Public Finance: Don’t Look Too Closely!

06 May

Public Finance: Don’t Look Too Closely!

The exploding US debt and the frenzy of Federal Reserve money printing is a reminder that the whole enterprise of public finance is not something you want to look at too closely… unless you are prepared for some really ugly stuff.

You will come face to face with deceit, theft, cronyism, hypocrisy, waste beyond measure, string pulling and influence peddling, the raw exercise of political power for private gain, and enormous riches for the few and impoverishment for the many.

Estimates are that COVID-19 will add $8 trillion to the government’s debt load over ten years.  There’s a lot of room in $8 trillion dollars for the kind of corruption we described above.

The $2 trillion CARES Act stovepiped hundreds of billions of dollars to large corporations.  Companies that were perfectly capable of setting aside capital to protect themselves from predictable cyclical and other business challenges used their earnings for stock buybacks instead.  Then, having enriched their senior management with swollen values for their stock options, they turned to the taxpayers to bail them out. 

In other words, their profits are privatized while their losses are socialized. 

Perhaps an account of the CARES Act appropriations that we already reported encapsulates the nature of public finance.  While restaurant workers and store clerks and drivers and others – Americans 30 million strong – lost their jobs, right off the top the emergency spending bill provided $25 million for additional House of Representative salaries!

According to the Manhattan Institute, with the pandemic “stimulus” measures total federal spending will surpass $49,000 per household.  Since median household annual income in the US is $61,937, the government is taking the lion’s share of it… some in today’s taxes, some in tomorrow’s, some by means of currency destruction.

So far, we’ve been writing about the fiscal side of the picture, Washington’s borrowing and spending.  We’ll let Ron Paul speak to the monetary side of the picture:

“Each of the Federal Reserve’s responses to the coronavirus shutdown increases the distortions of the market caused by the Federal Reserve’s meddling with the money supply and interest rates,” says Dr. Paul.  “These increased distortions guarantee the inevitable crash will be much more severe than the current downturn. The one upside is that the next meltdown will likely lead to the end of the fiat money system and thus the end of the welfare-warfare state.”

Where will the buck stop for all this fiscal and monetary excess?  With the US dollar, of course.  It will have to be massively devalued along the way. 

But there is something you can do.  You can protect yourself and even profit from this destruction with sensible investments in gold and silver.  Your Republic Monetary Exchange professional can advise you on the steps to take.