How much Does Free Health Care Actually Cost?

Well, they’re at it again! A group of possibly well-meaning Champions for the People are commuting around our lovely state of Idaho once more, advocating for what they see as a solution for health care costs that have gotten out of hand for many. Their mission? To prod our mean ‘ol state legislature – you know, the elected officials who are supposed to steward our tax dollars – to loosen up the state’s purse strings and expand Medicaid coverage. Why? To ‘help’ less fiscally endowed residents cope with the rising cost of medical care. The group’s goal? To give more people on the lower rungs of the economic ladder access to more health care at less cost, while saving save state residents tax dollars. Their means? Expanding Federal Medicaid coverage.

Sounds great and caring, right? But I have a question: can anybody really put more people on government health care subsidies while simultaneously lowering the cost and improving the quality of health care, saving the taxpayers money, and do all this without incurring any hidden costs? In other words, can increasing government intervention into a once model health care system they’ve already run into the ground on many levels, really give the people something for nothing? Haven’t we been doing this under Obamacare for nearly twelve years, now? Isn’t it time to admit that the whole idea really doesn’t work?

Hmmmm. Apparently not. The siren’s song of a free lunch still seems to overwhelm reality for the ideologically high-minded. Lowering people’s medical bills bills via government subsidies like Medicaid sounds like such a super deal! It would reduce or eliminate out-of-pocket costs for medical treatment for more low-income citizens! It would save taxpayer dollars by shifting the costs of Medicaid-covered services to the Federal government! It would help people struggling with things like drug addiction, chronic diseases and all manner of ‘debilities’ to extract as much care as they can handle out of the medical system, with no obligations to put anything back in – ever! What’s to not like about that?

Well, plenty, actually , especially if you’re the type of person who likes to think things through and consider what ‘good ideas’ might cost – especially when government largesse is involved. The argument behind the push for Medicaid expansion is that it will lower health care expenditures for people in need (with ‘neediness’ being defined according to the politics of the bureaucrats in charge of designing Medicaid), while saving taxpayers money. The proposed mechanism by which this miracle can happen consists of capturing and “bringing home” tax dollars already sent off by state residents to the Federal Government, for the purpose of being redistributed via Federally-administered, nationally subsidized health care programs. It works roughly like this:

Working people from across the nation pay tax to Washington.

Washington pools the money and parcels out some of it to cover the expense of subsidizing health care for certain citizens.

After feeding the parceled money through a huge, convoluted and expensive bureaucracy whose purpose is to decide who is most deserving of it, the leftovers are sent back to to the states according to whatever redistribution formula happens to be in vogue at the time.

Those dollars are then partially consumed by state or tribal bureaucracies in the process of getting the bit that’s left over out and into the hands of the people for whom it was earmarked by Washington.

The individuals being helped don’t actually receive the cash, of course, but they do receive the benefit of being the wards of bureaucrats who are tasked with looking out for their well-being. It’s the job of the Medicaid administrators to dole the recipients’ benefits to health care providers on the recipients’ behalf – subject to legal guidelines, of course. What the recipient ends up with is standard care at cut rate prices. Great for the recipient, but what about for everybody else? And how do the taxpayers get a savings on this deal?

Wait For It…..

The simple explanation for the ‘savings’ is…………. that all of the extra, very real, costs above and beyond the price to give health care services to the Medicaid recipients, are simply swept under the rug. The voices of those who are hurt are silenced. Those who disagree with the idea of government being responsible for the well-being of the politically favored, are castigated as being greedy and uncaring. And the economic damage done to everyone forced to work harder or do without, themselves, so that others may take freely, is rarely, if ever, counted.

While all eyes in the Medicaid debate are focused on recipients and some also consider the taxpayers, there are other actors in the equation who are also being affected, but often going unheard. Ironically, it is they who are actually the main targets of government health care regulation: the doctors, nurses and other providers of medical services to the Medicaid recipients. What would they collectively get out of a Medicaid expansion? Well, plenty, but nothing good. What Medicaid offers to providers is primarily negative incentives – punishments for not doing what the government deems is right, rather than rewards for doing what’s really in the best interests of the patients and saving time and money through making positive, productive adjustments to patient care. Negativity enters the government’s interactions with health care providers in many ways. Distrust that physicians will dispense equal or satisfactory care to subsidized patients drives the government to slam doctors with busywork documenting their interactions with patients to the governments’ satisfaction. The doctors don’t have to actually be even accused of ever having done anything wrong, the government just assumes they’ll be guilty of doling out substandard care to subsidized patients because….. well, you know…. physicians, as a group, just can’t be trusted to do the right thing like, say, Congresspeople can.

The disincentives continue into the medical cost reimbursement structure. Government cost-saving formulas dictate that medical professionals of all types are paid below-market reimbursement for their time, skill and labor if they’re treating government-sponsored patients. If that’s not enough, the government dictates that medical practices make investments into hugely expensive electronic records and other ‘advances’ and ‘safety technologies’ that haven’t really been shown to be necessary or even beneficial to most practices or patients themselves. And of course the government piles on redundant and, in some cases, simply ridiculous requirements for various medical professionals to continually prove that, after years of practicing safely and professionally, they’re actually capable of practicing safely and up to average standards.

And what do non-subsidized taxpayers end up with for all the sound and fury of government protection for the needy? Higher medical bills, greater insurance premiums and poorer medical services because the gap between what it costs to cover treatment for Medicaid patients and what the government pays medical professionals to treat, must be made up somehow. What the citizens as a whole end up with is bigger, fatter tax bills that rob working people of money with which to pay for their own health care, and an increase in the gap between the haves and the have-nots. As a bonus, the entire distinction between who is a ‘have’ and who is a ‘have-not’ becomes blurred and inverted. The ‘haves’ are now the low income and other ‘needy’ who receive their medical treatment for free, and the ‘have-nots’ are those who have to shoulder the bill to pay for the medically subsidized as well as themselves and their own families. This just doesn’t seem right, and it goes against the laws of nature. Since when should those who pay double for their care be considered privileged, and those who receive their care free of charge and obligation, be considered underserved?

Even if those who are funding the system have more money overall than do those receiving free medical services, they’re still robbed, by the force of the law, of the time, labor and income that they have to put into the system so that it can be stretched to meet the needs and wants of others. The whole arrangement winds up dinging working people, especially those who make too much to qualify for the subsidy but not enough to provide the standard of living that their labor should afford them were they not forced by the structure of the economic system to share some of their income with others. To add insult to injury, government subsidies like Medicaid also make medical care more expensive and sometimes more difficult to get for everybody who isn’t subsidized. Does that sound like a good deal to you?

A Magical Proposal To Cut the Pork Without Killing the Pig

The group that’s proposing to save taxpayer dollars by expanding Medicaid coverage isn’t advocating for getting rid of the Washington redistribution machine, rooting out user fraud, making Medicaid more difficult to obtain, putting performance standards in place to measure whether Medicaid is actually giving society a positive return on investment, or tackling the social problems that is making life on government handouts a more necessary or attractive option for growing numbers of people. They’re not asking people “what would benefit society more: to put some people on government subsidy, or reduce healthcare costs by half for everybody?” Nope. What this organization proposes is essentially to bring home the bacon without sacrificing the pig: that is, to recapture a bigger share of the dollars that state taxpayers are forced to send away to Washington by “bringing them home” (i.e. stop their redistribution to elsewhere) and redistribute them right back here in our state. The beauty of this plan is that it can easily be sold to most people as a way to reduce the number of tax dollars leaving our state, while increasing the breadth and ease of access to medical services by those who are deemed to be in need. Whether the number of tax dollars the organization is advocating to “bring home” is less than, equal to or greater than the number of dollars our citizens are forced to send off in the first place isn’t clear to me, as their public announcements don’t say. What IS clear, however, is that the proponents of Medicaid expansion see neither the redistribution machines nor the entire premise of Medicaid, as the primary problems within themselves. What they believe is that spending tax dollars at current (or even higher) levels to subsidize more and more health care for more and more people, somehow saves taxpayers money. I’m not sure I understand how that works.

Are Subsidies Cheaper Than Less Bureaucracy and Simpler, Freer Markets?

Recently, the organization in question issued a rather triumphant announcement that they had helped “save state residents over $8 million in 2019-2020” by shifting the cost of Medicaid medical treatment coverage earmarked to treat substance abusers and others in our state prison system, from state citizens to the Federal government. According to the organization, over 90% of the costs of Medicaid are covered by the Federal government instead of state citizens. Thus, by letting the Feds use tax dollars pooled from taxpayers across the nation to pay for substance abuse treatment in our state’s prisons instead of making taxpayers within the state pay for prison substance abuse treatment programs (and perhaps deciding within the state if ‘s really where taxpayers want a lot of their tax money to be spent), taxpayers within the state are supposedly being “saved” over $400 million tax dollars each year. (i.e., these are dollars that had been collected and sent to Washington to redistribute). I think their thesis is that if the Federal government collects, say $10 million tax dollars from working citizens in Idaho and uses it to subsidize, say, $8 million in health care for certain other Federally-approved citizens in Idaho (the difference between the two sums being what it costs the Washington and then state bureaucracies to collect, apportion and redistribute the taxes), then the taxpayers have saved $8 million because that $8 million is returned to them by Washington. Otherwise, they would have had to pay $10 million in taxes to Washington and pay an ADDITIONAL $8 million to cover the costs of, in this case, prison drug treatment programs, So, presto, sate taxpayers are “saved” $8 million by imply having some of what they paid to Washington paid back to them!

Sounds just wonderful, doesn’t it? Except, from a larger perspective, the math doesn’t really add up. And there are probably catches to this free lunch, right? Well, yes, and you bet there are. Anyone who thinks that prosperity can be created by shuffling money from one part of society to another, while simultaneously paying out the exorbinant sums required to feed the complex machine that makes the transfers possible, is probably someone who also believes that they could actually purchase the Brooklyn bridge for $1. In this article, I’m going to take a deep dive into what programs like Medicaid actually cost the public, and how we all secretly pay for expansion of massive Federal healthcare ‘financial assistance’ programs. The reality is that while it’s easy to think that redistributing money by cycling it through the government makes services cheaper or raises the collective good, even if the number of dollars inserted by one group of people or another at the front is returned to them from the back end, the process itself actually extracts terrible costs that are difficult to see. However, those costs are very real for everyone who has anything to do with paying taxes, receiving government services, or working to make an honest living.

Asking the Right Questions

Sometimes it’s easiest to see the issues more clearly and follow the often convoluted and barely discernable (but very powerful) ways in which actions at Points A and B can have consequences at Points C, R and Q if we start questioning how the whole system actually operates. So, I’m going to pose a series of questions that any reasonable tax payer or consumer of health care should be motivated to ask, and then think them through out loud. This should make it relatively easy to follow the line of reasoning through an often confusing system of real world relationships. It should also help connect distant consequences with their root causes. I hope this will open your eyes to what it actually costs to have the government subsidize our medical care, and some things we need to work on if we wish to drive the costs of medical care back down to the point of affordability for average working people.

Q1) How does expanding the presence of government in health care save money over leaving health care to the private sector? Or having a dual system?

The first thing to remember when arguing whether to have government involved in administrating health care, is that government creates no wealth in and of itself. All wealth is created by people generating goods and services that others wish to pay for. While government fabricates and passes out the medium of exchange (money or currency) by which both it and private citizens purchase goods and services from one another, government itself produces no goods or services. Even when it pays soldiers or legislators, government itself simply mints the money but the individuals furnish the labor which the government compensates. That money or currency then gets passed into the private sector, circulates, and creates more wealth as it pays for the goods and services created by other citizens. So, whenever somebody says the Federal Government “pays” for some program, that’s a misunderstanding. The Federal Government does not, and cannot, “pay” for anything unless it creates currency specifically to pay directly for the labor rendered on its behalf. Otherwise, it’s merely recirculating currency that you have earned by providing goods or labor for somebody else. Government captures a portion of your earned income in the form of taxes, which it then redistributes as it sees fit. When government creates currency (dollar bills and coins) out of the nothingness, fails to back it with precious metals or other enduring items with intrinsic value, and distributes the notes and coins it to the public without requiring that the recipients produce a good or service in return, it creates not wealth, but poverty as each new unit of currency dilutes the value of all other units of currency already circulating in the economy. The result is inflation and poverty, not prosperity. In the specific case of health care, the more unearned currency the government hands out, the higher the cost of health care rises.

Government, on the other hand, always demands to be paid for the labor and services provided by its workers in pursuit of its functions (in this case, in pursuit of taxing and redistributing income from those who provide goods and services to those whom the government wishes to be covered by its health care plans). Insurance companies demand to be paid, as well, too, but unlike the government, insurance companies must compete with one another and deflect pressure from health care industry lobbyists and the public if their practices become too abusive. The government, however, has no competition, and when it gets involved in making regulatory decisions, it always does so in such a way as to eliminate the option for the public to effectively opt out or the private sector to compete with it (for example, by offering better than government rates or looser regulations for the same services).

Government is not only a monopoly, but one with unlimited needs sans any fiscal checks and balances. Government never goes out of business. It only expands forever, or until it collapses the system it manages. From this perspective, then, we might want to know what makes it an inherently better choice than the private sector, for meeting the needs of the citizens in the long run? When I challenge the idea that the government is a better choice than independent groups of medical professionals, non-profit organizations, charities and business people for providing quality medical care at more affordable prices, I’m asking for evidence that a system run by personalities who collectively gravitate towards things like power, wealth and guaranteed employment, and who realistically can’t be challenged, is inherently better than a competitive public market? Both are flawed, of course, because they’re both run by humans and humans are flawed. But where is there non-partisan, non-ideological, objective evidence that, in the long term, allowing a mass of bureaucrats to control health care decisions and costs, instead of allowing those decisions to by made by lots of independent little groups composed of medical professionals, business people and allied businesses like insurance companies, results in cheaper, better care? Having once worked for a prestigious health care policy research group, I can say that honest evidence supporting the socialization (bureaucratization) of health care just isn’t there. If you’re not sure I’m speaking truthfully, simply consider the fact that government doesn’t allow precious metals, cryptocurrencies or anything else to compete with its Federal Reserve notes as legal tender. While the public is demonstrating its growing preference for precious metals and cryptos as financial alternatives to the dollar, the government is trying to either ban them, co-opt them, or artificially suppress their value and desirability. Why? So the Federal government can silently rob us of our wealth and transfer it to itself and its insider friends via taxation and continual dollar devaluation (inflation). What is it about an institution that does this, that inspires confidence that it can, and will, run our health care system in a responsible and cost-effective manner?

2) How does government actually “save tax dollars” in health care?

