Repudiating National Debt Will Happen Whether You Like It Or Not
June 22, 2011
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Governments have all kinds of bad ideas. They're like Bad Idea Factories. Oh sure, I concede that every now and then a good idea gets churned out, but they're hard to notice under the avalanche of bad ones.
Little Fiefdoms, All the Same
But before I get into today's topic, I want to address a common them you will hear from both Republicans and Democrats concerning the government. They tend to separate government into different "mini-governments." For example, if I point out the Bad Idea of Iraq to a Regressive, they will respond that foreign policy is somehow separate from the "government of welfare" or the "government of regulation." If I say to a conservative that the government is a fiscal nightmare, they can separate this "government of the budget" from the "government of warmaking."
The problem with this type of thinking is that the larger issue is not that a certain policy is flawed. The problem is that no matter how rosy the government's intentions, they derive their income via force and have no incentive to provide the best value to the people they are supposed to serve. So rather than delivering service, these mini-governments end up turning in to power centers where every decision is measured not by how it best serves the public (though that is the meaningless rhetoric often employed), but rather by how it will impact the department in question.
This is not a revulotionary concept that I am proposing. Many prominent scholars of both the statist and non-statist variety have discussed these issues, without much success in finding a solution. Voting every two years is not a solution.
A Gold Medal Run
That is your backdrop for today's topic: the National Debt. All national debts will eventually be repudiated. We are seeing Greece's national debt being repudiated right now. Greeks are turning to gold. This an outright rejection of Greek and Eurozone fiat money. This is an outright rejection of Greece's national debt. You don't buy gold in order to repay the bankers. You buy gold to stick it to the bankers, and to stick it to your government.
National debts are an immoral arrangement. The govenrment borrows on your behalf, without your consent, and uses force to recoup the payment. They don't consult you on the terms. There is no fine print. In fact, there is no "print" at all. Recently, Regressives worked themselves into physical orgasm over the prospect of Elizabeth Warren's newly formed CFPB simplifying the terms of borrowing. When is Ms. Warren going to break down the stipulations of government's borrowing on "your behalf?" Never, of course. Regressives would have you believe that the "government of regulation" is there to protect you. If only....
So while the CFPB works to make borrowing more transparent with one hand, it will work to increase your indebtedness with the other. You have to appreciate the irony.
Who Will Watch the Watchman?
The truth is that no one regulates the regulators, and so the government will continue to borrow trillions of dollars "on your behalf." Public creditors are also at fault here. They have to implicity understand the arrangement. As the national debt of a nation balloons out of control, the only solution is to tighten the screws on the unsuspecting citizenry in order to recover the promise. Money borrowed must be paid back, they claim, whether the borrower squanders it or not.
But why should the citizens, who never saw or signed a legal contract to borrow the funds, be left holding the bag? The answer, whether Regressives or Neocons want to hear it or not, is that they won't. They will reject the currency, and therefore they will repudiate the national debt. At this point, both liberals and conservatives will join hands in tightening the screws on American citizens. And so the police state grows more wicked.
A couple of years ago I proposed the idea of repudiating the national debt as a matter of policy. It has been done before in America (at the state level.) The idea was not welcomed. Many felt at the time there was no reason to be concerned. In fact, today several economic schools advocate that any concern over the national debt is foolish in the era of paper money. Why, the government can just print more! These schools overlook or deny the subjective value of the currency. They do not understand that all value extends from the human mind. These schools view value as a result of mechanical functions that can be explained with simple equations. Nuts.
Can We Legislate Away Gravity?
Governments have many bad ideas. Falling prey to the belief that economic laws can be ignored or, even worse, that they do not exist is among the most dangerous. Believing that you can borrow money forever on someone else's behalf is so foolhardy that proponents of these schemes would be tarred and feathered were it a simpler time. In today's bizarro world of rampant etatism, these charlatans are instead awarded nobel prizes and large speaking fees.
No supporter of liberty can look upon the world of government finance and the views of government economists without complete revulsion. To even give such ideas more than the fleeting moments it takes to note their lunacy is to waste your own precious time.
These debts will be repudiated. They will be rejected by the people. It's not a matter of "if" but a matter of "when." For Greece, "when" is now. For the rest of us, the time is coming.
I suggest you take the time now to protect yourself from the inevitable, but if you prefer to be run over by the stampeding horde as it scrambles to convert its last pitiful savings into something real, be my guest. I ain't gonna stop you from believing in fairy tales. Just don't crap on my Twinkie and tell me it's frosting. Deal?
David in Qatar
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