Thursday, February 17, 2011

Problems, problems everywhere but why???

The civil unrest in Europe and the Middle East need no further introduction.   Governments are toppling, plain and simple.  The credit based money is running out and people have had enough.

Here in the states we are also starting to see civil unrest as well.  But instead of the problem being lack of reasonably priced food and other basic necessities of life, the problem is that promises that could never be kept are in fact not being kept.

When government makes future promises as part of a debt Ponzi, I like to call them Wimpy Promises.  You remember Popeye's friend who would gladly pay you back a burger Tuesday for a hamburger fronted to him today, right?  Of course, Tuesday never came.  Our government has made Wimpy Promises to millions of people, many of them in the public sector.  These promises will not be kept because they cannot be kept without borrowing and credit is becoming more expensive for everyone, including governments.

You can see the beginnings of some very well organized civil unrest in this video regarding
Wisconsin public employees whose salaries and benefits are under attack:
http://www.youtube.com/watch?v=FbEFi4SFjuM&feature=player_embedded

In the following 2 part video, Armand Thieblot discusses the ills of public employees and their unions.  He talks about the abusive double dipping, 100k salaries for life during retirement and fancy medical benefits far better than normal working people could ever hope for.

Part 1:
http://www.youtube.com/watch?v=lI4AkZYbQrw&feature=player_embedded#at=278

Part 2:
http://www.youtube.com/watch?v=qH4MpQ2Miy4&feature=player_embedded

Yes, Theiblot and many others are bashing the crap out of public unions and public employees these days but all these bashers are missing the point.  The outrageous compensation of public employees is not the problem in and of itself but rather a symptom of the real problem which is that our economy is using a dishonest money supply based on debt and inflation.  Keep in mind that pension promises are a form of debt.  Instead of paying public employees a day's wages for a day's work using tax money collected from the people, public employees are being paid from the sale of bonds (debt) and they are being promised future salary and medical benefits in retirement which the state also plans to pay for with debt.  There is no way all of these current salaries and future retirement packages would be agreed to if they had to be paid for honestly with taxes.  NO POSIBLE WAY.  The only way it got out of whack was through the use of debt and Wimpy Promises and these are the pillars of a dishonest money supply. 

Sure the public employees got greedy.  So what!  This is America where people assume that if they manage to get something then it means that is the going rate and so they deserve anything they can get, right?  Do bankers apologize for making megabucks?  NO!  How about CEOs?  Nope!  The more they make, the more they think they are worth.  The only thing that makes public employees such easy targets to complain about is that banks and corporations are supposed to make their own money in the free market.  Thus, they should be allowed to pay their people whatever they want.  On the other hand, public workers are paid by other people in the economy who may or may not even want their services.  Is this the fault of the public worker?  Is it their fault that they were smart enough to form unions and to play the con game better than other people?  From a morality perspective, yes they are to blame but from a capitalistic perspective no, they have done nothing wrong and everyone who doesn't like it is just a sore loser.

But again, you have to look at how things got like this.  An honest money supply does not allow government to pay for things with debt.  If government wants something it has to tax people.  The pain of being taxed makes taxpayers stand up and push back when things are getting unfair on the part of state and federal employees.  Taxation is a feedback mechanism that limits the endless growth of government as well as abusive salary and benefit packages for public sector workers.

But when funny money, debt, inflation, etc. is used to pay government salaries instead of taxes then the citizens don't feel the pain immediately.  That feedback path is absolutely necessary for a sustainable economy and without it the eventual outcome will be that Wimpy Promises will be made until they stink to high Heaven and at some point the promises will be reneged upon.  Instead of viewing these wage and benefit claw backs as a return to fairness, those who are losing out will view it as theft and they will not be happy.  They were, after all, counting on that money.  They had planned their retirements around it and now it will not be there.  They will demand that everyone just pay higher taxes to pay for it all and those working in the private sector who are getting hit hard by the economy will push back.  The funny money scheme eventually drives a wedge between public and private sectors and the result is going to be civil unrest at the very least and more probably significant violence.

So as you look at these videos and all the other stuff happening domestically and internationally, please consider what the real problem is instead of falling for the temptation of getting caught up in the symptoms which pit citizen against citizen, dem vs. GOP, public sector vs. private sector.  Our real anger and corrective actions need to be focused on getting rid of the Federal Reserve which is responsible for our dishonest money supply.  Returning to an honest money supply means getting rid of fiat currency and fractional reserve banking and of course, an absolute demand for a balanced budget at state and federal levels every single year with no exceptions.  By the way, states are already supposed to balance their budgets but they currently do this using debt sales (bonds) and off balance sheet crap in order to do so.  That is a scam.  Normal people could not claim that they pay their bills every month if it just meant racking up larger and larger debt on the credit card so it is silly to let states do it.
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