I have coined a term for it: the socialist juggernaut.
Socialism is when the government enables other people to live at your expense.
A juggernaut is a large, merciless, and unstoppable destructive force.
And that is what is loose in America. A socialist juggernaut.
You work. You save. And then politicians looking for votes start offering everybody free stuff. Free college. Free medicine. Borrow money for free. Free guaranteed annual income. Free housing.
Somebody has to pay. The money has to come from somewhere. Before long they’re peering into your wallet. Eyeing your bank account. Focusing on your investments.
But as Margaret Thatcher said, the problem with socialism is that pretty soon you run out of other people’s money.
All of this comes to mind because of an investment newsletter that showed up in our inbox the other day. It asked what happens when the socialists come after your wealth.
We have plenty of precedents from all around the world, so the answer is pretty clear.
When the socialist come for your money, they get it.
Sometimes they get it by destroying the currency. The print more and more of it to pay for the giveaways, until the money you have saved looses its purchasing power. It is a stealth confiscation of your wealth.
Sometimes they get it through taxation. Or by the expropriation of your private property.
And there are other clever ways the socialists get your money. They may hope to borrow more. But if people decide they don’t trust the state enough to loan it any more money, they may insist that every bank and financial institution and even your personal retirement account must invest a certain percentage of its assets in their untrustworthy bonds. Bonds that are certificates of guaranteed confiscation.
Oh, they’re clever! When the socialists come for your money, they invent financial devices and monetary shenanigans to get it faster than you can keep up.
Ask the people in Venezuela. They get it by manipulating prices, by rationing, by increasingly burdensome financial regulations.
The evidence that a socialist juggernaut is loose on the land can be seen in the way America’s middle class is being wiped out, and in the mounting debt of the American people, borrowing and struggling to keep up. It can be seen in the compounding debt of the nation-state. It can be seen in the rise of political fantasies like Modern Monetary Theory and political figures who never learned that wealth comes from production, not from redistribution.
What do you do when the socialist come for your wealth?
You get your wealth out of the game since it is not a level playing field. You get it out of the institutions they control.
You refuse to be victimized.
Somebody wise once called gold “capital on strike.” When you realize your wealth is in their crosshairs, you have to go on strike.
The world has been through these episodes over and over: Venezuela, North Korea, Cuba, East Germany and much of Eastern Europe, the Soviet Union, and Mao’s China are but a few of many, many examples.
Gold remains the best means of getting out of the way and preserving your wealth when the socialist beast roams the land.
ONE FINAL NOTE:
If you have missed gold’s powerful breakout because you have been mesmerized by the stock market, we will share with you an observation from Bill Bonner, another newsletter writer:
“In the downturn of 2000, the Greenspan Fed cut the federal funds rate by 500 basis points. Still, in terms of gold, the Dow fell 82%. In 2008/2009, the Bernanke Fed again cut rates by 500 basis points. Once again, stocks nevertheless lost 68%.
“And now, the expansion seems to be approaching its end (it has to end sometime!)… and the Fed only has 240 basis points to cut.
“Besides, the Fed cannot really make companies more valuable. It can’t increase their sales; it can’t really increase their profits. It can’t improve their products or strengthen their marketing. It can’t create more time. Or more real money. Or make people smarter or more inventive.
“All it can do is mislead you and misallocate resources with fake money and fake price signals.”