds’.
So instead,
tonight, as you dodge phone calls from PACs from A to Z, I’m going to
provide some light reading, a little levity, and some historical perspective
along with some very timely quotes to hopefully help you to keep all of the
nonsense in perspective.
I’m
going to use some bad words in this column. Words like Constitution, founding
fathers, and personal responsibility. These words have been branded
‘bad’ by a media run amok in recent decades and have been deemed
to be politically incorrect. Here’s to political incorrectness!
Thomas Jefferson
was perhaps the wisest of our founding fathers (bad word #1) when it came to
matters of a fiscal and economic nature, which might be considered odd, given
that he was a lawyer. This reality strips the excuse from the bulk of our
legislators today who say they aren’t economists. Jefferson, with a few
timely observations of human action, laid waste to today’s plethora of
computer-driven economic models, sub-committees, and bureaucratic overhead.
He had a unique tact for getting to the meat of the matter. Who says it is
bad to be blunt?
Government: The Least Effective
Economic Agent
I bring up
Jefferson because he accurately described the current state of affairs in
America:
“I
predict future happiness for Americans if they can prevent the government
from wasting the labors of the people under the pretense of taking care of
them.”
Does this not
sum up perfectly the trend of the period since the Great Depression? There
has been one welfare program after another, and the kicker is the two major
parties have BOTH done the damage, which is much to the contrary of what many
folks believe. The only thing worse than passing a
bad law is a failure to repeal it. Period. End of story. And we’ve been
doing just that – since the 1930s. Party A passes a terrible law, Party
B bashes Party A, then when Party B gets into power, the law stands. Or even
worse, Party B adds to the law and makes it even worse. Wash, rinse, repeat
and you’ve got America 2012. They tried the same thing in Europe and it
failed miserably. Now they’re making it worse by refusing to recognize
the failure. The definition of insanity is doing the same thing over and over
and expecting a different result. Not going to happen folks.
One must only
spend a few minutes on their favorite search engine to discover the vast
magnitude of government waste, much of it under the guise of ‘taking
care of us’. It is the nanny state. Cradle to grave. Whatever you want
to call it, but this perpetuation of a lack of
personal responsibility (bad word #2) is absolutely killing this country. The
welfare state lingo is even built right into the titles of the laws
themselves. ‘Security’, ‘Care’,
‘Supplemental’, ‘Assistance’, and
‘Benefit’. And that is just to name a few.
Consequences of the Handout Mentality
An epic quote,
generally attributed to Scottish historian Alexander Fraser Tytler:
“A
democracy is always temporary in nature; it simply cannot exist as a
permanent form of government. A democracy will continue to exist up until the
time that voters discover that they can vote themselves generous gifts from
the public treasury. From that moment on, the majority always votes for the
candidates who promise the most benefits from the public treasury, with the
result that every democracy will finally collapse due to loose fiscal policy,
which is always followed by a dictatorship”
This is one of
the primary reasons the United States wasn’t set
up as a democracy, but rather as a Constitutional (bad word #3) Republic. Few
today know the difference and history teachers, the media, and government
have attempted to revise history by telling us that we have a
‘democracy’ in America.
Are we not
voting ourselves generous gifts from the public treasury? Absolutely. Have we
spent beyond our means and have now gone so far into debt that there is
little, if any, hope of ever getting out of it? Absolutely. Who is
responsible? Look in the mirror. We allow this to continue. Not only do we
allow it, but we put a rubber stamp of approval on it by treating the
election process in this country like a football game.
Let’s
take that a step further. It isn’t just the political process. It is a
nearly total lack of awareness of our government, how it works, and more
importantly, what it is up to. Every so often one of these television or
radio funny men will do a ‘man on the street’ type of survey. The
level of ignorance of Americans is despicable. Most can’t describe the
process by which a law comes into existence in this country or name even one
of their US Senators, or even know how many each state has. But they can tell
you so and so’s batting average or what their friend’s pet iguana
had for lunch via Facebook. It’s all bread and circuses.
Again,
I’ll reference the Europeans. It was all early retirement, free (insert
your favorite elixir here), futbol, and parties. Until it wasn’t. The
party is over. In the same manner the Europeans have fallen victim to their
own greed and avarice, so too will America. This is not a ‘maybe’
or a ‘possibility’, but rather a
foregone conclusion. It is concrete. You can mail it in.
