Yesterday, my colleague, Marty Biancuzzo, explained why America is on a path to inevitable economic and government collapse.
After reading Marty’s piece, another colleague asked me: What will America look like after a government collapse?
It’s an important question, and I want to give a satisfactory answer. But I can’t do that in one short column, so I plan to return to this topic several times over the next few weeks. I hope that when I’m done, you will have a better understanding of where the country is headed.
Now, consider our current situation…
It’s clear that Barack Obama and Congress have no plan to get the dead-in-the-water economy moving. In fact, they appear to be completely incompetent.
Too many Americans are jobless, an excessive number of Americans are dependent on government handouts to eat, and the countless Americans who could contribute to the economic recovery are frozen in place, unwilling to take risks due to an uncertain regulatory environment.
Now, it’s fashionable in some governmental circles to argue that another Great Depression could never happen. Politicians reason that America at present has far more tools to prevent such a cataclysm.
They believe that “things are different this time.” If only they knew how right they were.
It Is Different This Time… It’s Worse
I’ve heard investment advisors, central bankers, and politicians use the phrase “It’s different this time” so often, I want to wretch. This asinine statement is arrogant beyond reason.
Frankly, I believe we’re much more vulnerable to a prolonged depression than we were in 1929.
Here’s the truth: Today’s monetary manipulation may forestall a bust, but it can’t change the fact that one is inevitable. And when it arrives, it’ll be more devastating and difficult to solve than in the past.
Don’t believe me? Well, I’ve identified seven reasons why we are in fact worse off today than we were leading up to the crash in 1929.
- In 1929, America had by no means the social problems we face today.
- In 1929, the federal government had very little debt. Today, we have a staggering $16.5 trillion in debt.
- In 1929, most state governments weren’t facing insolvency. Today, they are flat-out broke. We have $4 trillion in unfunded pension liabilities at the state level, thanks to decades of union control of local government. There were no public employee unions in 1929.
- In 1929, we didn’t have Social Security, Medicare, and Medicaid, much less Obamacare. Our obligation to these entitlement programs will consume our entire federal budget in a few years.
- In 1929, the costs associated with illegal aliens were non-existent. Today, in California alone, it costs $10.5 billion to pay for the incarceration, health care, and welfare costs of illegal aliens.
- In 1929, today’s massive government dependency culture was unheard of. Today, we have food stamps and dozens of other housing and welfare programs. Indeed, over 100 million Americans are now dependent on the Federal government for something.
- Taxes were significantly lower in 1929 than today, even as a percent of family income. Most businesses paid no taxes in 1929; and today, we have the highest corporate tax rate in the world. Sales and FICA taxes didn’t exist. Today’s combined total of income, sales, local, state, gas, and property taxes amount to the highest burden in our history.
So all those same problems we faced from 1929 to 1938… out-of-control unemployment, bank failures, currency depreciation, deflation, bankruptcies, a housing bust, sickness, and hunger… are ones we’ll face again in the future.
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