The simple truth is that government cuts corners and undercuts the private sector as ruthlessly as the most predatory private business cartels could – only our government does so on a greater scale, and without threat of being caught and punished. One of its favorite cheats is simply to gyp health care professionals and private health care facilities by paying below fair market rates for their knowledge and labor. Government punishes both organizations that take financial risk to open health care facilities, and hard-working individuals who spend many years in school and a lot of money to earn their professional titles, by paying them both less than their knowledge and labor would be worth in a free market. The professionals, most of whom who know they’re being cheated and aren’t sufficiently co-dependent to think that’s a great thing, respond generally in one of two ways: if they can afford to do so, they choose the ultimate opt-out by retiring early. Or they may find another, less demanding and more appropriately paid job to escape to. The exodus of highly trained health care professionals, particularly physicians, is a root cause of the increasing shortage of doctors and nurses across the country. Idaho is currently suffering from the greatest shortage of primary care physicians among all 50 states, and second to last (behind only Mississippi) in the number of physicians per capita¹. Telling medical professionals to work harder for less income so that the government and those who support an interventionist state can feel virtuous about their redistribution ethic, won’t reverse this poor statistic.

If health care professionals can’t afford to opt out of their careers directly, many opt out indirectly by providing less service while crowding in more patients per work hour to maintain their incomes. Indeed, the government FORCES them to see more patients and provide less service, or to shift medical service to cheaper and less trained assistants. It does this insidiously by taking precious time away from already too-short appointments to fill out teams of mandatory paperwork (which causes increasing environmental damage, by the way). More time spent providing voluminous documentation of the minutiae that some public policy college-grad legislative rules writer feels is important in a medical encounter, means less time for the physician to exercise his or her training and find out what’s wrong with the patient and how to best handle it from a genuinely informed medical standpoint. The result? Every patient, regardless of funding source, foots the bill for increased government intrusion in the medical clinic by receiving less time, attention and skill from the physician, or by seeing a less qualified practitioner.

Raising government burdens also harms medical professionals and thins their ranks by increasing physician and nurse frustration and burnout². This is not only unjust, but is leading to increases in rates of debility, disability and suicide, especially among primary care physicians, but also among nurses and medical students, too ^3,4,⁵ . The implementation of ObamaCare and its ethic of “faster, cheaper service for everybody, courtesy of the government” has driven physician suicides to new heights thanks to the burdens added to doctors under the “more efficient” (actually grossly less efficient) service delivery model⁶. This is a hidden cost of government “savings’ in health care. Why is it considered “socially just” to degrade and punish those who worked the hardest, sacrificed the most and took on the greatest load of professional risk (in terms of being potentially held liable for their actions) in order to do a very difficult job that is critical to maintain a healthy and productive society?

When considered in terms of the costs of time, money and energy invested and opportunities lost during youth for people to become physicians and professional nurses, their financial compensation is already too low. Punishing them by pushing it lower with the help of government discourages the most qualified young people from choosing medicine as a career path. The prospect of being underpaid as a health care professional also makes it more attractive for young people to either to accept positions in life that are easier but that don’t make use of their medical potential -which is a loss for society- or encourages them to migrate towards careers in business and finance where the potential rewards are far, far greater. How can discouraging good candidates from becoming tomorrow’s skilled doctors and nurses because the known costs relative to the potential gains is too high, be of benefit to society?

It would be of benefit to also ask how making the careers of physicians and nurses so miserable under a stingy government-run system, that young people with the dream of going into medicine are discouraged from doing what they really want to do in life? How is rigging the economy so that bright and talented young people are encouraged to settle for doing less in life, either fair to them, or good for society overall? Isn’t stealing people’s dreams so that the government can re-distribute society’s wealth towards those who have lesser ambitions in life, also a form of theft? Or is “social justice” only an entitlement for those who are less smart, less ambitious, and less interested in doing something with themselves?

3) What Are We Actually Buying With The Money Saved If We’re Being Cheap?

Some have proposed that the solution to our medical professional shortage is to import cheaper foreign doctors and nurses to take the place of American professionals. Doing so, however, ignores a variety of hidden penalties, not the least of which is the corrosive cost of allowing the latent talent in our own society rot on the vine because the government thinks investing in its own citizens is too expensive. Sure, money would be ‘saved’ if foreign doctors and nurses worked for lower salaries, but the ‘savings’ is paid for by robbing our own citizens of their human potential as well as by robbing society of the broad, diffuse social and economic benefits of having a greater number of more highly educated, ambitious, socially satisfied and higher paid members. Now I’m not opposed to allowing foreign medical professionals to work in the U.S. – anybody should be allowed to set up shop here if they’re qualified and not being brought in to undercut our own – but it’s no more our responsibility to provide jobs for medical professionals from elsewhere than it is for, say, Italy to provide jobs for our farmers or Uganda to provide jobs for our musicians.

Furthermore, importing doctors and skilled nurses to fill shortages (assuming they’re even willing to come to America at this point) ignores the option of expanding our own medical training centers. How many good jobs could be created or saved if our government saw fit to pay American health care professionals fairly, and to invest in building, staffing and maintaining the facilities required to train growing numbers of professional health care students we need? How many construction jobs would be created? Faculty jobs? Janitorial and administrative jobs? How about research jobs for medical scientists? Everybody wants a cure for cancer, but where do we think it’s going to come from? Bureaucrat drones who abuse the public at the DMV?

How much more economic activity would be generated if the government encouraged honest labor (construction labor, janitorial labor, administrative labor, teaching labor, provision of goods and supplies, and so on) to get busy providing for an expansion in the ranks of medical professionals? Wouldn’t the real wealth generated through the provision of goods and services more than make up for the government outlay required to raise reimbursement levels high enough to incentivize American citizens to become medical professionals? Or if government stayed out of the medical system altogether and let the private sector meet society’s needs all by itself? “Saving money” for the taxpayers by cheaping out medical professionals is the equivalent of jumping over dollars to pick up dimes. Sadly, because the government has for so long pumped the myth that it (somehow) generates, stewards and and saves the people’s money when it interferes with what society would provide for itself, most citizens have come to unconsciously accept this lie. This blinds us to the more complex realities and steals our ability to think through the consequences of government action. This is another layer of theft from us as a whole. If the government were genuinely interested in creating a better health care system and a better economy for all, it would recognize that paying doctors, nurses and health care facilities a ‘living wage’ relative to the time, effort and risk invested in their careers, instead of paying itself to choose who gets help and who doesn’t, would be a cheaper and better way of caring for us. The only downsides? Eliminating redistribution would reduce the growth of government and decrease its power to spread dependency and promote its political goals. A truly cost-effective system would also expose the hollowness of the morality of those who want to care for their bretheren, but only if the cost of doing so is reduced for them by being split with their neighbors. And we mustn’t have that!

4) What kind of return on investment (ROI) do most people who receive Medicaid assistance offer back to society?

It would be extremely refreshing to see actual, unbiased, long-term studies to assess the economic and social impacts of government-induced wealth transfer medical subsidies. For every $8 million spent on prison drug programs, for example, how much new wealth is created over time? How much potential lifetime physical and social debility is actually avoided? How much spending on other social welfare and police functions is eliminated over the rest of the recipients’ life? In other words, how much of the $8 million do the taxpayers who footed the original bill, get back? If the final amount isn’t more than $8 million, then the subsidy isn’t working. For those who argue that not spending the $8 million allows problems to go unfixed and eventually costs more than $8 million, I would say that the only real solution is to find whatever combination of factors works to produce end value that’s greater than the total dollars invested. Failing to do so is to engage in deficit spending and all deficit spending creates debt. All debt must eventually be paid. Failure to pay off debt over time leads to the implementation of expensive and destructive distortions as both those in charge and those who benefit from the status quo, seek to prop it up at any cost to those forced to fund it. Eventually the whole system fails and everyone, including those who are supposed to be getting ‘help’, suffers.

5) When does the support ever end?

Once an individual begins receiving a government health subsidy, how long do they usually stay on that subsidy (or another subsidy to which they may be shifted as their circumstances change)? In other words, once $8 million is spent to give a group of people free or reduced cost health care, how much more will they require? How much of your and my money will the government throw at them before they’ll be willing and able to turn around and start repaying for their help? What if they never do? Or what if they backslide repeatedly? How many times will the government use our money to intervene on their behalf? How many times, and at what cost, will they be bailed out, even if their problems are of their own making? Last but not least, what happens to the competing individuals who could have been genuinely helped by that care, but weren’t able to get it because it was already being used? Did the government have to take another $8 million in wealth from taxpaying workers who live somewhere else to cover the additional need, or were others whom the government considers less eligible, simply told to do without? Is the Federal government always fair and honest in deciding who wins and who loses in the redistribution shell game?

What would happen if we had no Federal system by which to redistribute tax-subsidized health care from wealthier states to less wealthy states? Would the citizens be empowered to save more to provide for their own care? Would they actually do that?Would the states themselves more carefully manage their budgets to prioritize affordable health case over other things? Why can’t we have a type of dual system in which each state gets to decide whether to opt out or opt in to the Federal health care subsidy budget? That would allow each state to figure out what works best for their own population. But giving the states and the citizenry such a choice would reduce the power of the Federal government – and for that reason it would never be allowed! But it would show which states and groups of citizens really believe in self reliance and free markets, and which love the idea in principle but would actually rather have socialism in practice. I think the results of such an experiment would be quite revealing.

Using Taxation To Impose One Vision of Morality On All

The bottom line is that even if we want to make sure our neighbors can afford whatever health care they or we think they need, we have to ask whether it’s fair that people in more wealthy areas – people who, as a rule, either worked harder and sacrificed more to get to where they are or who occupy the easier service jobs but don’t pull in the same amount of wealth, should be forced to send money to people in less wealthy, but also usually lower cost, states? Even if you say yes because you feel it’s your duty to rob Peter to pay for Paul’s hernia surgery, you can’t argue that paying the Federal government to shuffle tax dollars around is extremely expensive for both you and Peter.

How much money would be left in people’s pockets to buy their own health care if they weren’t paying Uncle Sam to collect it all in a pot and dole it back out as he sees fit? How much money that the Federal Government soaks up to impose the view of medical morality favored by the elites and their supporters, would be available for the more compassionate citizens to donate to their less fortunate bretheren if individuals and states were left to their own devices? Surely those who cry the loudest that we need to collectively do more, would see to it that the needy would be cared for – via the dime in their own pockets saved from the debasement of circulating through Uncle Sam’s hands? Yes?

Not only individuals but states, too, would have more with which to help their own simply by getting rid of the cost of Federal redistribution. It’s understandable that some states don’t want to do this because redistribution brings them in more than they pay out. Taxes are a good thing of you’re the privileged one getting back $2 in services for every $1 you pay out! That’s a compelling fiscal, if not moral, argument by which recipients (individuals or states) could support redistribution. But for every dollar of extra help received by one state, a dollar less is spent in another. Does the Federal government really know that the dollar spent here renders a greater financial or moral bang for the buck than a dollar spent there? Should it be up to the Federal government – the same body of policy makers that everyone derides as being elitist and out of touch – to decide what’s “fair” for every state and every citizen? What roles and responsibilities should the states have in caring for their own citizens?

If Wyoming, for example, (just a random state, I’m not trying to pick on anybody specifically) doesn’t generate enough income to pay for certain kinds of medical care for many of its rural residents, that’s sad, but should it be mandated that New Yorkers and Floridians pony up to close the gap? Maybe the Wyoming government needs to think more creatively about how to attract greater wealth to their state or add value to its residents’ output. Maybe the citizens need to run and elect legislators who will encourage them to do things that are well within every person’s means to improve their own health (such as reducing alcohol consumption, making better choices at the grocery store, establishing with a regular doctor instead of using the emergency room for non-emergency health care, and complying with their doctor’s treatment plans, for example). Maybe Wyoming legislators need to spend the state’s tax revenues more carefully, or the citizens need to accept that a lower financial standard of living is just part and parcel with a more rural economy.

A more radical but perfectly rational policy would be to encourage residents who take more than they give, to leave the state for fiscally greener pastures. Maybe the people and the legislators should, together, do a bit of all of the above, plus save their citizens the cost of redistribution by telling the IRS to take a hike.

On the flip side, perhaps citizens who feel that cost should be no object in determining what the “Federal government” should spend to take care of them, should quit complaining about not having enough where they are, and take themselves to more wealthy states with greater means and a more dependency-oriented social ethic. Perhaps hose who are aggrieved that their state doesn’t want to tax their neighbors more to pay for all the needs and wants of the poor, could help pay the poor’s moving costs to better places? People who seek subsidies move all the time to take advantage of more generous handouts elsewhere. If the states can’t control the Federal government’s predation on their citizens, then wouldn’t it be to each one’s advantage to adjust free benefits upwards or downwards in proportion to the amount of money the Federal government robs from their working taxpayers to redistribute? Who is the state supposed to prioritize, after all? Those who pull the wagon (or who have spent their productive lives contributing and have earned an honest rest), or those whose presence generally means a net social or fiscal burden on everybody else?

Do government rules to ‘protect patients’ really make patients better off? Or just more frustrated and poor?

If all the foregoing isn’t bad enough, perhaps the most deadly and ubiquitous way in which government “saves tax dollars” at grotesque expense is by making the regulations for “protecting patients” so burdensome and the punishments for not doing things entirely their way so extreme, that doctors can no longer operate small, efficient and less expensive private practices on their own. How many people aware of how much of each and every medical bill goes to pay the literal army of paper pushers now required in every medical setting just to insure compliance with every minute rule and regulation? Especially for programs like Medicaid? The cost of operating any sort of medical practice or facility to the government’s satisfaction is staggering⁷. If you want to see some shocking numbers, look up how much of the cost of each medical encounter is tied up in paying the back offices to insure regulatory compliance. This is a hidden cost of government largesse that EACH and EVERY working patient and taxpayer pays for either directly or indirectly. Ironically, the only people who do NOT bear the burden of the increased costs are the very “underprivileged” and “needy” people who create the cost in the first place by qualifying to be on government care! Those patients pay little to nothing for the services they demand, and pay few or no taxes to keep the system going. Many contribute nothing, little, or far less than the cost of their care back to society after receiving it. How many have ever done anything even remotely socially or financially worth the tax dollars or inflation the government uses to pay for their care via redistribution? Is this just, or fair, to everyone else? Certainly, in some cases this isn’t really the recipients’ fault as they would be able to pay if the government hadn’t pushed the cost of care so far above where it should be that a person with an honest but lower-paid job can no longer afford what was affordable before government stepped in to “help”. I am in no way suggesting that honest working people in need should be denied meaningful assistance. Far from it. What I’m suggesting is that if the government were out of the system, most working people wouldn’t need the government’s ‘help’ in the first place, and that voluntary contributions and incentives provided by the private sector could help subsidize those who genuinely require a hand up while rooting out free riders. The free riders and the political class they keep in power would undoubtedly dislike this arrangement, of course, but perhaps they shouldn’t be the ones that you and I and the working public should be most concerned about?

