This article first appeared in the St. Louis Beacon: July 21, 2008 - What if we were to go to the grocery store only to find it closed? What if we were to find all the grocery stores closed - no workers and no food?
Societal breakdown would come pretty quickly. Envision hungry people forming roving bands to break into houses to get canned food - maybe, even dog food.
What, pray tell, would lead to such a breakdown? I suggest it is the precise policies our national government is now pursuing: “It’s the inflation, stupid.”
It seems that no matter what happens our government’s answer is to print more money. Big Wall Street investment bank failing? Print up some money and bail it out. Health-care needs going up? Hire more people, buy more gizmos, promise free care to all and print the money to pay the bill. Number of old people increasing relative to active workers? Increase those Social Security payments and print the money to pay for it. Further examples abound: war, highways, disaster bail-outs, student loans, blah, blah, blah.
I consider the balance of trade to be too complicated to understand, but sending $100s of billions a year overseas can’t work forever.
We should give our beloved elected officials due respect. They are only acting in their rationale self interest. Politicians say yes to get votes. Whoever comes in requesting a hand out is accommodated. The old adage - “tax, tax, spend, spend, elect, elect” - has only been slight shortened for the sake of expediency. The new version is: “spend, spend, elect, elect."
I think this will be pretty nasty. I also think it will come about suddenly.
One day the economy will be going along on its steady but slow inflationary course, and then, without warning, the Saudis or the Chinese will lose confidence in the dollar and, wanting to avoid being the last in line, will start selling. The dollar will crash on international exchanges. The rout will turn both massive and local. Suddenly the dollar won’t buy anything. Anything.
There are, of course, countless possible initiating events – nukes on Israel, big terrorist hits, giant bank collapses, whatever.
But let’s return to those grocery stores. Workers work not to get a paycheck, but to get the stuff the paycheck’s money will buy – useful things like food, gas, computers, furniture, clothes, etc. The day the dollar collapses there will be no purpose in going to work. The whole thing will break down.
Our nation and other nations have had a little experience with this.
After the American Revolution, we had the “Articles of Confederation” and, oops, the currency hyperinflated. That ended well because the Founding Fathers went to Philadelphia for a “do over” and wrote the Constitution. But there is no reason to expect a good outcome this time. Back then most families lived in farms and generally met most of their own needs for food and shelter. There was a second inflation during the civil war, but even then the nation was still basically a bunch of self-sufficient farmers.
How many of today’s citizens know how to grow enough vegetables to last a year? Our vaunted computer skills won’t help much without the currency.
When Germany had hyperinflation in the 1920s the outcome was Hitler.
So what should politicians do, and what should individuals do?
We can’t ask politicians to make hard choices and stop spending like drunken sailors. They are what they are with the incentives they have. They are going to continue to do almost anything they can buy current votes and shove off the problems on the next fellows to hold office. So I say, let’s just continue on the current course until the dollar collapses. Then we can deal with the situation and make a new arrangement for the currency.
That leads us to the individual citizens and what I believe to be each person’s three jobs.
- Each citizen’s first job is to prepare psychologically. Are you ready for a different world?
- Each citizen’s second job is to resist calls for government control over the economy – i.e. tyranny – when the problems start. Solutions will come through individual action, not government action.
- Each citizen’s third job is to take advantage of the Supreme Court’s recent blessed ruling that the right to bear arms is an individual right and not a military right. Buy a gun.
Bevis Schock is an attorney in private practice in Clayton. He serves on the Boards of the Show-Me Institute, a free market think tank, and Shakespeare Festival St. Louis, which produces Shakespeare plays in Forest Park free to the public.