Perhaps the
most sobering part of Tytler’s warning is the final phrase. Every
democracy will finally collapse due to loose fiscal policy, which is always
followed by dictatorship. I am not sure our fiscal policy at this point could
get any more loose than it already is, but I am sure that over the next four
years we’re going to see someone give it the good old college try. It
is the only path now. What politician is going to get elected by standing up
and telling fat, dumb, and happy Americans that the party is over, they now
must embrace austerity, and that the handouts are over?
And speaking
of dictatorships, they are much like hurricanes. There have to be certain
ingredients present for a dictatorship to develop. One of the requirements is
a total leadership vacuum due to a failure of a country’s leaders to
accomplish anything other than more of the same. The second is that there has
to be some level of desperation amongst the people. The Treasury is broke,
their world is coming unglued, and they are getting desperate for answers.
Next, you need a charismatic personality who the people can embrace as a
prototype ‘savior’. Whoa. Getting a little too real here
isn’t it?
Hitler’s
Germany is the most popular recent example, but really studying any
dictatorship in history reveals certain patterns and progressions.
Corollary to
the above quote is this absolute gem by Alexis de Tocqueville:
"The
American Republic will endure, until politicians realize they can bribe the
people with their own money."
Notice de
Tocqueville said ‘Republic’, not democracy. In today’s
world, the government essentially confiscates the labor of certain economic
agents and transfers the fruits of those labors to other agents. This is the
‘bribery’. And the tipping point in this whole system is when the
agents who are doing the work become outnumbered by the ones who
aren’t. And we’re awfully close, if not already there.
And Finally…. The Banks!
And for a
grand finale, some more of Thomas Jefferson’s wisdom, this time concerning
banks and his opinion of them. Seriously Thomas, next time you must tell us
how you really feel:
"If
the American people ever allow private banks to control the issue of their
currency, first by inflation, then by deflation, the banks and corporations
that will grow up around them will deprive the people of all property until
their children wake up homeless on the continent their Fathers
conquered."
This bit of
prognostication is nearly complete in America. Bankers
are already bragging about how they have taken over Europe and America.
Think of the 1920s and 30s. ‘First by inflation, then by
deflation’. What happened to the wealth? It was transferred.
The same thing has been going on to varying degrees ever since. We had a
mini-repeat of that cycle between 2000 and 2011. And speaking of homeless,
how many Americans have lost their homes in these boom bust cycles? Look at
the loss of home ownership during the Depression and compare it with what has
gone on over the past 5 years. The private banks have depleted the issued
currency to just 5% of its purchasing power nearly 100 years ago. They
brazenly admit it and tell us it is necessary to achieve growth. Nonsense.
That is like someone coming to your door and telling you they’re going
to rob your house so you can be rich. Give me a
break.
"The
issuing power should be taken from the banks and restored to the people, to
whom it properly belongs."
Notice
Jefferson uses the term ‘restored’. For something to be restored,
it must have already been taken away. Article I, Section 8 of the US
Constitution gives Congress the authority “To coin Money, regulate
the exchange value thereof, and of foreign Coin, and fix the Standard of
Weights and Measures”.
Yet, almost
from the word ‘go’, the central planners within the new
government tried to bring a central bank to the United States. The first two
were unsuccessful and were destroyed because people had an awareness about
money and how it worked. The federal reserve is the third coordinated attempt
and was brought into the world like most corrupt entities: have improvised
and half compromised. Due to the growing ignorance of the people about how
money works, the bank has been able to survive and even thrive, regardless of
the economy, the stock market, or any other circumstance. It is like a
casino. In the aggregate, the house never loses.
Isn’t it
ironic on election eve that the face of the President who so vehemently
despised central banks and was responsible for killing off the second attempt
now has his face plastered on the $20 federal reserve note? Talk about the
ultimate insult; an insult that goes unnoticed by an entire country.
As for
tomorrow, it might make sense to start small and find a candidate or two who
actually understands some of the things highlighted above and that the
Constitution (there’s that bad word again) is the law of the land no
matter what the media or anyone else says. It is the standard. And I
can’t help but throw in the old adage that you’ve got to stand
for something or you’ll fall for anything.
Andrew W.
Sutton, MBA
Chief Market
Strategist
Sutton &
Associates, LLC
http://www.sutton-associates.net
andy@suttonfinance.net
Sutton &
Associates, LLC is a Registered Investment Adviser in the Commonwealth
of Pennsylvania. This
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