As the Government Creates Inflation, It Also Creates Dependency, Poverty, Debility and Crime. So how Does More Government Mean Less Poverty, Dependency, Debility and Crime?

I’ve been talking a lot about redistribution, and should point out that creating inflation and levying taxes are two key methods that the Federal government uses in combination to redistribute (often by subsidies such as Medicaid) the wealth created by higher income working people to lower income working people and non-working people. The beauty of this arrangement is that it achieves the government’s goals without anybody realizing what’s going on. Here’s how it works: inflation erodes the purchasing power of your dollars, but most people get raises, bigger tips, or a higher minimum wage to compensate. When taxes are calculated, you’re taxed on the total number of dollars you’ve earned, not on their purchasing power. So, the more you earn, the more tax you pay, even as you become poorer because each dollar buys you fewer goods and services (unless you’ve earned more dollars than you’ve lost in each dollar’s purchasing power, which is not the case for most people). So, you become poorer even as you earn more dollars! And the more dollars you bring in, the more you pay out in taxes because the government doesn’t tax you on the purchasing power of each dollar, it taxes you on the growing number of increasingly meaningless nominal dollars you earn- a double blow! But the people who receive your tax dollars to subsidize their medical care (or other things) are made more wealthy because they’ve just received free money, even if that money isn’t worth as much as it was, say, last year or five years ago. And they get another bonus, too. They’ll get bigger subsidies as inflation drives up the number of increasingly worthless dollars the government needs to spend to take care of them. Meanwhile, you’ll be left with less purchasing power and a higher tax burden. See how that works? Who really wins under this scenario? You don’t, until the government raises the threshold to qualify for subsidies, which it does from time to time to account for inflation. By that time, the purchasing power of your dollars is so eroded that you can no longer supply yourself and your family with anything resembling the quality of life you had 10, 20 or 30 years ago. Yet you’re older now and probably still sweating away at a job. Now you qualify for ‘help’ – especially if you’ve given up and claimed a a disability. Or maybe you can’t do that, but somebody else in your position can, and they begin to enjoy the benefits of medical care subsidy at your expense. Talk about unfair! The government subsidy ladder, which is supposed to be a tool by which citizens like you or I can climb out of financial holes we may fall into through no fault of our own, becomes an escalator to destitution and mass financial hell that drags everybody lower the more it expands. Instead of helping to preserve prosperity, government subsidies actually generate poverty and all the ills that come with it, and almost nobody understands how. Well, hopefully you do, now. And hopefully you can see that according to government logic, losing can be winning and winning can be losing. It’s become a very mixed up world, hasn’t it?

How To Get A Free Ride On the Government Escalator to Financial Hell

The potential vehicles by which our government could drag down our entire society into a mass of poverty and dependency are many, but probably the easiest and most efficient method – indeed, probably the only method by which the government can trick the people to clamor for their own slavery – is to subside everything. From rent to education to health care, subsidies create a dependency class that will lend the government its political clout for as long as the handouts last. The problem, for government, is how to persuade a people who hail from a culture that generally prides itself on virtues like independence and self-reliance, to accept cradle to grave help and see government as the source of all wealth? Slow impoverishment through double taxation and uncontrollable wealth redistribution under the guise of promoting social welfare and helping the poor, is an ideal approach. Double taxation for the purposes of wealth redistribution, when combined with inflation, are the primary drivers pushing more and more people who were once self-supporting into positions in which they “need” programs like Medicaid to help them make ends meet. As more and more working people slowly slip into positions in which government handouts become necessary, the stigma against living on the system also disappears. The dependency lifestyle deepens and the dependency mindset expands society wide. Mental and spiritual poverty both increase. The energies of human potential and agency, and even the capacity to form meaningful human connections, are siphoned off by the state, to be usurped and used for the government’s purposes.

As the government underwrites more and more aspects of a greater and greater number of people’s lives, it creates ever greater levels of dysfunction. As the mental and physical health of the collective deteriorates so does social stability. One critical result is an expanded criminal class for all the rest of society to deal with and pay for. This begs the question of how, exactly, more government, more forced redistribution and more dependency, can reduce social and economic problems? Indeed, more government will only deepen them. Perhaps the saddest part is that most decent, working people who find themselves either pushed into the ranks of the needy or standing on the sidelines wanting the government to do something to help their neighbors, won’t see how the money that’s supposedly created, spent or saved by Uncle Sam is actually driving everyone further into a financial and cultural hole. They will also fail to grasp how more “government help”, which is, in reality, financed by the people through higher taxes and inflation, is accelerating the erosion of the middle class. Government grows by draining honestly earned wealth, time, professional skill and productive manpower away from stable, hardworking people and redistributing it to three interlocking social groups: the political class, the dependency class that keeps the political class in power, and the co-dependency class that helps the government to grow the dependency class. Regular people won’t see the redistribution happening. They WILL, however, see that as time goes on, despite the additional “free help” they’re receiving, they are increasingly poor, increasingly vulnerable to being dependent, and increasingly unable to build or maintain any sort of wealth or climb the social ladder. They will also be increasingly caught up in the angst, class warfare and social violence engulfing our society. Will that make things better for most people?

The Ultimate Cost of Government Healthcare Help

Unfortunately, if the public continues to accept the idea that the government creates and/or saves money, they’ll be woefully unprepared to evaluate the true costs of Medicaid and other government programs. Because those costs are hidden, decentralized, abstract and sometimes incurred far from the source of the problem, most people will never really see where they ultimately come from. What they WILL see, however, are fewer or deteriorating hospitals and health care facilities, heavier reliance on cheaper and less-trained staff to do what a physician or skilled nurse once did, more disaffected and disengaged health care professionals taking care of them, shorter appointment times, greater wait times, higher insurance premiums, less choice and higher cost of medications and, ultimately, a three-tiered, one-payer system that is slow, inefficient, crushingly expensive and disproportionately unfair to the “privileged” who work and pay for the system, in preference for the “underprivileged” who receive care for free as well as the 1% with the wealth and political clout to create their own separate system. Class warfare will be exacerbated and the mass of good middle class Americans will be dragged into a long-term quagmire of poverty and social chaos. Expanding access to taxpayer-subsidized medical care is just one more step towards pushing our society either towards a violent, impoverished socialist hellhole, or a crushingly authoritarian, militaristic state similar to Nazi Germany. (For those who don’t accept that socialist societies are less desirable than capitalist societies, consider that there has never been even one nation that has ever progressed to truly classless, possession-less socialist ideal. All fail when the authoritarian stage in which they universally get stuck is upended by violent revolution.) Alternatively, our nation could shuffle into a giant version of the post-civil-war South complete with a new class of landless peasants (the free riders and middle class who didn’t prepare for the coming storm) and new carpet bagger barons (those who did prepare and who become the new holders of wealth and power). Or, society may simply boil down into a sort of anarchy in which citizens no longer recognize a common culture but create their own tribes that become mired in more or less endless tribal warfare. This is the state in which most of humanity has endured for most of history, so should the potential for reverting back to it really surprise anybody? Not if they look past the economic propaganda to see where their government is leading them.

Helping others is a wonderful ideal, but not if doing so involves preying on working people, failing to consider the costs and weigh them against the alternatives and their costs, or using the ideal of being our brothers’ keepers as an emotional cudgel to suppress questions and manipulate people with guilt and shame. These ways of helping out do others (and the self) no good. Pushing solutions that don’t attack the actual roots of the problems one wants to see go away is a spectacular method to multiply the very evils that the “help” was supposed to solve. It’s far past time when the public should be having honest and informed debates about the pros and cons of expanding government programs like Medicaid. Blindly applying more government to cure the problems primarily created by government is a knee-jerk cure that’s ultimately worse than the disease. If you think this is an exaggeration at best or a mean-spirited lie at worst, consider the words of 19-th century French political thinker and historian, and observer of American politics, Alexis de Tocqueville. He sagely commented that American democracy would endure until the politicians discovered that they could bribe the American people with their own money⁸. Let’s not make the body politic even more ill than it already is by draining it further with additional government fiscal leeches and co-dependents. Let’s stop accepting policy pitches that encourage lazy thinking and emotion-based responses. Lets start asking how much we’ll all have to pay in order to have the government save us money. Let’s start finding out how high the cost of free medical care really is, and private solutions to make it genuinely affordable again.

References:

America’s Epitaph: Suicide by Charity?

Hamlet’s Timeless Question Applied To Today

To give, or not to give? With regard to whether Americans, individually and collectively, should continue to pour billions of dollars and hours of manpower into charitable endeavors every year, that’s one of THE most important economic and social questions facing us today. It may seem like a strange query, but when our national debt is soaring above $21 trillion, our deficit is topping $1 trillion annually, we have trillions in unfunded liabilities coming due, interest rates are almost zero, real (not official) price inflation is probably somewhere near 7 or 8% annually, and our government is thinking about imposing digital currency on us so they can confiscate our wealth directly through negative interest rates, it’s not unreasonable to inquire whether pouring hundreds of billions, even trillions, of private and public dollars into charitable endeavors, is really the right thing to be doing at this moment?

Let me be clear. I’m not talking only about the forms of charity that usually come to mind when people talk about giving, like volunteering at the zoo or leaving some cash to the local children’s hospital in your will. I’m also speaking about the larger, broader, more insidious and institutionalized forms of wholesale charity that American taxpayers and, indirectly, all citizens, are forced to participate in whether we want to or not. Examples include the bailing out failed miscreant banks and the propping up of entire communities with free social welfare. Those are most certainly forms of charitable giving, too, though we’ve been conditioned to stop seeing things like taxation on behalf of social programs, the imposition of government mandates to give this or that group preferential treatment, and hidden financial manipulation to funnel money to favored industries, as forms of charity.

Charity is a psychologically and socially complicated affair. It can elevate the human spirit and bring out the best in us, and it can be a handmaiden to our deepest, darkest impulses. The act of giving is frequently bound up with selfishness, fear, greed and manipulation. This is true whether donors and recipients know each other and are bound in a one-on-one relationship, or whether masses of donors and receivers don’t know one another yet are bound together in a complex web of giving (for example, when disaster victims receive food and blankets from unaffected strangers half a world away). While certainly not every act of generosity is a bad thing – far from it! – giving is fraught with unconscious energies and potential side effects which, when allowed to accumulate, can destroy the giver, the recipient, the community, and even an entire civilization if they spread to a mass scale, which is what we’re witnessing in America today.

Charity as a Weapon of Mass Destruction

I believe that misplaced and “toxic” charity is a largely unrecognized force that has contributed greatly to the fraying of our cultural fabric and explosion of America’s financial crisis. On a personal level, toxic charity mires the lives of individuals and their circles of contacts (family, friends, caretakers) into a sea of unresolvable depression, dysfunction, and wasted time, money and energy. Add up thousands or millions or tens of millions of cases of toxic charity cumulatively and, a cultural level, you get a sort of poisonous social cement that binds up and drags entire communities – and then systems of communities and ultimately civilizations – into nearly inescapable downward spirals of anger, depression, crime, debility, social dysfunction and economic collapse.

“Seeing” Toxic Charity And Its Effects

America has, from its founding, always been a generous nation, and yet charity during our earlier days was a force that helped build and strengthen our society. So how did it turn into such an economic and existential threat? I think the key lies largely with the confluence of the technological revolution, fiat based currency (which causes social problems of its own, but that’s a topic for another paper), and the rise in charity as a government and public obligation, rather than as a personal decision. A number of years ago, as a result of numerous puzzling and paradoxical experiences connected with my own charitable giving, I started to inquire why donating one’s time, money and effort for a cause often doesn’t generates the positive results for donor or recipient that one would expect. I looked at the phenomenon of giving at both the simplest level – one donor interacting directly with one recipient – to the most complex level of charitable giving involving mass numbers of donors (such as taxpayers) interacting through an intermediary (such as the government) on behalf of mass recipients who were total strangers, both personally and culturally, to the donors. I found several surprising characteristics common to all forms of charitable giving and, when present, conditions that always and everywhere changed the charitable relationship from one of mutual benefit to one of mutual harm. I also discovered that these pernicious conditions had an innate mechanism by which they could, like a virus, replicate and spread themselves from even one giver and one receiver to larger and larger groups of vulnerable individuals until families, communities and even entire civilizations were infected and ultimately destroyed. I put my findings into a short book (only 33 pages) and decided to release it now because I think it fills a desperate need to understand how economics, biology, social policy and spirituality have combined to create a well-intentioned but almost insurmountable social mess, and to provide guidance and justification in choosing where and how to attack our current social and economic problems.

Yes, I know that economics, biology and spirituality may seem like odd bedfellows. However, like most things in the material universe, if examined closely enough, one sees that they form webs of interconnecting strands that influence one another in odd and surprising ways. Charitable giving as an integral strand of the fabric of everyday secular life for the masses is a relatively recent social invention. It is also primarily an invention of Western culture. It’s a trait that makes modern Western society distinctive. Everyday charity as we practice it, hardly exists in most traditional cultures. On the plus side, the ways in which mass secular charity has made life better for most, are too numerous and obvious to merit mention. However, along with the benefits of charity come the costs, which are rarely considered. In proper amounts and applied strategically, charitable giving is a powerful force for making life-improving changes for individuals and society. If applied in excess, however, or improperly (as is more and more the case), charity becomes a hungry and indiscriminately destructive beast. It’s also a non-linear phenomenon. The benefits of giving don’t accrue to infinity in a linear fashion. Like most other functions of nature, if we plotted the results or effects of generosity on a graph, we would get not a line but an inverted U-shaped curve, with benefits or marginal utility going down after peaking at some critical point. Indeed, if we plotted the benefits versus the problems created by charitable behavior on a graph, I suspect that we would get two curving lines that intersect at the “optimal” level of giving, much like the positive lift and negative drag curves for airplane wings intersect at the “optimal” level on graphs of aerodynamic efficiency. If I’m right, then we can ask if there any ways by which we can either objectively or intuitively grasp approximately where these lines might intersect for any given instances of charity, whether on an individual or a mass scale? I believe there are, and I detail them in my book.

How Has Generosity Become Such a Potential Problem?

The impulse to generosity is buried deep within the architecture of our brains and has persisted for millions of years because, in the environment we evolved in, it was a useful survival skill. Back in the day – really, until the very recent arrival of the urbanized, highly technological world – the impulse towards generosity was met by pushback from nature. Material circumstances created plenty of need for assistance, and some opportunity for that assistance to improve the general welfare. Generally, however, short, direct and sometimes brutal feedback loops would signal when enough was enough and more generosity would threaten the donor’s, or the recipient’s, own good. The environment functioned efficiently to keep our charitable impulses in check. Individuals and groups that balanced their giving with their withholding were usually the most successful in terms of overall survival. Besides, giving of the types and on the scale that we take for granted today, simply weren’t even possible just a century or more ago. A web of advances in everything from energy production to materials science (which made many previously expensive things from books to shoes cheap and abundant, increasing the average person’s disposable income as well as material wealth), to modern telecommunications, the internal combustion engine (which made mass transport of goods and services by land, sea and air both cheap and efficient), to a fiat currency that has the added bonus of being the world reserve currency, have combined in a “perfect storm” to render most of the old checks and balances on our giving impulses impotent. We no longer generally see charity as an unruly force that our forbears unconsciously understood must be somewhat curbed for the overall safety and benefit of the whole society. Today, giving is widely viewed as the correct and righteous foundation upon which society should be constructed.

