“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”
The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
- From bondage to spiritual faith;
- From spiritual faith to great courage;
- From courage to liberty;
- From liberty to abundance;
- From abundance to complacency;
- From complacency to apathy;
- From apathy to dependence;
- From dependence back into bondage
This quote comes from a Scottish history professor in 1787, two years before George Washington became President. It also seems to be an extremely accurate portrayal of our US history, and perhaps the finality of our future, as a country.
In “An American Tragedy“, James Quinn goes into even further depth on his pessimism for the future of the United States. I cannot say that I agree with him 100% in terms of his anticipation of a complete collapse, but from a financial and economic standpoint, our current status is as dire as he suggests. Outside of that, I have a faith in our people to demand what is right and know what is wrong (such as a Dictatorship).
Our debt to foreigners, primarily China, is massive and continues to grow. Fortunately, it is not in China’s interest currently to begin selling Treasuries, even with their horrible yield. The effect on the dollar would crush China. However, that will not always hold true. At some point, the dollar will devalue enough naturally, and the US economy will weaken to a point where China feels comfortable selling that investment, or at least not purchasing more debt and letting the current bonds expire.
The problem, as Quinn suggests, is the continuing expansion of US debt rather than acceptance of our status as a country full of debt. Replacing consumer debt and corporate debt with government debt is merely a different form of the Ponzi scheme run by Madoff, the Bayou fund, and others. We are paying off one hand with another, but not accepting the pain anywhere. Eventually it will catch up to us just as it did to Madoff. There is definitely a chance that the economy recovers and we are able to pay off this government debt before things get out of control, but the government is setting us up for a serious problem if that economic recovery does not happen.
As the Scottish professor suggests, we are in the stage of voting in those who promise the most benefits to us from publish treasury. I know it is a bit late to convince anyone to change their votes, but be aware of what these latest elected officials do for us and how much more government debt they give out.
*image source: Bloomberg.com
No related posts.
Interesting analysis…..Colonial bank collapsed on friday and the FDIC is almost maxed out…We are heading for financial fireworks this fall. Whether this heralds a total collapse or not if the u.S defaults on it’s debt the dollar could collapse.
Many are investing a little in gold and silver coins as a hedge against currency collapse or hyperinflation. Food storage wouldn’t go amiss either.