The auto industry was really pressing for a bailout today. They’ve tried everything from appealing directly to Congress, to posting videos on YouTube. I’m tempted to say, “give it to ’em.” After a $750 billion bailout of Wall Street, plus an extra $2 trillion in lending in the last couple of months, what’s an extra $25 billion? Honestly, these numbers all start to seem quite meaningless; they’re thrown around with such casual aplomb. I printed a book back in September that said the US national debt was roughly $9.5 trillion dollars, but now, two months later, and it’s $10.6 trillion.
So much for my book being up to date!
We went through a trillion dollars in a couple of months — and that doesn’t even include the liabilities that Fannie Mae and Freddie Mac may have on their balance sheets! Now that we’ve gotten started with the big earth-shattering figures, here come the also-rans in the auto industry trying to get in on the action. Of course, if the auto makers get their bailout, then will come another group equally deserving. It seems everyone is too big to fail these days.
Where will it end?
I say, it shouldn’t end anywhere. We should all get bailed out. Everyone of us. Why not?
Oh, wait … I know why not. Because society doesn’t work like that.
Government does not have a great font of wealth that it can dispense as it pleases to those who deserve it. All they have is a printing press, and every time they run it, it’s a tax that we are all being made to pay. Perhaps now we can realize that Frederic Bastiat was right when he wrote, “government is the great fiction through which everybody endeavors to live at the expense of everybody else.” Never have truer words been written.
But right now, no one seems to understand that. We are seem to be living under the illusion that the government can come to rescue us with wealth that did not originate with us to begin with, and Ben Bernanke is certainly helping work to make that happen.
According to John Williams at Shadow Government Statistics, the money supply has grown 38% this year over its level the previous year. That means that for every 1 US dollar floating around out there in electronic IOU-land last year, there are $1.38 today.
That seems like a lot.
Now, I understand why everyone is freaking out about deflation — because the stock market is going down as well as the COMEX price of gold. But fear not, I say. With monetary inflation like that going on, it’s not going to be the greater buying power of the US dollar that we need to concern ourselves with.
Don’t believe me? Well, why not let Ben Bernanke tell you himself? In a speech he gave that is now right on the Fed’s website:
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
Well said, Ben.
Trust me, with 38% monetary inflation year-over-year, it’s not deflation that we’re going to need to concern ourselves with. And so right now Ben’s got the printing presses going in high gear, and it seems that it’s drawing petitioners for government largesse the way blood in the water draws sharks. Everybody wants a piece of those fresh dollars coming piping hot, right off the press.
And, I am once again reminded of the words of Bastiat; who wrote:
“Finally … we shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the state. The public treasury will be literally pillaged. Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: “Let me have the benefits, and let others pay the costs.” Everyone’s effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success.”
For someone who died in 1850, he certainly seemed to know how these things would turn out.
I suppose the problems we face are not as new as we like to make believe. I’d recommend that we pick up a copy of the Bastiat Collection and get familiar with the ideas that he expressed. We’re in the process of a getting a first-hand education in them.