‘Charity Vampires’ Assume Many Pleasing Shapes – But They’re Still Deadly

Movements and institutions as diverse, and sometimes oppositional, as Antifa, some Christian churches, and many self-proclaimed ‘socially conscious’ clothing companies (to give a few examples), are all constructed on excessive versions of the ‘society should be based on giving’ ideology (which, taken to its ultimate extreme, yields Utopia, which is possibly the most dangerous vision humans ever invented.) Antifa, for example, demands abolishment of all forms of imprisonment (among other things)¹. What is this, except the ultimate generous gesture to be bestowed upon those who degrade the very foundations of charity, namely, orderly society? In an indirectly related and opposing point of view, various branches and sects of the Christian church glorify poverty – why? Because being poor and deprived diminishes one’s propensity towards crime, and lifts one’s soul? Or maybe – at least a little bit – because having a lot of poor people around guarantees that the church and its charitable functions form an exalted and indispensable fixture of society? Last but not least in these examples, some clothing companies manage to victimize both the wealthy and the poor simultaneously by using donations to the poor to boost sales. They prey upon the wealthy by pushing feelings of shame and guilt, while holding out the promise of easy dispensation via gimmicks like ‘buy one and give one’. (In this way, vampire companies operate not unlike the medieval Catholic church selling indulgences, although Church leadership did – officially at least – disapprove of the widespread abuse of the practice.²) What are the less savory ‘socially conscious’ retailers really doing, though, besides victimizing consumers with self loathing (and the false promise of redemption), competing with the domestic producers in the places they’re supposedly helping, and creating dependency instead of local entrepreneurship?³

Beliefs of our grandparents and their grandparents such as “Charity begins at home”, have been replaced with “kinder” beliefs like ‘”it takes a village…”, with little consideration for what happens when the village becomes overrun and ruled by its most ideologically driven, but not necessarily wisest, citizens.

Enter the Newest And Most Ideological, But Not Necessarily Wisest, Citizens?

The supporters of the New, what I might term “Hyper”, Keynesian economics may turn out to be the newest and most deadly citizens who will try to run and ruin “the village'” While Keynes’ basic theory posited that economies in a slump could be revived through a combination of increased government spending and reduced taxation (with the resulting deficit being made up later through tax increases once the economy recovered), generous New Keynesians have stretched his idea to a deadly extreme. They believe that government spending can be increased without limit, and without consequence. Debt can be piled to the moon and never repaid. People can be lifted out of poverty and the economy strengthened by free tuition, loan forgiveness, and endless fresh bread for all. In the mind of a New Keynesian, there is literally no limit to the charity the government can dispense, nor the goodness that will flow from its largesse. Nature’s dictate that one must take care of oneself before taking care of others is backwards in the minds of New Keynesians. In what I would call the social corollary of New Keynesian economics, there is the assumption that, in a properly functioning society, we can all afford become our brothers’ keepers and give him everything he wants without having to be concerned about out own subsistence. That sounds lovely, but is there any way to find out whether it might actually be possible? Or good for those who will have to be the foundation of givers? I think there is, and I think a quick look at recent American history might provide an answer.

The Great Society? Or The Great Failure?

When America embarked upon the expansive monetary and social experiment in the 1960’s dubbed “the Great Society”, the premise was that the government could harness and deploy our resources (material, manpower, intellectual skills) so effectively that we could achieve a stable society so egalitarian and wealthy that no citizen would ever need to go to bed cold, hungry, or lacking any of the increasing number and variety of necessities in life. Progressive leaders assured working people that the ethic of taking care of one’s own first was selfish and outdated, because there would be no more need for the idea of “first” in a land brimming with plenty for all. With wise government correcting imbalances and deficits of giving created by selfish and short-sighted citizens (collectively known as “the invisible hand’ in capitalism), everyone, regardless of their level of participation in the system, could be supported in a style that would be the envy of most of the rest of the world. (Universal Basic Income is the current manifestation of this idea.) Americans could create a material and spiritual Utopia for ourselves if we would only put old-fashioned, limiting ideas like hierarchy, standing in line, the family unit and scarcity (especially of money) into the ash heap of history where they belonged.

Well, how has that been working out for us?

Charity as Our Swan Song

While I wouldn’t ever say that charity is a bad thing – I’ve actually given a yeoman’s portion of my own time, energy and money to various causes over the years – time and experience have conspired to suggest to me that maybe the Great Society that rests upon an embedded ethic of endless charity, is actually more of a killer than a spreader of the American dream. I’ve come to the conclusion despite the shrill objections of the people who have far more economics training than I have, such as Alexandria Ocasio-“Just print the money”-Cortez and the seemingly infinite cadre of class warfare warriors. They say that average Americans have perpetuated poverty and other social ills by being too fiscally and emotionally stingy. I say the problem is that America, as a society, has actually been too generous to the “underprivileged”. I believe that the abundance of ‘help’ thrown willy-nilly at those who are all too willing to outsource the work needed to fix their problems to others (usually family members, taxpayers, social workers, the police or the state), is one of the primary roots of our rising social and economic dysfunction. Left unchecked or not reversed at this late stage, this continued largesse will completely corrode and weaken what is left of our social and political system until it falls. I know that sounds crazy and even offensive to many people, but it’s far from a poorly considered opinion. The bottom line is that I have created an evidence-based, integrated economic and spiritual perspective on why I think that charity, when practiced mindlessly, carelessly, selfishly or manipulatively – the primary ways in which we’ve been trained to do it over the last six decades or so – has become a modern weapon of mass social destruction. The methods that traditional societies subconsciously used to keep the destructive power of charity in check no longer apply to us. The idea of running to world by making abundant charity available to anyone, anywhere who asks for it at any time, is primarily a modern Western practice that may have exceeded its levels of usefulness to society. Because mass charity is a relatively new and culturally localized (advanced Western economic) phenomenon, we have few, if any, significant precedents in which charity has been able to play a major role in ruining civilizations, to learn from. But perhaps we’re about to set one?

This article is a condensed version of the principal ideas in my book Charity: A Force For Good, Or Weapon of Mass Destruction? If you would like to pursue these ideas in greater detail, or find out whether they may help you identify and solve issues in your own life that are holding you back, you can access the link to my book here: https://wordpress.com/page/economicswatchdog.com/309 Just one note: it was written for people seeking help and answers to certain seemingly inexplicable or intractable problems in their lives. It is therefore presented in a very different style than my blog. If you’re willing to accept that, however, you may find it very useful and eye-opening even if have no “issues” to which it speaks.

You may download and print out my book for your personal use for free. You may also share it in electronic or print form at will, with attribution to Economics Watchdog.

https://cloverchronicle.com/2020/06/02/blm-and-antifa-reportedly-release-demand-lists-to-u-s-government-amid-widespread-violent-riots/

2. https://www.catholic.com/qa/does-the-catholic-church-still-sell-indulgences

3. https://www.triplepundit.com/story/2012/problem-toms-shoes-charity-model/66636

Is the Money You Didn’t Get From the CARES Act Being Charitbly Redistributed To Save Foreign Governments, Prop Up Wall Street, and Set Up the World’s Greatest Heist?

Like most people “of a certain age”, when I was young, I was taught that part of what made America special was that we were the most generous nation on earth. To prove the case, my elders would point out example after example of how American citizens and government continually helped out those around the world when they were in need. After Parumphistan was hit by a severe earthquake, for example, it was the Americans who rushed in to stabilize them with the most massive imports of food, blankets and funds to help them rebuild their schools and roads. When the people of Turkapopolis rose up and threw out an evil dictator, America was first on the scene to offer huge amounts of foreign aid and support for the fledgling new democratic government. And whenever the Papaneese people suffered from another devastating plague, it was American doctors and nurses who beat a trail to swoop in with life-saving vaccines and soothing lollipops for the children.

What my elders taught me was that American charity made a huge positive difference in the world. The emphasis they placed upon engaging in private charitable behavior helped inspire widespread pride in our nation and its ideals. For many decades, America was the leader in spending its disposable income to help everybody else in the world during their times of need. But slowly, as our country turned from a mostly agrarian frontier nation into a wealthy, urban, technologically advanced world power, our cultural motto of “Charity begins at home” turned into the increasingly militant belief that “We are are our brother’s keepers”.

Has that had any effects on us?

I believe it has – and not for the better. While the ideal of charitable giving has remained strong in the national psyche, our government has taken the concept to bizarre and hideous levels that have been helping to eviscerate the middle class for at least the past two decades. This year, in particular, our government appears to have taken the concept of charitable giving to fantastic new heights and twisted places under the guise of helping those laid low by the coronavirus debacle.

Remember the CARES Act? The sweeping legislation that was supposed to generously return to the people a share of the taxes levied on the workers, in order to help individuals and businesses devistated by the pandemic lockdown and layoffs? Did you get your share of the promised redistribution? Well, many people and businesses never found the government’s promised largesse in their bank accounts, and nobody seems to know why. But a few clues have recently surfaced. Taken together, they suggest that the help that millions of Americans were supposed to have received, was re-routed by the most powerful offices in the land to lend a hand to a struggling Wall Street, instead. And maybe even to financially stressed foreign governments.

Say what??!?

Using an Obscure Old Law As A Smokescreen For Modern Rip-Offs

The government has been ripping off and slowly impoverishing the American people for decades by funneling our hard-earned tax dollars to Wall Street, failing mutual funds, foreign governments and possibly other places via a poorly known financial law called the Exchange Stabilization Fund, or ESF. The ESF was enacted in 1934 for reasonable purpose: to help stabilize the U.S. currency during times of deep financial turmoil. However, the way in which it was set up offered rather fertile grounds for later mischief. Created and financed by the Gold Reserve Act of 1934 (1), the ESF is a rather opaque Federal entity that allows the sitting Treasury Secretary to use Treasury funds (i.e., taxpayer dollars), to intervene in any types of markets (currency markets, commodities markets, precious metals markets) anywhere in the world, including in the U.S., as necessary to maintain the stability and value of the US dollar. The ESF has also been used for such purposes as making loans to foreign governments to prevent their collapse, and insure the mutual funds market after a major bank collapse (ibid.) These intervention may take place without approval from, or even notice to, Congress, and can be undertaken at the sole and final discretion of the Treasury Secretary him- or herself.

Over the years, the ESF has grown to reach $34 billion in size. That may not sound like a lot given the monstrously bloated proportions of overall Federal spending, but remember, this money can – and currently is – being used without congressional oversight or the knowledge and consent of the people. It is also apparently not being utilized as charity at home, at least not for the average American citizen.

The ESF: A Way Of Robbing the Frail American Taxpaying Peter To Pay The World’s Foolish and Reckless Pauls?

The uses to which the Exchange Stabilization Fund have been put over the years are murky, but what is known certainly looks like example after example of serreptitiously redistributing ever greater amounts of American wealth via state-approved “charity” to failing governments and institutions around the world, including Wall Street. The most massively egregious abuse of taxpayer dollars via the ESF may have occurred this spring, during the throes of the COVID pandemic. (I say “may have” because, due to the paucity and fragmentary nature of the available evidence, it’s difficult to find a smoking gun. But the gun itself may be the lengths to which the government has gone to reduce the amount of evidence available.) Anyway, as if to kick failing American businesses and workers when they were down, President Trump issued a Memorandum on the Delegation of Functions under 31 U.S.C 5302 (https://www.whitehouse.gov/presidential-actions/memorandum-delegation-functions-31-u-s-c-5302/), in which he upped the ante of the ESF by authorizing a transfer of executive authority over the disposition of up to $500 billion of taxpayer money to the Secretary of the Treasury (who happens to be his personal friend, Steve Mnuchin). That money was supposedly intended to be distributed to aid struggling American businesses and workers under the CARES Act. It was also supposed to help the Fed absorb losses of capital under its emergency lending programs. Strangely, however, the bulk of the money, $360 billion of it, never left the Exchange Stabilization Fund. Even more strangely, Mr. Mnuchin apparently helped to make sure the potentially secretive ESF, over which he could exercise direct personal authority, was the account into which that money was deposited. A big question is why the money destined to help American workers and businesses, was deliberately deposited there, and put under Mr. Mnuchin’s sole authority? Also, why Mr. Mnuchin was given sole discretion as to the disposition of those funds, which were supposed to sit in (be used by) the ESF until January 1, 2026, and then returned to the Treasury’s General Fund to be put towards deficit reduction of they weren’t already spent?

Becoming Our Brothers’ Keeper, And Oppressor of His Family and Ours

Mr. Mnuchin is currently presiding over a pile of $368 billion taxpayer dollars over which nobody save Mr. Mnuchin himself, our current and past Presidents, the New York Fed, and the beneficiaries of the ESF funds, seem to know how it got there, or what was to be done with the CARES portion of it in place of directly helping struggling Americans. Also unknown is how it was to be used between now and 2026. Is it possible that some of the money has already been quietly pumped into the U.S. stock market to artificially reverse the massive decline it experienced during the height of the pandemic in mid-March? Could it be that the intended purpose of the CARES monies poured into the fund were to be used to continue to prop up the markets until Mr. Trump left office at the end of his presumed second tenure? The timing of the funds transfer and the subsequent puzzling upward march of the stock market in the face of steep overall economic decline, when combined with the tight security surrounding the sharing of information about U.S. interventions in markets, makes ruling out those possibilities impossible. In other words, it’s entirely conceivable that our Treasury Secretary, with our President’s approval, may be using our tax dollars today to charitably support the wealthy at the expense of everyday working Americans.

What some members of Congress and a few others DO know is that, in perverse acts of ‘generosity’, ESF funds have been used in the past without congressional approval to bail out both domestic mutual funds and foreign currencies and foreign investment failures and policy mistakes. In other words, to save both American and foreign governments and institutions from the consequences of their poor decisions or miscalculated greed. All at the expense of the U.S. taxpayer. While it looks like the ESF is more likely being used today to bail out the American stock market and asset holders, there’s no reason to dismiss the possibility that during a second term as President, Mr. Trump was also planning to indirectly preside over continued redistribution of our wealth to paper over foreign monetary and fiscal policy blunders – blunders which, oddly, often seem to have the puzzling consequence of making the most well off and politically connected in the affected countries, better off at the expense of the people.

