Highway to Hell
The President asked a most important question. So we’ll offer the puzzled fellow an answer…
We – as in the USA – are hurtling down the highway to hell. The state of the union is chaos. America’s finances are completely out of control.
Spending is rapidly outpacing revenue. Debts and deficits are mushrooming like mold spores on wet drywall. Rot and decay have set in. The nation’s structural foundations have fallen into irreversible disrepair.
Don’t believe us?
According to the recently published Congressional Budget Office (CBO), Budget and Economic Outlook: 2021 to 2031, America’s broker than broke. For example, the CBO projects a federal budget deficit of $2.3 trillion in 2021. At 10.3 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year.
The CBO projects federal debt held by the public will reach 102 percent of GDP at the end of 2021, and more than 107 percent of GDP by the end of 2031. And as the Committee for a Responsible Federal Budget clarifies, the CBO’s report shows:
“Four major trust funds are on a path toward insolvency. CBO projects Highway Trust Fund insolvency in FY 2022, Medicare Hospital Insurance trust fund insolvency in FY 2026. Social Security Old Age and Survivors Insurance trust fund insolvency appears likely in calendar year 2032 and Social Security Disability Insurance trust fund insolvency in the mid-2030s.
“Debt could be even higher than projected. If policymakers enact $2 trillion of additional fiscal relief, extend expiring tax provisions, and grow annual appropriations with GDP, debt would total 120 percent of GDP by 2031.”
So we may not be in hell just yet. But we are, without a doubt, hurtling down the highway to hell. And look who’s driving the bus…
The ruling eggheads, as they delight in planning the economy, fabricate data and chart out the future. By pushing one policy lever while pulling another they believe they can make the world a better place. They even model data to prove it.
[Editor’s note: Refer to The Triumph of the Egghead, by Louis Bromfield, from the December 1952 edition of The Freemen, for the birth and definition of the word egghead.]
For example, all eggheads know the minimum wage should be precisely $15 per hour. They also know that the interest rate on a 30 year fixed mortgage should be exactly 3.50 percent. So, too, they know government programs of forced philanthropy are required to help people in need.
Yet tomorrow’s reality never lines up with today’s plans. Jacking up minimum wage accelerates the push for automation…putting more workers on the dole. Artificially low interest rates pump housing prices up into an epic bubble…putting home ownership out of reach for young families. Government programs for the needy, even those with the best of intentions, promote an ever growing class of dependents.
Such abject failures in most professions would be grounds for getting fired. But not for the professional egghead. The occupational disease under which they labor rewards their delusion. They get promotions and wage increases. In 2019, Dr. Fauci – the egghead who now recommends double masking – hauled in $417,608. Not bad for government work.
Members of these crafts – from central bankers to social engineers – are apt to move from one disastrous idea to the next with little reflection or responsibility. Misperception of reality first incubates in colleges and universities. Then out pops professional eggheads, like Twitter Safety patrollers and chief diversity officers, to protect everyone from the evils of free speech.
What’s more, the best and the brightest of these eggheads have set up America for their greatest caper of all…
The Great Egghead Caper
Year after year, the federal government has spent more than it takes in. Now the debt has piled up past the point of no return; there’s no longer an expedient way to reverse course.
But don’t worry. The eggheads have a plan…
Guided by eggheads, the U.S. government, and by extension the American people, are fully committed to a program of currency debasement to inflate away the debt problem. The eggheads believe executing an implicit default via inflation is the easier and softer way.
Over the last 90 years politicians have promised something for nothing. And voters obliged them. Thus, eggheads from Benjamin Strong to Alan Greenspan, from Robert Rubin to Ben Bernanke, from Janet Yellen to Jerome Powell, and every egghead in between, have put their egghead minds to the task of how to deliver…
Countercyclical stimulus spending. Interest rate suppression. Quantitative easing. Operation Twist. Yield curve control. Elastic currencies. Money shuffling. Inflation targeting. Modern Monetary Theory. Smoke and mirrors.
…all so governments, and individuals, can spend well above what they can afford, and then welsh on the debt without consequences.
Of course, all these policies come from the same place. That is they start and end with inflating the money supply. This printing press money – now commonly referred to as stimulus or stimmy for short – is outright dollar debasement. And egghead directed dollar debasement is theft.
The eggheads, you see, through policies of dollar debasement, are robbing what remains of the private capital stock of individual citizens. This is the great egghead caper.
Are you prepared for your life savings to be cut in half over the next five years?
for Economic Prism