The USA is $21.4 trillion in debt. That is larger than the entire US economy. And it shows no sign of slowing down.
To put that in perspective, imagine spending $28 million per day, EVERYDAY since Jesus walked the earth. Even then, you’d still have a trillion dollars to go…
But it gets worse. This debt does not even include unfunded liabilities, like the promise to pay out Social Security benefits to retirees. Social Security is underfunded by a whopping $50 TRILLION.
Worse still is that the Federal Reserve has the power to print money, and set interest rates. That means the economy you and I see on a daily basis is not reality.
Markets always have corrections. It is natural for sectors to wax and wane. Some years boom, and some years bust.
But the Federal Reserve has made this problem a hundred times worse. The booms are astronomical because of artificially low interest rates.
That means it is easy to borrow money, even if there isn’t much real capital out there to borrow. And that means money gets wasted, placed in bad investments, or squandered and misallocated on unneeded projects.
We are living in a ticking time bomb.
I have no particular faith in any government.
But I do believe the smaller the government gets, the easier it is to control. Your vote might actually count at the state level.
And living down the street from your State Representative helps to keep him fearful of his constituents. Politicians should fear the people.
State governments can cushion the collapse of the federal government.
This collapse will be triggered by monetary policy.
So states should make sure their economies can keep on chugging along in the event of such a catastrophic financial meltdown.
Could We Return to a Gold Standard Without the Fed’s Approval?
In 1944 governments agreed at a conference in Bretton Woods, New Hampshire to make the US dollar as good as gold. You could literally trade your paper dollars for a fixed amount of real gold. Cue decades of stable economic growth.
And in 1971 that gold standard was removed. Cue decades of inflation mixed with wild booms and busts.
Since then, the dollar has lost 85% of its value.
Gold and silver, however, have retained their value extraordinarily well. Not just over the last 50 years, over the last thousand years.
But this isn’t medieval Europe.
Even though it sounds kind of fun to walk around with a leather pouch filled with silver coins, I am sure the novelty would wear off pretty quick. Not to mention the effort of making change, and tracking daily changes in the value of the metals.
Instead, bank-like institutions could hold onto your precious metals, and issue debit cards–or simply a spending app for your smartphone. You could then spend the value of your gold and silver anywhere that accepts cards or electronic payment.
But you wouldn’t be spending the value of your silver or gold in dollars. You would literally be spending the silver or gold itself. Dollars would be out of the picture.
When you make a payment, the bank would debit that amount from the silver or gold you deposited, and credit it to whoever you paid.
We do measure the price of gold and silver in US dollars currently. But we can track the real value of the US dollar based on purchasing power. So just cut out the middleman, and we can track the real value of gold and silver in terms of purchasing power.
Which again, remains much more steady than the purchasing power of the US dollar…
This is actually a surprisingly simple solution for money in the modern age.
There is no need to trust a large institution to issue gold backed paper notes that are hard to counterfeit.
Truly we can solve monetary policy in the easiest most efficient way by simply going back to basics, and adding a little modern technology.
Use something with intrinsic and historical value, and a limited supply. Then trade it electronically, instead of physically.
States Governments: Your Time to Shine
I think it is the right of the people to separate from groups they no longer wish to take part in. This is especially important when the group–in this case controlled by Washington DC–is steering us towards collective suicide.
So perhaps if Donald Trump is re-elected in 2020, California will actually be motivated to secede. A liberal state’s secession would be an important precedent for states like New Hampshire and Texas.
Could progressives finally agree to disagree? To let us go out separate ways… To live and let live… To actually require consent from the governed?
States like California, Texas, New York, New Hampshire, and Florida have robust economies. Plus, they gain by separating from the federal government. They all pay more in taxes to Washington DC than they get back in federal funding.
But we all know DC wouldn’t let them go without a fight, especially being so desperate for tax revenue.
So here’s an alternative strategy to political secession. Separate your state’s economy from the reverberations of the national economy.
Then, when shit inevitably hits the fan, make the break. Refuse to pay for more of DC’s mistakes. And by that point, they won’t have the funding to stop us. States will be in a better financial position than DC.
Rather than allow an irresponsible government in Washington DC to bring down the entire nation, states can cushion the blow and insulate us from a collapsing dollar, or bankrupt government.
One way to do that is to encourage citizens to use a gold standard like the one explained earlier. States could implement this system without having to mint their own coins or create their own money.
They could even give discounts to citizens willing to pay taxes in the new, real, money.
Or perhaps it is time to talk about states creating their own currency… Something for the digital age, that cannot be manipulated, or counterfeited…
More on that tomorrow.
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