Sadly, few sources in the mainstream or the financial press will cover the issue and inform us of what’s really going on with OUR money in the secretive Exchange Stabilization Fund. The one that I am aware of is Wall Street on Parade, written by a husband and wife team who do the investigative work of old-fashioned financial journalists. Their work helps expose that America IS being extremely generous – but to all the wrong people and institutions and for all the wrong reasons. For an eye-opening account of how YOUR dollars may be being used to serreptitiously lend a helping hand to everyone who is in trouble except yourself and your fellow working Americans, please take a close, careful read of the following article by Pam and Russ Martens (www.wallstreetonparade.com):

Trump Issued an Executive Memorandum Giving Mnuchin a $50 Billion Slush Fund; Mnuchin Gave Himself $386 Billion More

By Pam Martens and Russ Martens: December 1, 2020 ~

Five days before Congress passed the CARES Act on March 25 of this year, President Donald Trump issued an Executive Memorandum giving U.S. Treasury Secretary Steve Mnuchin complete discretion to use $50 billion in the Treasury’s Exchange Stabilization Fund (ESF) as Mnuchin solely saw fit. The Memorandum was dated Friday, March 20. On the prior Tuesday and Wednesday of that same week, Mnuchin had already used $20 billion of the Exchange Stabilization Fund to bail out Wall Street. As Mnuchin’s letter of November 19 to Fed Chair Jerome Powell confirms, he gave (or committed) $10 billion from the ESF to the Fed’s Commercial Paper Funding Facility on March 17 and another $10 billion to another Fed emergency lending program, the Money Market Mutual Fund Liquidity Facility, on March 18.

Most Americans have never heard of the Treasury’s Exchange Stabilization Fund (ESF), a slush fund available to the sitting U.S. Treasury Secretary since 1934. The ESF has grown from $94.3 billion in assets prior to Trump taking office to $682 billion as of September 30, 2020. As recently as March 31, 2007, the ESF had assets of just $45.9 billion, meaning it has grown by a factor of more than 14 times in 13 years.

The size of the ESF slush fund matters because under current law (31 U.S.C. §5302) the decisions on how to spend the billions in this slush fund belong to the Treasury Secretary and “are final and may not be reviewed by another officer or employee of the Government.” The law also provides that the Treasury Secretary “with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities the Secretary considers necessary.” Since publicly traded stocks are “securities,” that certainly sounds like the Treasury Secretary would have the right to intervene in buying up stocks to shore up the stock market, ….

To view the rest of the article, please visit https://wallstreetonparade.com/2020/12/trump-issued-an-executive-memoran… .

And now for the $64 trillion question:

Was Donald Trump, with the help of Steve Mnuchin, planning the world’s greatest heist under the guise of COVID relief? Did the revelation of the strange facts surrounding the disappearing CARES funds, uncover a grand scheme in which Trump was orchestrating the use of your tax dollars to secretively prop up the stock market in a grand, bigger-than-life, eight year long “pump and dump” swindle? A rip-off in which he would pave the way for the Dow to reach 50,000 or more and then allow himself, his family and his crony insiders to take their profits just before he left office, while leaving the public to hold the global bankruptcy bag? Given that Trump constantly proclaims himself to be the “king of this” and “world’s greatest” that, and rarely stops bragging about his prowess at “making deals”, it ‘s almost a no-brainer to believe that he could possibly have been planning history’s greatest robbery – with us as his hapless victims. At least it’s a plausible theory. And if it’s not true, now would be the time for him to come forth and set the record straight. I would actually prefer if he could provide a verifiable alternative explanation for why he gave the Secretary of the Treasury total control over $50 billion in tax money appropriated from the people, without expecting a full accounting for how that money would be redistributed back to the needy, as promised.

But I won’t hold my breath.

Maybe my theory is correct, and maybe it’s not, but the evidence so far certainly looks rather damning. If Joe Biden does make it into the White House in January, we may never know for sure. (BTW, I’m not a Democrat or a Biden fan, either.) But with Mr. Mnuchin recently making an odd public show of demanding back CARES money from the Fed that we now know never left the Treasury, the theory at least makes sense. The whole sordid scenario reminds me of a domineering, petulant child (Donald Trump) being pushed out of the play group and ordering his underling to pick up all the marbles so he can take them home and deprive the other kids of the opportunity to play. Is this what’s really happening? Only time will tell. But if the reality is ever fully uncovered and this turns out to be the truth, remember that you read it here first.

https://www.investopedia.com/terms/e/exchangestabilizationfund.asp

FedCoin and Depreciating Digital Dollars: What Will An Electronic Cash Future Look Like For You?

Economists may have all the answers when it comes to getting our economy back on track, but what will everyday life actually look like after the great reset to a completely digital currency?

America’s current political and economic situation is pretty crazy right now, isn’t it? We have the highest unemployment rate ever and bread lines miles long, while importers of goods can’t find space on container ships because retailers are gearing up for a record-breaking Christmas consumer spending spree. The Dow just broke above 30,000 for the first time while the U.S. debt sailed past the point at which it can ever be repaid. There’s a lot of cheering going on over the false prosperity in which our nation is now hopelessly mired, but whichever party is declared the more successful cheater after the current election mess is over is going to find itself faced with one inescapable question: how are we ever going to repay our debt?

The answer, of course, is to do what governments in hopeless debt have always done – impoverish the productive people who would otherwise create prosperity, through taxation and inflation. The problem with this (from Uncle Sam’s point of view), is that the people will stand for only so much taxation. Shove too much naked confiscation in the citizen’s faces, and eventually they rebel. Create too much hunger and deprivation by removing all the value from the currency, and unrest fills the streets. Not to be deterred by these obvious facts, however, a growing cadre of genius economists are pushing the notion that taking away what wealth and productivity remains in our country via increased taxation is, indeed, the road back to national prosperity. A giant among them, named Kenneth Rogoff, is even suggesting that raising taxes without raising the ire of the people should be done via the novel (and deeply unnatural) method of imposing heavily negative interest rates. In other words, he’s proposing to raise money by taxing wealth through making every dollar not spent today but saved for future investment and consumption, worth significantly less for each unit of time kept in storage (perhaps as much as 5% annually). The rather questionable theory behind this preposition is that if people are forced to quickly spend every dollar they make, then the velocity of money (the rate at which it change hands and thus creates more value), would quickly zoom upwards, jolting our zombie economy back to life. The upswing in overall economic activity that would result from everyone going out to spend, spend and spend everything they have would rapidly get the manufacturers manufacturing again, the farmers farming again, and scientists finding new cures for old diseases at breakneck speed, or so the Keynesian economists like Rogoff would have us believe. America would pull herself up by her bootstraps, and become a world economic and industrial powerhouse once again, or at least a financial utopia for the common man.

But Utopia is a funny place. It always has a way of receeding over the next hill every time we find ourselves pulling abreast of it, doesn’t it? Like the shadowy mirages of great cities that bewilder thirsty wanderers in the desert, Utopia always looks more promising from afar than it turns out to be once you arrive at the spot where it supposedly stands. In the case of the plan to rebuild our debt-soaked economy by punishing people for providing for their own long-term financial security, Mr. Rogoff and others of the Keynesian ilk now propose that levying a deep and punishing tax on money – a negative interest rate as deep as 3-5%, will bring ailing global economies back to life¹. But how to accomplish? Technological advances in the nature of money, namely the creation of a digital currency based on blockchain computer, are the likely candidates for the task. Digital dollars would be a relatively easy, at least in some respects, way of imposing confiscatory inflation on workers and savers without allowing said producers to rebel or escape the iron fist of government policy.

Two Proposed Methods of Robbery

Two methods of robbing the masses have been proposed: a purely electronic form of fiat money called Fedcoin, and traditional-style paper bills that would get a makeover and be manufactured with embedded computer chips pre-programmed to decrease the value of the bill over time.

Enter the Devils

While the idea of jolting our moribund economy back to life through a) massively increasing consumer spending, and b) rapidly devaluating the dollar (thus making debts relatively cheaper to pay off), while, at the same time, shrinking the national debt by taking the interest rate below zero, sounds nothing less than wonderful (insert sound of slight sarcasm, here), the devil is always in the details. And I perceive the details to hide some very big, and very mischevious, devils. Indeed, if implemented, I perceive that any attempt by our government to solve our debt crisis by herding the citizens into government-controlled digital money, will actually permanently crash both our economy and the global economy, while ushering in a period of global chaos and social repression that would resemble a Mad Max style of life for generations. Now, lest someone accuse me of being overly dramatic in my prognostication, please allow me to conduct a thought experiment and look at all the unintended consequences that would logically follow from binding our economy to any form of electronic currency controlled by our government.

Let the Listing Begin

The most fundamental problem that will follow from the imposition of Fedcoin or electronically depreciating dollar bills will be the complete erosion of trust between people and the government, and between lenders and borrowers.

As a direct consequence, most (not all, as I’ll discuss below, but most) lending will grind to a halt.
1. Who will be willing to lend when the borrower’s income is determined mostly or entirely by the government?
Neither lenders nor borrowers will have any reasonable guarantee that the borrowers will have a stable income lasting the length of the period of the loan. What if the borrower is convicted (or even accused) of supporting to the “wrong” political party or candidate? What if he or she runs afoul of a union dictate, or commits an infraction while being of the non-politically favored race? What if the borrower is simply a victim of identity theft or government identity glitch? Their income (and with it, ability to pay back a loan), may disappear. There will quickly be so many ways in which most people could be denied access to income, and so few ways in which to restore it, that lenders will find very few borrowers worth taking any risks on.
If banks and other lending institutions (mortgage companies, payday loan companies, and so on) can’t lend because they can no longer find a base of borrowers of sufficiently low risk, how will they replace the income they receive from loan interest? After all, the interest generated from making loans is a substantial (or total) source of their income. What will they do when it’s gone?
Will lending institutions demand outrageous fees upfront to compensate for the grossly heightened risks of making loans? Big new fees are how European banks are already compensating for the relatively minor negative interest they must absorb for making money available to borrowers. That does work to cover small amounts of interest lost – though it imposes a bigger burden on borrowers, who must now essentially pay for the bank’s lost interest up front – but it can’t be done to cover the entire cost of potential total default on loans of any substantial size.

If we extrapolate from the basic problem of potential lenders being unable to make loans to potential borrowers, we begin to see that this conundrum creates a broad spectrum of downstream problems which will cause not only the economy, but society itself to seize up.

Businesses will be increasingly unable to sell to one another because sellers will be unable to trust that buyers will be able to pay. When government is in complete charge of distributing money, businesses selling finished products to customers won’t be able to count on customers being able to pay their bills because customers may not receive their own salaries or support from the government in a timely fashion for a whole host of reasons. If businesses at the consumer end of the supply chain can’t be certain of being paid, the uncertainty ripples all the way up to the start of the supply chain.
If businesses are forced to use electronically depreciating bank notes, who is going to want to sell product when they have no idea what the notes will be worth by the time they get them? Even if the face value of the notes doesn’t change, maybe the government decided to decrease their purchasing power between the time you agreed to make a sale and the time you were paid. Businesses can’t function when they’re uncertain about whether they can cover their costs. Forcing businesses to operate on money that depreciates severely and erratically will cause chaos and eventually catastrophe across the business community. Bare shelves in the stores and steeply rising prices for whatever can be had will become a permanent fixture of life for most consumers.
Homes will turn from most people’s greatest assets into economic albatrosses around their owners’ necks. Although generally not considered to be terribly liquid to begin with, homes will become downright toxic liabilities when homeowners are unable to sell, and potential homebuyers unable to buy, because lenders can’t (or won’t) make loans available. The only potential remedy for a homeowner who needs to pull equity from their house and finds themselves stuck with an expensive asset that no longer serves its intended purpose, will be to sell it for cash on the black (aka, free) market. Selling a home for a privately negotiated price and without permission or the payment of taxes and fees will constitute a crime in the eyes of the state, of course, and a transaction of that sort could not be hidden from authorities.
The state will try to solve the problem of people needing to sell their homes but being unable to in one (or both) of two ways: either by making state-guaranteed loans available to favored groups and those willing to comply with onerous imposed controls, or buy purchasing homes outright from sellers and selling them directly to buyers, thus bypassing the banks and mortgage companies and putting mortgage companies (which will be considered the competition), out of business. The latter solution will “work” because, with the Federal Government in charge of an individual’s income, it can both issue sufficient income for the recipient to be able to afford the home, and automatically withold the mortgage payments from the income granted. (A situation of a sufficiently Rube Goldberg nature to please any petty bureaucrat’s heart.) As a bonus, as the state comes to own more and more of the housing stock, and with incomes and housing prices being determined and paid by the state instead of the market, realtors will be transformed from competitive home sellers to low-paid bureaucratic functionaries. Their role will change from trying to find their clients the right homes at the right prices, to simply serving as tour guides for citizens choosing among the rental properties the state deems they qualify for.
If the state is in control of both incomes and loans, it will, as a matter of course, begin choosing who is eligible for how much loan. The politically connected and the politically preferred will be granted access to the best housing. The elites and their masses of unproductive supporters will eventually come into possession of most of the finest housing (or, what starts out as the finest housing, until the unproductive trash them), while the workers and producers will be relegated by degrees to the poorest housing. Segregation will become equality, success will become failure, and the American Dream will become the total American Nightmare. George Orwell will be covering his eyes in horror.

Homeowners will not be the only people affected, however. Renters are going to discover that they, too, are beset with a new and unique array of problems that will make the era of high rents look like the good ‘ol days.

Because lenders won’t want to lend given the inherent insecurity of borrowers’ Federally-controlled incomes, most potential owners of rental property would be unable to purchase property to rent out. On the other side of the coin, or transaction, most owners of rental properties they are ready to part with, or have built on spec, would be unable to sell it. Potential buyers of rental properties will thus be stripped of the opportunity to supplement their incomes through collecting rents, and sellers of rental properties will be deprived of collecting the equity they were counting on when it came time for time to sell. Renters, on the other hand, may face a rental housing shortage because no private parties will be able (or willing) to finance the building or acquisition of new rental units.
The government will most likely intervene to “protect” renters from shortages and “unscrupulous” landlords who might take advantage of the situation by adjusting rents higher (as the law of supply and demand generally dictates). The government will do this by buying, or simply seizing, more and more rental properties, which it would then administer either directly, through newly created agencies, or indirectly, through favored banks. (A ‘soft’ form of this is already happening, as I will discuss a little further down.) The government will then set its own rates, which will likely have nothing to do with market forces but everything to do with the ruling party’s desires to segregate society and dole out rewards and punishments to various groups of people based on the government’s preferences for race, income, gender occupation, and level of party support.

Fedcoin and its effect on real estate is also likely to finally turn our increasingly irrational criminal justice system completely on its head.

