The Educated Socialism of ObamaPolitics / US Politics Feb 16, 2013 - 06:37 PM GMT
Porter Stansberry writes: In Wednesday's essay, I laid out the "great lie" that is bankrupting America.
At the heart of this lie – told by so many of our political leaders and believed by so many of my fellow citizens – is a horrifying turn of events. As I mentioned, the drive for freedom and a better life through hard work, saving, and independence has been replaced by a craven need for the illusion of security.
Rather than trying to leave our children in possession of a better world – with more financial security – political leaders around the world now bicker about how to change the rules so that still more debt can be stacked upon their grandchildren.
For an idea on how things will turn out, a few lessons from history are instructive...
The Spanish Empire destroyed itself by "finding" money, rather than by building industries. And the key to its temporary wealth was a single mountain in Bolivia, "Cerro Rico" – the Mountain of Riches.
At least, that's what the Conquistadors named it. In Bolivia, they call it "the mountain that eats people." Thousands of slaves died trying to satisfy Spain's lust for treasure.
In Cerro Rico today, silver is still mined by people making a few dollars a day using pickaxes in dust-filled shafts with no ventilation, no light, and no safety features of any kind. The 10,000 miners who work there every day toil under the constant fear that the entire mountain could collapse on them. After 400 years of unregulated mining, it's like Swiss cheese.
Bolivia's politicians use these conditions to demand more power and implement more socialism. Of course, it's the poverty caused by decades of socialism that actually prevents modern mines from being built.
Last month, Bolivia's current socialist strongman, Evo Morales, published his Ten Commandments Against Capitalism. He starts out broadly with No. 10...
Economic development must not be oriented to the market, to capital and to profit; development must be comprehensive and be oriented to human happiness, harmony and equilibrium with Mother Earth.
Then he gets to the real point...
We must free ourselves from that colonial bond called the External Debt, which serves only to blackmail us, to oblige us to hand over our assets and privatize our natural resources, and to destroy the sovereignty of peoples and states.
The colonial External Debt is the mechanism of exaction and impoverishment that afflicts the developing countries and limits their access to development. We call for canceling this unjust External Debt. No more inequality. No more poverty. It is time to distribute the wealth.
These aren't just empty words, either. In June 2011, Morales nationalized the Toronto-listed South American Silver exploration firm, promising only compensation "later." Six weeks later, Bolivia decided that the compensation paid to the Canadians would be zero. Nada, zilch, nothing. Apparently, it was time to seize their wealth.
The people of Bolivia cheered this madness. As their reward... Bolivians will continue to work in some of the most dangerous and least-efficient mines in the world. Their real wages will continue to fall. That's because without capital investment, without savings, without property rights... without the responsibilities of capitalism... there will be no increase in wealth.
Bolivia's socialist policies will have the same economic effect as similar activities in Venezuela and Argentina... The black market rate for dollars in Venezuela is three to four times higher than the official exchange rate. In Argentina, the "blue" dollar rate is 50% more than the official rate.
The looming crisis in these countries interests us in two ways... First, because so much of the world's raw materials (including food and hard commodities, like metals) come from countries like these, a return to socialism will undoubtedly cause shortages and price spikes around the world.
But on a more important and deeper level, ask yourself, what's the real difference between Evo Morales and our current American political leaders?
President Obama and his puppet at the central bank, Federal Reserve Chief Ben Bernanke, are also calling for us to cancel our external debt. They're just saying it in a smarter way, calling it "quantitative easing."
And what's the real difference between what Morales advocates in his Ten Commandments Against Capitalism and what's happened in the U.S. over the past decade? First, President Bush granted free medicine to every retired American. Then, Obama pushed through "free" health care for everyone. In his State of the Union address, he labeled these benefits, plus Social Security payments, "civil rights."
That's pure madness. Rights are something you're born with as a human being. They describe what people can't do to you or take from you.
The government cannot guarantee you any benefit or service without first taking it from someone else. That's why the promise of socialism is merely the promise of plunder. Whether it will benefit you depends on where you stand. However, the nation as a whole cannot become wealthy through the plunder of its own citizens. This one fact explains why Argentina – which was the fifth-wealthiest nation in the world 100 years ago – now ranks 50th.
That's where we're headed. Make no mistake. By 2020, the costs of Social Security and Medicare alone will reach $2.5 trillion a year. That's more than the U.S. federal government collects in all forms of tax ($2.4 trillion) today.
The only things funding these programs are lies and taxes. We've been paying for these programs out of current revenues all along – just like convicted hedge-fund scammer Bernie Madoff used new money to create the illusion of returns for existing clients. There is no way we can afford these obligations without making them far more redistributive and increasing payroll taxes enormously. Obama says "of course" we need more taxes. And he's going to do everything in his power to levy them.
It's time to distribute the wealth, all around the world.
The true costs of the world's return to socialism will strike the mining industry first. That's because mining requires immense capital investments over long periods of time. These mines are sitting ducks for politicians, who can tax them or nationalize them easily... all while the public cheers them on...
But that greatly reduces existing supply and makes new supplies incredibly difficult to procure. In short, you can print money, but you can't print metals. And this explains the price spike in gold and silver over the last four years.
Still, all these precious metals do come from somewhere...
While we don't believe that mining companies are a good investment in the long run, they can be incredibly lucrative as short-term speculations. Politically driven market disruptions make mining stocks soar. That's why gold- and silver-mining companies have also long been thought of as crisis hedges – just like refined metal. And we're about to enter an extended – perhaps decades-long – period of unprecedented, politically caused market disruption.
That's why I'm encouraging my readers to buy precious metals like gold, silver, and platinum. Although these metals have appreciated in value over the past 12 years, they have much further to run.
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