Economies Rise and Fall

Economies Rise and Fall
September 24, 2018

Imagine it is roughly ten thousand years in the past. A small village of nearly 250 people have assembled near a fresh water source and a small community now exists. The men hunt daily for food and gather what edibles are available to be carried back to the village. One of the hunters is very good at spear making. In hunting the spears made by others do not always stay together when thrown to pierce the hide of an animal but this one young hunter's spears are superior.

One of the hunters, one of the fastest runners when chasing game, is not a good spear maker but knows that if he could match a great spear with his running skills he could be the best hunter of the village. He approaches the hunter that makes good spears and agrees to share half of his next hunt with the spear maker if he would fashion him a great spear. They agree. This then becomes an exchange of something produced or a labor that is assigned value.

Capitalism is born.

From this point on labor or a product can be exchanged and as societies grow from a village to a town to a city, this method of exchange flourishes and allows individuals with specific skills to be able to perform a task in exchange for life-sustaining products. This is specialization, meaning that some can perform a labor or make a product and not have to hunt daily for his and his family's sustenance. As societies come upon other societies this exchange of labor and products extends across regions and spurs the recording of transactions and trade, leading to the first writing.

With the production of the first currencies, primarily in coin form, an individual now had a medium of exchange. If he was a sandal maker and needed grain for bread he could use the coins as legal tender for the exchange.

Left unfettered Capitalism has led to many advancements among humans. Buildings, roads, shipbuilding, sciences and medicine could advance because an economy could allow individuals to specialize and not have to produce their own food for survival. Across the planet as populations grew these exchanges became ways to not only survive but it could produce excesses for enterprising people. Once cities and city states became large enough to have a recognized leader and leaders began to impose levies upon people's resources – it was in effect, the birth of taxes.

In his writing, “Anatomy of the State”, Murray Rothbard identifies the tax-levying body as the “State”, and writes;

"If, then, the State is not “us,” if it is not “the human family” getting together to decide mutual problems, if it is not a lodge meeting or country club, what is it? Briefly, the State is that organization in society which attempts to maintain a monopoly of the use of force and violence in a given territorial area; in particular, it is the only organization in society that obtains its revenue not by voluntary contribution or payment for services rendered but by coercion. While other individuals or institutions obtain their income by production of goods and services and by the peaceful and voluntary sale of these goods and services to others, the State obtains its revenue by the use of compulsion; that is, by the use and the threat of the jailhouse and the bayonet.3 Having used force and violence to obtain its revenue, the State generally goes on to regulate and dictate the other actions of its individual subjects. One would think that simple observation of all States through history and over the globe would be proof enough of this assertion; but the miasma of myth has lain so long over State activity that elaboration is necessary."

While Mr Rothbard makes some salient points here it has to be granted that the collection of funds by the State to administer important requirements for a society can be arrived at by mutual consent and not at the end of a bayonet. Such mutual consent for taxation can be for things such as sustaining a military for protection, the building of roads and other public services.

But, it can result in the monies levied for State provided protections becoming burdensome to the citizens providing for these protections. For some States with money problems it was decided to just print currency. Once printed currency began to spread across the State it diluted the value of that currency. That is how the Wehrmacht caused inflation so great in Germany after World War I that it might take a wheel barrow of Deutschmarks just to buy a loaf of bread.

Can we agree that States requiring monies from it citizens can impose so many burdens on its citizens that the accumulated resources of the State's goods and services are not enough to meet the spending that the State determines necessary? That leads to deficit spending or spending more than you earn, a concept not alien to the typical worker in the world. In this case the State may “borrow” the needed funds to meet their spending habits, thereby putting an additional burden on the State by not only owing the funds borrowed but in addition, the interest payments on the borrowed monies.

This debt, or national debt, merely becomes a Ponzi scheme with collected taxes in large portions going to pay off those from whom the State borrowed – and if unchecked leads to tremendous debts being paid like a revolving credit account. Should those willingly offering their savings to purchase that debt become dissatisfied with the State and stop funding the debt – the doodoo hits the fan.

This condition is rampant and on full display in Nations that follow a Socialist/Communist doctrine. Nations experiencing financial upheaval are those such as Greece, Ireland, Venezuela and increasingly, the entire European Union. Though those who warn about that prescription for failure becoming true in the United States – guess again. We are already there.