The incentive to wrongfully accuse innocent people of crimes they didn’t commit, simply in order to obtain their private property and turn it into a government rental for free (a way of abusing the legal process of “asset seizure”), would be irresistible to those in power. Expect the rates of incarceration in America to skyrocket, and the jails to be emptied of real criminals (who would be turned into ‘good’ renters thanks to the government being able to control and garnish their incomes to make sure the rents were always paid) while good people will spend years behind bars for the ‘crime’ of attempting to be economically self-sufficient. Over time, private rental property will likely cease to exist, and the government will have full control over every unit of housing that wasn’t previously owned and is still being occupied by the single family that bought it.
- As I mentioned earlier, in a soft way, this is already happening. An excellent example of this trend is the recent (April, 2020) closing of a joint venture between the nation’s largest bank, J P Morgan, and AmericanHomes4Rent (NYSE ticker AMH) to drive forward plans to construct 2,500 purpose-built single-family rental properties in high growth areas of the west and southwest². Could this be, in part, a pre-emptive move to compensate for anticipated loss of income via a move to negative interest rates or accelerated debasement of the dollar?
- The ultimate goal for JP Morgan is to generate an income stream through collect the fees associated with providing and managing housing assets for large investors. Sound legitimate for a capital enterprise? Consider this: JPM is a bank deeply intertwined with the Fed. It also appears to be a, or possibly the, vehicle through which someone – most likely the U.S. Government itself – manipulates global precious metals prices in order to prop up the value of the U.S. dollar. (For more about that, please see my previous article on the evolution of American banking and my recently posted reprint of GATA’s article on precious metals manipulation). Beyond that, JPM is also the same bank fined several times by our same government for the (relatively minor) crime of cheating precious metals traders via “spoofing” of precious metals prices. If that’s not bad enough, consider that JPM is one of the big banks accused of illegally manipulating bond prices around the globe specifically to cheat pensions out of legitimately earned profits. (For more on that, please see my article on 6 Ways to Solve the Pension Crisis, and the Problems With Each.) So, I guess the question is, with such an illustrious track record, if the government allows JPM to own a substantial portion of the nation’s housing, what could possibly go wrong?
This isn’t an issue that is only now starting up. JP Morgan already owns roughly 52-53,000 multi-family rental units across the United States on behalf of institutional investors (ibid.). Does allowing JP Morgan (and other big banks – JP isn’t the only player in this game) to control the lion’s share of the housing in America – for the purpose of turning a profit for large investors, of course – sound like a fair deal to you? Does this sound like our government looking out for the welfare of the common citizen, or attempting to close the wealth gap? To me it sounds like not allowing several perfectly good crises (COVID, unemployment and crushing consumer debt) to go to waste! And where is Congress or our executive branch of government to rein in this increasing division of wealth and power? Right there to turn a blind eye, of course. Having control of the lion’s share of the housing market will come in very handy when the time comes for the Federal government to “rescue” the nation from the “crisis” of private home ownership and job immobility that it creates.

Sadly, this will not be simply our generation’s problem. The government will insure that future citizens who may have inherited the undesirable personality traits or cultural proclivities leaning towards hard work, thrift and independence, will be held down and used just as hard as we will be.

Expect that the transfer of real estate from generation to generation to be outlawed, in the name of the government protecting the “underprivileged” citizens and their children, from having less wealth than productive citizens and their children would. Impulsive spending and complete financial irresponsibility will be rewarded to reinforce the politically correct ideology that “all cultural beliefs have value” – except those that challenge the dogma of the state, of course. A mass acceptance of living totally in the moment and having no interest in the future will become necessary to keep people spending their entire incomes because the survival of the economy will perpetually depend upon it. At the level of debt America currently owes, and given the number of people who do not currently – and will not ever – engage in productive work, there is no realistic way to recover to the point that the government can cease engaging in financial repression.

Given our aging demographics alone, America is going to be taking on huge amounts of additional debt while losing a massive cohort of workers as the peak of the Baby Boom retirement hits. When the Social Security Trust Funds are depleted, probably around 2024 according to estimates by the Congressional Budget Office, the national debt will immediately soar by approximately $5 Trillion on top of well over $30, or more likely $50, Trillion already accumulated in debt from all other causes. How much will every man, woman and child alive in 2024 owe on a national debt of that size? How will we all realistically be able to handle that amount of loss of purchasing power should the government choose to try to inflate away all of that debt in, say, five years? Or ten? Or even 25 years, which would cover a good portion of a young person’s working lifespan? And that’s assuming that deficit spending would stop during the payment period. Of course it won’t. It can’t. Society can no longer function without mass wealth transfer and debasement to prop up both the financial and unproductive classes. The reality is that America is too old, too needy, and too unproductive to ever be able to repay what we have collectively borrowed to live beyond our means for at least the past six decades.

Allowing the Federal Government to eventually play God with real estate will have severe unintended, and quite possibly fatal, consequences for business and industry, as well as workers.

Workers who cannot sell or buy their homes are workers who are restricted in which jobs they can accept. The ability to move is a prerequisite for accepting a job in a new location. Consider what would happen to worker mobility if the opportunity to move were abolished unless the worker agreed to let the state (in lieu of the lending institutions) handle the sale of his or her home, and the purchase of a new one. Alternatively, the worker could acquiesce to the state selling their home, and resign to become a permanent renter, quite possibly in state-controlled housing.
The pool of candidates available to take jobs would shrink dramatically, at least for a couple of decades until the state “solved” the “problem” of workers being stuck in the wrong places.
- The Federal government would have two means of solving this problem. The first would be to copy the Romanian communist playbook. I had a Romanian friend, once, who grew up under the benevolent dictatorship of Nikoli Ceauçescu. One of the more tender ways Ceauçescu’s state took care of its citizens was to relieve them of the burden of figuring out what they were going to be when they grew up. The state decided for them! Teacher evaluations and tests sorted the students into those who were going to college and professional schools, those who would learn a trade, and those who would perform unskilled labor for the rest of their lives. Those who made it to college or trade school would be assigned to a profession based on their talents and the needs of society (as determined by sensitive state bureaucrats). Once educated, most were then relieved of the pressure of finding jobs and figuring out where to live. The state took care of that, too. So if a business ever needed workers, presto! The government would provide warm cogs already fitted to the wheel, and positioned within easy reach. And those who were genuinely smart figured out along the way that they had better grovel and thank the state for its wisdom and benevolence, because the state wasn’t always so generous to those who questioned the program.

Is that the type of America that you would like to live in? No, that’s not the America I’d like to live in, either. Even the Romanians eventually grew skeptical of it. After 25 years, they threw a revolt to which Mr. Ceauçescu and his wife Elena were invited – to play the role of targets for a firing squad.

Now, I can’t say with absolute certainty that such specific tyranny will ever take root here. But I can say with certainty that, if the Federal Government gets its way with digital money, the option for them to engage in such a form of life-determining mission creep would definitely be much, much greater than it is today.

The second way in which government could “solve” the problem of potential workers being unable to move to where the jobs are because they were tethered to unsellable homes, would be to, well, phase out private home ownership (except for the elites and the underprivileged, of course). The most logical and likely way the government would accomplish this without inciting domestic warfare would be to gradually deny more and more workers the ‘privilege’ of having access to government guaranteed home loans. Eventually, only the underprivileged, the criminals, and others to whom the state wished to dispense “social justice” and “equality” would have access to the state-backed loans necessary to grant them access to the requisite funding. Workers would become renters, and the state could grant them the right to petition to move into state-controlled housing in the vicinity of the jobs they wished to take.
If the government chose to abstain from producing and placing workers into their jobs, but also didn’t intervene directly to help workers who couldn’t move because they were saddled with a home, businesses would be in a chronic, and likely fatal, dilemma. Their main pool of job candidates would extend only as far as the local commutes or public transportation system went. Candidates from outside of the area would be virtually impossible to hire, at least until nearly everyone was a renter and the rental system could accommodate free movement of employees. Businesses would be forced to choose mainly from local candidates, regardless of their suitability, talent or interest in the jobs available. How many businesses will fail because they couldn’t import the right number or type of people to fill their positions?
Even if the “problem” of private home ownership was “solved” by forcing every working citizen to rent from the state, how many people would be free to migrate to accept new jobs? What sort of bureaucratic approvals will be required for “good citizens” to be “allowed” to move? How much would such approval cost, and how long would obtaining such approval take?
If the ability for workers to freely move about becomes questionable, how many businesses will even want to try to expand and hire? What will happen to entrepreneurship? Without entrepreneurship, where will new ideas and products come from? In time, quite possibly the only forms of innovation will come from state-sponsored enterprises, subject entirely to the whims, goals and levels of knowledge of the cadres of bureaucrats (a notoriously poorly educated and unimaginative bunch) who control every aspect of civic and economic life.
Even if some businesses can operate with many or most of their employees permanently working from home, which would solve the issue of where their workers were located, many jobs simply cannot be done remotely. It’s hard to imagine a dentist filling your teeth over the internet, for example, though somebody will eventually figure out a way to fix that, I’m sure. But such a possibility is still a long way off if you have a toothache right now. Even for those jobs that CAN be done remotely, however, people still need to get together from time to time because the human element in collaboration cannot be satisfied electronically. Even now, businesses that championed working from home are beginning to see that eliminating physical contact among employees is taking a toll on creativity and productivity^3,4. How much will the erosion of both creativity and productivity reduce the long-term viability of businesses? How many startups will fail because they can’t sustain the “collective effervescence” (as famed anthropologist Emile Durkheim called it) of the in-person experience? What will the death of birth of new businesses do to the long-term viability of the economy, and to the sustainability of a technologically dependent society?
Not only employers but employees, too, are beginning to see that working from home may not be the wonderful, satisfying situation they assumed it would be when they dreamed about it from their office cubicles. Working from home is a grand experiment that is only in its early stages. It’s far too early to conclude that working from home will be a permanent success. What happens if masses of people and their employers decide that going back into the office at least part time is really the right thing to do, but the government begins making it nearly impossible for the workers to sell their homes and obtain suitable new housing near their workplace? How will businesses survive sudden, forced mass layoffs of their work forces, particularly if the people being laid off are skilled or seasoned professionals? How will masses of workers survive sudden and arbitrary unemployment? Will the government simply cut off their salaries since they’re no longer working? Or will the government replace their salaries with unemployment aid to compensate? How much will it cost taxpayers to fund the bureaucracy that will make that switch? If workers are suddenly jobless thanks to the government, will the government then force them into homelessness, as well since they won’t be able to pay their rents or mortgages to the state? Will the government then step in to “solve” the homeless problem by raising taxes higher or further deepening negative interest rates on the rest of the workers, to raise the money to fund new housing for the workers they threw out of their jobs? Won’t that become a complete nightmare for everybody (except the government paper pushers?)

Now, let’s carry this line of thought out to some logical extremes

If your head is already spinning with questions and nightmare scenarios, let me pull you along a little further to consider just how bizarre and ridiculous things will REALLY get when we consider the potential effects of the change to FedCoin or electronic currency on some of society’s, shall we say, ‘less mainstream segments’, such as the sex industry.

Whether we like it or not, or approve or disapprove of it, the sex industry is very real and moves billions through the economy every year. And it’s not going anywhere regardless of how stupid or broken or controlling the government becomes because it serves a very deep-seated, primal purpose. But if we take a look at how Fedcoin or electronic currency is likely to affect the sex industry, we might be able to see just how totally FUBAR the whole plan is likely to become.
Take prostitution. Automatically traceable or depreciating dollars won’t dampen the prostitution business. In fact, despite the government’s official stamp of disapproval on the practice, the use of electronic currency is likely to actually boost business.
- Men will immediately realize they had better ‘get their money’s worth’ before the cash loses value and literally costs them time in the boudoir. Prostitution is a major industry in many urban neighborhoods where residents can’t afford food, rent, medical service or child care. Putting traceable or depreciating bills into these communities will be as effective at stopping legally unapproved behavior as putting cameras on the streets is effective at stopping crime. Control systems like these don’t work because they target the wrong areas of the human brain. Indeed, if bills are designed to automatically lose value if not spent quickly, they will actually provide incentive for men especially from ‘culturally relaxed’ communities, to spend MORE on self-gratification because getting that is easier, more rewarding and less time-consuming than engaging in more wholesome activities such as taking care of wives, children and homes.
- If the demand for prostitution and related services actually increases with the introduction of electronic money, what will that do to such evils as human trafficking and the repression of women?
- Would the trackable FedCoin solve this problem, by holding the spenders accountable? Not likely, for who will actually care? Is the government going to impose a ‘supremacist’ value system on communities that would prefer to live by different values? Is the government committed to thwarting natural selection going to deny anyone food, shelter, education and medical care because they choose to spend their cash on other things?
If you think about it, we’ve already tried the Universal Basic Income (UBI) experiment in numerous communities, just in piecemeal fashion. Recipients obtain their incomes from a variety of disconnected government services rather than from just one source, such as an electronic bank account. What we’ve learned is that simply giving people money with no strings attached is a spectacular way to ruin lives, families and communities, as well as increase socially corrosive belief systems. It’s therefore kinda’ hard to figure how doing more of the same, but literally by pushing the cash into each person’s hands instead of at least making them go get it from various government agencies, is going to create less bad behavior instead of more.
It’s also challenging to figure out how much is going to be enough, and what the total tab for taxpayers will be. If “underprivileged” communities that operate largely on self-defeating cultural values will be granted the right to spend taxpayer-sourced money as they see fit, why wouldn’t they be at least as smart as the military, or the government itself, and waste it because they know they’ll always be backstopped? Businesses do it as long as the Fed has their back with unlimited QE (aka the perpetual “Fed put”), so why should we expect everyday citizens who grow up without a strong sense of personal and social responsibility to behave better?

Justice May Be Blind, But FedCoin Will Make It See

What will happen to our justice system, even such as it currently is, when the government electronically manages all of our cash? Will FedCoin make us all more equal under the law? Or will it make existing inequalities even worse?

People of all walks of life and from all segments of society do wrong, but all are supposed to be judged objectively by impartial jurors. Will the economic all-seeing eyes of Uncle Sam really be blind to political and economic differences among the accused, though? Through the legions of police, judges and social spies on his payroll, might he peer more closely at a small town lawyer who could be improperly pettifogging, for example, than at a member of the President’s legal counsel who decides to lay down in the job? Or might he seek to de-frock a country priest accused of engaging in unseemly behavior, but decide that the Archbishop who presides over a politically valuable flock, got caught with his pants down because his belt was too loose? Who is more likely to have their salary cut off and be punished for wrongdoing?
Most likely, those at the top of a FedCoin-based economy will have to be granted some way of opting out of the system when the needs of human nature override the boundaries of what society considers acceptable behavior. What will a system to hide the elites’ wrongdoing look like in the era of electronic money? Will high-level officials be allowed to keep using unchipped bills to pay for their indescretions? If so, the people they pay will have to be authorized to spend it, and who will take it? Might the continued use of legacy cash create its own underground economy of elite sleaze?
Alternatively, will the people in power be granted FedCoins that can be spent without being electronically tracked? Will the coins then become trackable once they hit the wallets of the providers of goods and services? How much of a programming nightmare would that be to accomplish reliably? And what provider is going to want a deal like that, anyway?

More potential perverse effects of electronic money, even for the godly

FedCoin is likely to have perverse effects in other ways, too, even on the ‘opposite’ tier of society: the religious community. Let’s look at how electronic cash might intersect with religion.

Churches are unlikely to embrace FedCoin because they and their affiliate enterprises are, and always have been, exempt from paying income taxes or filing annual income reports with the IRS^5,6. This isn’t a trivial issue, as some large churches are actually very large businesses, as well. For example, Life Church, based in Edmond, Oklahoma, brought in $143.4 million in cash and non-cash donations in 2018. Another very popular institution, Pastor Joel Osteen’s Lakewood Church in Houston, reported $78.8 million in contributions for their fiscal year 2017 (ibid.). And in 2013, the Mormon Church became the largest private landowner in the state of Florida, with approximately 670,000 acres at its disposal to farm and timber⁷. Why does a modern church need so much land? According to church leader Gordon Hinckley, the institution’s objectives were to create a bounty of agricultural resources for its members, and an additional stream of revenue for itself (ibid.).
Life Church and Lakewood Church are among the few churches that choose to voluntarily report their incomes and assets, although there is no ironclad way to verify whether the numbers the offer up are factual. The Mormons apparently didn’t say what they expect to haul in from their agricultural enterprises, and they didn’t have to. But the prospect of juicy profits must have been pretty large, as their justification for the acquisition was a statement that “Good farms, over a long period, represent a safe investment where the assets of the Church may be preserved and enhanced.”(ibid.) Pardon me if I think that sounds more serving mammon than Jesus.

Because churches are legally allowed to keep their business enterprises, no matter how large or lucrative, away from the prying eyes of the government, they can easily hide their true incomes and financial ventures. What will happen when Fedcoin obligatorily lays their coffers wide open should the government choose to investigate them? What might the government find? An article in the January, 2011 issue of The International Bulletin of Missionary Research, offers a clue. The authors estimated that Christian churches would spend $31 million that year on global missions, while Christian religious leaders would commit $34 billion in financial fraud. The authors conclude that if current research is correct, the dollar amount of fraud in Christian churches will climb to $60 billion annually⁸. That’s a pretty hefty load of sin going on! For an amusing (though sad) overview of some of the more spectacularly shameful fiscal behavior perpetrated by some of the world’s more colorful and notorious religious hucksters (mostly, but not entirely Christian – proving that greed doesn’t discriminate against faith)- here’s a fun little read: https://www.businesspundit.com/15-religious-swindles-that-shame-the-holy-name/ This group of holy swindlers and shysters practicing at a wide variety of houses of worship could have taught P.T. Barnum a thing or two!

Even if churches truly do have nothing potentially questionable on their books, simply allowing the Federal government to peer into their innermost financial transactions may provoke a Constitutional crisis. The deal is this: the exercise of religion (including the raising and dispersal of funds to pay for church maintenance and activities) is exempt from control of society at large, and even more so from the state, as long as the churches keep their noses out of the realm of the state, which is politics. This arrangement is based on the argument that the secular state has no natural right to tax religious institutions – and thus no need to investigate or control their economic activities – because the ability to tax is derived from holding a position of power over the taxed entity. Obviously, the purely secular state has no natural power over the divine (and, by extension, the earthly representation of the divine).
So what happens if FedCoin inadvertently gives the state the inherent power to see, examine or investigate all fiscal operations of every church, and, by its very nature, deprives the church of what has heretofore been considered legitimate financial privacy? Will the government have to find a way to carve out tracking exceptions for all donations made to churches, and for all church expenditures? Unless such privacy could be assured (and what a nightmare accomplishing THAT will be!), FedCoin could provide a sort of back door to controlling church incomes, and thereby church power. Not being a religious person, myself, I have no particular feelings about the matter one way or the other, but I am concerned about the potential for a deeply divisive Constitutional fight that would have serious social consequences for everyone. This could be a very literal fight to the death between a starving, increasingly out-of-control government and a very large, economically powerful and deeply entrenched social institution. It sounds like something that most of us would prefer to stay away from, especially when we already have a pandemic and a very ugly election fight (with a possible Constitutional crisis from that, as well), to get through.
- A worrisome sign of a potential impending conflict came in 2018, when the congressional re-write of the tax code began chipping away at the special tax status of churches as well as some other historically exempt organizations including orchestras and hospitals. A Republican-controlled Congress (surprise!) fired the first shot by imposing a 21% tax on some fringe benefits these organizations offer their employees⁹. This is relatively small potatoes, yes, but what might happen if progressive Democrats continue to accrue more political power? Will laws permitting the religious community to operate without taxation and economic oversight, be more likely to come under increasing scrutiny?
- As the national debt explodes, where will the state find the will power to refrain from grabbing the hundreds of millions of juicy tax dollars they could potentially squeeze from religious institutions – at the mere cost of destroying one of the fundamental tenets of our system of government? By the same token, if the state continues to honor its side of the contract, will the churches, which find themselves increasingly at odds with secular leadership, be able to refrain from getting themselves into trouble by meddling in politics? Will FedCoin be the catalyst that irrevocably changes the nature of the relationship between church and state?
- How will American faith-based communities that voluntarily remain non-modern, such as the Amish, Mennonites, and some Indian tribes that maintain a more traditional way of life, fare when confronted with the necessity of adopting electronic currency in order to interact with the outside world? How will they be impacted by money that automatically depreciates at the speed of our exploding debt? There are fairly substantial communities in our midst simply do not run at the average frenetic pace of modern- especially urban – technological life. Forcing them to use money that depreciates faster than they can circulate it in their communities will arbitrarily make them poorer. Rapidly depreciating currency taxes communities that enjoy a slower way of life at an arbitrarily higher rate than it taxes communities that live at a quicker pace. Is it ‘socially just’ to effectively punish people for not living a fast-paced, highly technological lifestyle?

OK, if your head isn’t reeling from this little trip through the bizarre, unintended consequences of letting a Federally-controlled electronic currency loose to wreak havoc on the people, here’s another real life example to illustrate the absurd. Let’s take a look at how electronic money might affect the illegal drug industry.

Drug dealers, whether we like them or not, walk among us and will be affected by Fedcoin or electronically depreciating currency bills just like the rest of us will. So far I haven’t heard anyone consider the potential broader social effects of creating new headaches for them. Sure, we’d all love to see them go away, but realistically, that’s not going to happen. So we’d better think about the potential blowback if the government tries to separate them from the standard paper cash they operate their businesses on.
Will FedCoin or electronically self-destructing currency reduce demand for drugs? Probably not. In fact, If I know my fellow man (and I think I do), my guess is that that the demand for drugs will only grow as society becomes increasingly stressed by the increasingly obtrusive interventions of government. For an excellent real-time overview of exactly this happening, see https://www.zerohedge.com/political/fumes-stimulus-frustration-california-legal-cannabis-sales-explode
- As long as the human mind can be influenced by psychoactive substances, and to the degree that it seeks either enlightenment or escape, it will crave and seek these substances out regardless of risk and cost. Drugs are big business whether the government cares to count it into the GDP or not. Like all businesses, the drug trade will attempt to survive anything the authorities throw at it.
No matter how the government attempts to phase in FedCoin or self-destructing currency, the drug cartels will reject it in favor of legacy cash, precious metals or something else they can gin up. Legacy money, meanwhile, will be around underground and will still have value within the drug networks, at least for quite a while. Eventually, one of three things will happen: a closed, circular, parallel permanent underground economy will be built around legacy money and drugs (similar to, and probably part of, the ‘elite sleaze’ economy I speculated on earlier), or, if legacy money becomes too difficult to use, a new underground source of revenue will evolve to take its place, or, if legacy money fades and nothing can be found to effectively replace it, the supply of drugs will decline and prices will climb out of reach even when demand doesn’t drop. The government will then be in a serious bind. What will it do when addicts spend most of their allowance on product, and haven’t enough left over for food, rent or child support? Will the government simply increase their income (and the inflation necessary to evaporate the additional debt away) until the addicts have all the currency they can spend, and they die on the street of malnutrition and overdose? Or will the government cut down their incomes and force a choice between withdrawl, hunger, homelessness, or the instigation of violent chaos as a last ditch effort by the addicted to procure their substances of choice?

These are very nasty questions that most of us would prefer to not have to think about. However, they WILL become a reality not only for the combined millions of dealers and addicts, but for the much wider swath of polite society that will discover with great surprise that they’re in the path of the fallout. Crime and murder rates will soar, especially in the very communities that the wealthy, liberal, white, co-dependent psychic parasite young people and their half-assed parents are pleased to believe they’re “liberating” from the bondage of basic human decency, self-management and self-development.

While I realize that these are issues most of us probably wouldn’t even think of, they are necessary to consider because our country is full of people we don’t like to acknowledge but for whom FedCoin or electronically depreciating money will have very real consequences. And those consequences aren’t going to be limited to their lives. The consequences will definitely spill over into ours, too. Imagine what is going to happen if the millions of drug addicts who live just about everywhere among us are more or less simultaneously forced into partial or full withdrawl because they cannot pay for product? If you think things are crazy now…!

The last thing I’d like to consider (and you can read that any way you want to), is the effect of FedCoin or electronically depreciating cash on retirement planning.

If a central objective of FedCoin and electronically depreciating cash is to force people to spend their money right away, what will happen when people become old or sick? Will retirement become a thing of the past? Will the infirm get cut off and deliberately put out of society to die? If money must be spent instead of saved, how will the young provide for themselves when they become old? Or will living to a ripe old age become a thing of the past? Will America turn into Logan’s Run, where everyone will be given the opportunity on their 30^th birthdays to compete to go on living, but where nobody pays enough attention to realize that the competition is rigged so nobody ever gets to win?

Assuming the public won’t be ready for such an arrangement (at least for a while), what is poor old Uncle Sam to do when his citizens get old while bereft of means to support themselves? Does he step up, give them as much cash as they need for as long as they need it, and deepen the negative interest rates for younger savers until they, too, have nothing to live on? Who keeps the system afloat at THAT point? Or perhaps the rotten paw of Austan Goolsbee will reach from beyond the grave (yes, I know he’s supposedly still alive, but, let’s face it, giant psychic parasites aren’t really living things in the way that normal people understand life to be), and increasingly helps the privileged who are no longer able to be milked, go ever more gently and ever more early into that good night so they stop selfishly running up the debt?

I realize that none of the options above is pretty to think about, but one of them is what we’ll get if we fail to stop the government’s attempt to digitize our economy. I hope that this paper has given you some new and sobering things to consider when you’re wondering what the world will look like under the shiny promises of a brave new utopia, brought to you through the promise of a Federal digital currency.

Fighting back?

If you’re as thrilled as I am (which isn’t very much) about the prospects of life being lived under the thumb of FedCoin, negative interest rates and digital money designed to depreciate on a preset schedule, here are a few suggestions as to how, together, we might keep the monster at bay:

If you own a business, give customers who pay cash a discount equal to the amount you have to pay the credit card companies to process card transactions. This will encourage cost-conscious customers to increase their use of cash. More cash in circulation and less use of credit and electronic payments shows central planners that people will not be as accepting of digitized money as they hoped we would ne. Increasing the difficulty for the government to roll out its plans will slow it down, and could possibly stop FedCoin from being implemented at all.
Better yet, if you are a business owner, begin accepting gold and silver as payment in lieu of credit or cash. Maybe even offer the cash use discount as above. The bonus for you is that the metals will appreciate as the dollar inevitably goes bust, so you’ll be sitting on a pile of rising real wealth held outside the banking system if TSHTF or if digital money becomes a reality.
- The state of Utah allows citizens to pay for goods and services with Constitutionally approved money, which is gold and silver. Consider petitioning your state to do the same.
If you are a consumer, pay for more things with cash. Go elsewhere when businesses won’t take your cash, after politely explaining that you refuse to help the government condition us to accept their digitized payment scheme.
Use your current dollars to purchase small denominations of gold and silver. Rounds or coins may be best, as they look like other loose change and can therefore be more easily concealed and exchanged during barter. Also, small coins lack serial numbers or other identifying features. Don’t bother with graded or certified coins. There’s no guarantee that you’ll be able to command the extra premiums in a barter situation, and they can be more easily traced. You’ll be able to sell them for the premium you invested only at a coin dealer, and you’ll get FedCoin or depreciating notes in return. That’s no bargain.
Put aside unchipped currency notes of various denominations now, to be used for private transactions if the government starts printing digital notes. If digital notes start coming out, ask your bank to exchange digital notes for legacy notes. If you receive digital notes as change from cash purchases at the store, ask the cashier if they have any legacy notes in the till for which you can exchange the digital notes.
Keep abreast of the situation via the various blogs and web sites that carry information about currency changes being contemplated. Take every opportunity to let your elected officials know that you do NOT approve. Ask them to explain how FedCoin or digital notes will work, and how they are planning to handle the various problems outlined in this article.
Share your concerns with your friends and family. Encourage them to save unchipped currency, and buy some precious metals for themselves. Ask them to let their reps know that they don’t approve of digital currency, either.
Make your feelings known on digital chat boards. Various organizations scan the boards to gauge the public mood on various issues. Help make it known that the public is on NO mood for a digital economy.
Sign up for newsletters such as Gold Anti-Trust Action Network, Wolf Street, and Wall Street On Parade (and there are many others, too, depending on your preferences. These are simply suggestions.) Begin educating yourself on the importance of sound money, and the dangers of government cryptos. Become knowledgeable so you can speak to others with confidence.
Refrain from stepping up when the government, or any private organization that might be associated with the government’s efforts, asks for volunteers to help out with testing any part of the system. Beware the incentives. China recently offered the equivalent of a couple of hundred measly dollars for volunteers to help them test out a government crypto. They had thousands volunteering for a few hundred slots. It’s really amazing that people will gladly sell their souls for a pittance, because they either never stop to think about the consequences, or they can’t grasp that the government is not intent on making their lives better. Don’t be gullible. Don’t help to lift up the corner of the tent so the camel can slide its nose under. It wants in only so that it can eat you alive.
Do what you can now to purchase hard assets (shelter, storable food, clothing, and so on) so that, if the worst comes to pass, you won’t need to be held complete hostage to government dictates. And,
Last but not least, I hesitate to say this, but be prepared, if necessary, to pitch in to support more outgoing mass efforts to discourage the government from going down the electronic currency road. It’s a sad and ugly thing, but direct public pressure is sometimes the only method that works. In a 1787 letter to William Stephens Smith, son-in-law of John Adams, Thomas Jefferson himself opined “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it’s natural manure¹⁰ In a related musing, the Buddha urged his disciples to speak about liberation “in whatever language the people understand”. Sadly, bullies and bureaucrats (do I repeat myself?) understand few languages except that of force. Directly threaten them, and suddenly they begin to figure out what you’re saying. Be polite, and they never hear you. No, I’m not advocating for blood in the streets, but name one instance in which a tyrannical government was ended by nice people asking those in power to please respect what they see as their rights and dignity? Just sayin’. Let’s hope the situation can be controlled before it reaches the point at which serious resistance is needed. Better yet, let’s all actually do the work necessary to have a shot at stopping the madness before it gets started. Keeping the government’s digital dreams out of our currency will be the best economic investment we will ever be able to collectively make, for both ourselves and all future generations.