States in America that have reinterpreted what is necessary for the State to function into a State that rewards those in the electorate to garner a vote for office have spent those States into an unrecoverable balance sheet. Most common among States facing financial difficulties are the granting of benefits to those who serve under their administrations – primarily in the form of pension benefits.

A 2016 Reuters report showed that debt nearing $1.7 Trillion.
(https://www.cnbc.com/2016/10/07/us-state-public-pension-unfunded-liabilities-to-hit-175-trillion-moodys.html)

Information at gobankingrates.com shows the top six debtor Sates as Connecticut, Massachusetts, California, Illinois, Kentucky and New Jersey.
(https://www.gobankingrates.com/making-money/economy/states-least-amount-debt/#3)

As States increase spending for what the State leadership deems as necessary, without providing for the means to collect enough revenue to meet the spending, the debt increases.

In the very same month the Reuters article came out I wrote an article for my Facebook page, (no longer on Facebook) that indicated my belief that Socialism was already here in America and being advanced by State Legislators that copy the same overspending that Socialist countries do. In order to pay for increased spending a State can sell bonds – which must be repaid with interest – and/or increase taxes on the Citizens. With Kentucky being the exception of the six States shown above, the other five States are controlled by Democrats – something I wish America's voters would consider when electing leadership.
(https://en.wikipedia.org/wiki/List_of_United_States_state_legislatures)

It is with some interest that one may look at where people choose to live in America when seeing information that shows voters leaving high tax and spend States for those with low or no State income tax.
(https://www.investors.com/politics/editorials/state-taxes-american-migrating-to-low-tax-states/)

Unfortunately for America, there are still millions upon millions of Americans who either by ignorance or apathy embrace the march to Socialism (Communism in reality), that the problem of debt will continue to increase. When will it reach the breaking point is the real question.

For people that ignore history and Socialism's results, more and more of the Political Mantra from Democrats not only praised the march to Socialism but have made the promises from the money tree almost grotesque in their deceit. Rules, Regulations and Taxes implemented by the last Democrat Administration is a prime example: (https://freedomoutpost.com/cloward-piven-strategy-barack-obama-playing-america/)

(1955 National Debt: $274,374,222,802.62 2017 National Debt: $20,244,900,016,053.51)
(http://www.polidiotic.com/by-the-numbers/us-national-debt-by-year/)

You may have heard the suggestion that if you know you have to soon file bankruptcy that you should max out all of your credit cards first. That philosophy brings my prediction that this is what the tax and spend States are counting on – putting their financial burdens from glorious promises on the country as a whole – in other words – a bailout.

Don't be surprised if those most financially troubled States get together and plead to those in Washington that all of America must help pay for their foolishness or else there will be anarchy. That means that the working stiff in a financially more stable State will have to pony up money to pay for the handsome retirement of California's retired government workers.

In some voting districts we have already seen election victories by avowed Socialists with more and more promises being made by the Socialist/Communist wannabe's who prey on the gullible and Emotionally Retarded who wield a vote. It is also understood that some seeking office are willing to overspend and create chaos because the chaos is part of the Cloward-Piven Strategy for the breakdown of the financial system, allowing those in power to consolidate their power by using the chaos as an excuse. Once that power is consolidated the control over the citizenry will become more harsh and severe – just as they were in Pre-World War II Europe.

Those lusting for power are those on the Left – Democrats – masquerading as wanting to help. The propaganda outlets of the mainstream media pump out lies and distortions daily leaving those who do not study history as being willfully ignorant about their own impending doom. When Hollywood personality, Rosie O'Donnell, claims that a vote for the Brett Kavanaugh Supreme Court appointment “is a vote to kill women” – you get an idea of how miserably ignorant those on the Left are.
(https://www.breitbart.com/big-hollywood/2018/09/07/rosie-odonnell-vote-kavanaugh-a-vote-to-kill-women/)

Remember, Democrats and their misinformed cadre hate Donald Trump – not because he is destroying the nation's economy – but because he has invigorated the economy and enhanced the country's position on the world stage – reason enough for them to hate him, due to his successful nourishment of Capitalism. Capitalism raises us up – Socialism tears us down. Read it, learn it, live it.

As stated by this writer and many before me, ignore history and you will repeat its mistakes.

Charles G. Kellerman