1. https://think.ing.com/opinions/the-case-for-deeply-negative-interest-rates

2. https://www.prnewswire.com/news-releases/jp-morgan-asset-management-commences-first-development-in-625-million-jv-with-american-homes-4-rent-301059382.html

3. https://www.bloomberg.com/news/articles/2020-09-14/at-jpmorgan-productivity-falls-for-younger-employees-at-home

4. https://www.forbes.com/sites/joemckendrick/2020/10/18/work-from-home-fallout-productivity-up-innovation-down/?sh=7b385168668d

5. https://www.irs.gov/charities-non-profits/churches-integrated-auxiliaries-and-conventions-or-associations-of-churches

6. https://www.foxbusiness.com/money/how-much-money-megachurches-make

7. https://www.miaminewtimes.com/news/the-mormon-church-will-soon-own-more-private-land-than-anyone-in-florida-6519089

8. https://www.scribd.com/doc/24336837/An-Overview-of-Religious-Financial-Fraud

9. https://www.politico.com/story/2018/06/26/republican-tax-law-churches-employees-670362

10. https://www.monticello.org/site/research-and-collections/tree-liberty-quotation

Yes, Virginia, The Price of Gold IS Being Manipulated – But The Central Bank Dams May Not Hold Back Demand For Much Longer

Today’s column comes to you courtesy of Chris Powell, Secretary/Treasurer of the Gold Anti-Trust Action Committee (GATA). GATA has been – and remains- the premier organization documenting the how’s and why’s of global precious metals price and market manipulation. In this article, Chris gives an excellent summary of the mountains of evidence that have been accumulating and pointing to one unmistakable conclusion: that, since at least 1974, central banks and governments (especially the American government) have been manipulating global precious metals markets. Why? To have total control the valuation of all labor, goods and services on the planet, of course. (Remember the “Golden Rule”….)

Please read and digest this article carefully. It’s an important reference for anyone who wants to be able to distinguish precious metals market fact from fiction. And if you haven’t done so already, when you finish reading this article, you might want to scan my previous post on the past and future history of America’s financial crises. You’ll get a somewhat deeper understanding of the role of bullion banks in manipulating precious metals prices, ow the current corrupt banking system arose, and how precious metals manipulation both delays, and then worsens, a nation’s financial and social collapse.

And now, the excellent article from Chris:

Gold Market Manipulation Update

by: Chris Powell Money Metals News Service November 12th, 2020 Comments Print

The following is a special presentation on gold manipulation from Chris Powell….

Slide 1: Introduction

The premise of my organization, the Gold Anti-Trust Action Committee, is what the assistant undersecretary of state for economic and business affairs, Thomas O. Enders, told Secretary of State Henry Kissinger in a meeting at the State Department on April 25, 1974 – a meeting whose discussion was transcribed and now is posted at the internet site of the State Department’s historian.

Slide 2: State Department historian

That is, the gold price is a primary determinant of all currency values and whoever controls the gold price can control not just all currency values but, implicitly, control the value of all capital, labor, goods, and services in the world. Back in 1974 the countries that were about to form the European Union had amassed, collectively, more gold than the United States had.

So it became U.S. policy to push gold out of the world financial system in order to protect the dollar’s role as the world reserve currency. Western gold price suppression policy, extensively documented at GATA’s internet site, arose from this realization and objective.

This is not “conspiracy theory,” though the policy usually was concocted and implemented in secret – that is, by a conspiracy, which is only how government often operates. No, this is history. As the saying goes, “you can look it up,” though the people in power would prefer that you didn’t.

So gold is the secret knowledge of the financial universe. That is why nothing financial can be analyzed without regard to gold and to what governments and central banks are doing in regard to gold.

This year has produced many major changes in the gold and silver markets that indicate increasing demand for real metal and tightness in supply. Some of us think these changes foreshadow the implosion of the longstanding fractional-reserve, derivatives-based gold and silver banking system – a system that has diverted most demand for the monetary metals away from the metals themselves and into derivatives.

While the supply of real metal is finite, the supply of derivatives is infinite, and credible estimates are that there are dozens of derivative claims to every ounce of actual gold and silver. That is, most of the gold and silver the world thinks it owns doesn’t exist. There is a huge and uncoverable short position in the monetary metals. Physical demand threatens to destroy this short position. Therein lies the opportunity in investing in the monetary metals and the companies that mine them.

The risk is that, as author and geo-political analyst Jim Rickards said on CNBC in September 2009: “When you own gold you’re fighting every central bank in the world.”

So in the context of this background let’s review the major changes in the gold and silver markets this year.

Slide 3: NYMEX / COMEX headquarters

The gold and silver futures markets of the New York Commodities Exchange, the Comex, have been transformed from almost entirely paper or derivatives markets into largely physical markets with huge offtakes of metal. Meanwhile the London gold and silver markets are having trouble delivering metal. GATA’s friend the London metals trader Andrew Maguire says it is impossible to get timely delivery of gold and silver in London and that as a result “spot” prices there are misleading, not capable of bringing forth metal in anything less than weeks.

Slide 4: CME Group gold bars list

A few weeks ago the Comex quietly implemented a vast expansion of the eligible mints of gold bars acceptable for gold futures contract delivery. Some of the mints on the Comex’s expanded list are no longer operating. This implies shortage of supply.

Volatility in the gold and silver futures markets has increased dramatically, but the frequent smashdowns in these markets are losing effect. In recent years they could knock prices down for weeks or even months at a time. Now prices usually bounce back in two or three days. The biggest smashdown of all came last week but prices are on their way back up again. Someone seems to be using the smashes in the futures markets to obtain real metal.

Slide 5: Scotiabank fines

Scotiabank recently paid fines of $127 million to settle gold and silver futures market rigging charges by the U.S. government. Scotiabank also is closing its gold and silver division, the oldest continuously operated bullion bank in the world.

Slide 6: Fines against JPMorganChase

JPMorganChase recently paid fines of $920 million for rigging the gold, silver, and Treasury futures markets. Both JPMorganChase and Scotiabank have entered deferred prosecution agreements with the government, indicating that the banks are expected to cooperate with the government in additional prosecutions.

Slide 7: Deutschebank trader convictions

A few weeks ago two former traders for Deutsche Bank were convicted for manipulating the gold and silver futures markets.

The futures market rigging done by Scotiabank, JPMorganChase, and the Deutsche Bank traders, called “spoofing” – the strategic placing and withdrawal of buy and sell orders calculated to mislead other traders – is not the rigging GATA long has complained about. The market rigging GATA long has complained about is done through largely surreptitious intervention by governments and central banks.

But the spoofing convictions are important because they show how easy it has been for big traders to rig the futures markets. It went on for years without discovery by the U.S. Commodity Futures Trading Commission, even when the commission purported to be looking for it. If futures market rigging is that easy for big traders, imagine how much easier it is for governments and central banks.

Slide 8: CME Group’s Central Bank Incentive Program

Indeed, CME Group, operator of the New York Commodities Exchange, has a special discount program for governments and central banks surreptitiously trading all major futures contracts in the United States.

Anyone trading commodities in the United States is probably trading against any number of governments and central banks, whose pockets are far deeper than those of ordinary traders.

Slide 9: GLD metal held at Bank of England

GATA’s friend the gold researcher Ronan Manly of Bullion Star in Singapore reported a few weeks ago that the exchange-traded fund GLD appears to be storing increasing amounts of its gold at the Bank of England, even though the fund’s prospectus requires the fund’s metal to be immediately transferred to the vaults of the fund’s own custodian, HSBC. This prolonged storage at the Bank of England suggests that GLD is increasingly using borrowed central bank gold to balance its accounts.

Slide 10: BIS statement of account

In recent months intervention in the gold market by the Bank for International Settlements, monitored by GATA’s consultant Robert Lambourne, has reached its highest level in the last two years and possibly the highest level in the bank’s history. The BIS functions as an agent or broker for its member central banks in purchasing, lending, and swapping gold among its members and commercial banks so the metal may be applied to gold markets that are under stress. In doing so the BIS provides camouflage for the interventions of its member central banks so they do not have to transact as directly with bullion banks and run more risk of being exposed publicly.

Slide 11: BIS PowerPoint presentation

Indeed, GATA has obtained and posted at our internet site BIS documents showing that the bank considers its major purpose to be to help its member central banks control the gold price and the value of other currencies. The BIS refuses to explain the purposes and objectives of its trading in gold, nor for whom this trading is done.

A few years ago GATA put that question to the BIS. Its press office quickly replied that the bank never answers such questions. Fortunately for the bank, mainstream financial news organizations and market analysts never ask it, since asking might be bad for business.

Slide 12: University of Sussex report

In May this year a study by researchers at the University of Sussex Business School in Britain concluded that the gold futures market is indeed heavily manipulated, seemingly contrary to regulations, but regulators are overlooking it.

Slide 13: U.S. Rep. Mooney’s letter to CFTC

In the last year the U.S. Commodity Futures Trading Commission repeatedly has refused to answer a crucial question put to it by GATA and U.S. Rep. Alex X. Mooney, Republican of West Virginia. This is the question: Is futures market manipulation undertaken by a broker or agent for the U.S. government, or by someone acting with the approval of the U.S. government, subject to the commission’s jurisdiction, or is such manipulation legal under the Gold Reserve Act of 1934 or other federal laws?

Since the CFTC refuses to answer that question even for a member of Congress, you may fairly assume that the commission considers futures market rigging by the U.S. government to be perfectly legal. That certainly would help explain the commission’s strange reluctance to act against gold and silver futures market rigging over the years.

Slide 14: U.S. Treasury Department’s ESF page

Discovering this U.S. government policy was GATA’s first great success. It came in 2001 in U.S. District Court in Boston when our consultant and litigator, Reginald Howe, extracted from an assistant U.S. attorney a claim that the Gold Reserve Act of 1934, which establishes the Exchange Stabilization Fund in the Treasury Department, does indeed empower the U.S. government to rig the gold market exactly as Howe’s lawsuit complained. If you will visit the Exchange Stabilization Fund’s page at the Treasury Department’s internet site, you may see that the Treasury Department indeed seems to construe the Gold Reserve Act to authorize it to manipulate not just the gold market but any market anywhere.

When GATA got started in 1999 nearly all respectable market observers insisted that the gold market was not being manipulated by governments or anyone else. Today most respectable market observers acknowledge that most markets ARE being manipulated by governments, but they don’t want to talk about gold. This is a bit of an improvement, since at least it seems that few observers today are willing to DENY that the gold market is being manipulated by governments.

In the last few weeks there have been many reports that after a decade of increasing their gold reserves, central banks have become net sellers of the monetary metal, if only in a small way.

Slide 15: Secret IMF staff report

But these reports were based on mere estimates offered by the World Gold Council, which long has been determined not to look too deeply into what central banks do with gold. For example, the World Gold Council has never taken note of the March 1999 secret staff report of the International Monetary Fund, which acknowledged that central banks refuse to distinguish the gold in their vaults from the gold they have swapped or leased with other central banks or bullion banks.

That is, the reports of central banks often overcount their gold.

Candor in gold reserve reporting, the secret IMF staff report said, cannot be allowed because it would reveal and compromise the surreptitious interventions by central banks in the gold and currency markets. The secret IMF staff report remains a warning to all market observers that central bank gold data cannot be trusted.

While the World Gold Council was claiming last month that central banks are now net sellers of gold, London metals trader Andrew Maguire was reporting that China has begun bypassing the London gold market and is acquiring unrefined gold directly from mines in Africa and South America and doing the refining itself.

Of course it is a matter of record that China is not always candid about its acquisition of gold. Not long ago China went five years without updating its gold reserve reports, and then reported five years’ worth of acquisitions in a lump sum.

If Maguire is correct about China’s acquisition of unrefined gold directly from mines, central banks are likely still net buyers of gold, not net sellers.

Because there is no serious journalism about gold, what the world is told about the gold market is almost always only what central banks want the world to be told.

It would not be difficult for financial journalists and gold market analysts to confirm or discredit Maguire’s assertion about China’s acquisition of unrefined gold. Journalists and market analysts could inquire with central bankers, gold traders, gold mining companies, and customs agencies. While few such sources might go on the record, some might comment confidentially. But even publicizing the question would be too subversive for most journalists and market analysts.

Of course monetary metals investors most want to know when gold and silver will break free of this manipulation at last – break free of the longstanding Western government policy of driving the monetary metals out of the world financial system, the policy that is extensively documented at GATA’s internet site.

We at GATA tend to expect that there will be another international currency revaluation in the near future. Something like that likely will be announced on a Sunday night before the Asian markets open. Of course governments are not going to share such plans with us in advance. But the day of deliverance for the monetary metals and their investors could be hastened if mainstream financial news organizations and market analysts reclaimed their integrity and began committing some journalism about central banking and gold.

All they have to do is what they never have done – put a few critical questions to central banks and regulatory agencies and report the refusals to answer.

Of course monetary metals mining companies could help by pressing those questions too. But most mining companies are too scared – too scared even to stand up for their investors. Mining is the most capital-intensive business in the world, and most mining companies cannot operate without support from the largest banks, which typically are intimate agents of governments, and few governments want gold and silver remonetizing themselves and competing with government currencies.

Mining is also the business most directly vulnerable to government regulation – for mining permits, environmental standards, and royalty payments. It is a rare mining company that is willing to embarrass its government with critical questions.

Central banking’s power to create and dispense infinite money is of course a spectacular power. But this power can’t succeed on its own. To succeed this power usually requires secrecy and deception. For if investors are NOT deceived, the power of central banking’s infinite money vaporizes. People won’t buy gold and silver derivatives if they realize that those products are designed to cheat them.

That’s why central banking’s most crucial power right now is its power to intimidate financial news organizations, market analysts, and mining companies out of their duty. That’s why GATA struggles to gain a forum. It is also why GATA is especially grateful to this conference for granting us this forum and grateful to you for attending.

About the Author:

Chris Powell is a political columnist and former managing editor at the Journal Inquirer, a daily newspaper in Manchester, Connecticut, USA, where he has worked since graduating from high school in 1967. His column is published in newspapers throughout Connecticut. He is also secretary/treasurer of the Gold Anti-Trust Action Committee Inc., (GATA) which he co-founded in 1999 to expose and oppose the rigging of the gold market by Western central banks and their investment bank agents.