The Unfolding Danger: Greece Today...America Tomorrow?
I have been analyzing economics and financial markets for over a quarter century and my analysis always stopped at â€śfinancialâ€?. In other words, I do not follow trough usually past the financial theme. After all, as a certified financial planner (CFP), you usually think in terms of dollars and cents, interest rates and all sorts of financially-oriented concepts. I have always been concerned about the financial and economic impact of many different kinds of policies and events but in recent years I started thinking â€śoutside of my own box.â€?
Perhaps what I find more unsettling that the financial impact of certain policies and events, is what happens afterwards. What is the social impact of bad financial/social policies?
After all, I donâ€™t worry about the impact of good policies and good events since the impact is usually beneficial or at least not bad. However, it sunk in some years ago the following important observation:
ECONOMIC DISINTEGRATION LEADS TO SOCIAL DISINTEGRATION
When economies break down, you are left with people that have desperate needs. This was true in my former country Yugoslavia during the 1990s. It was true of the former Soviet Union during the late 1980s. It was true of almost every country throughout history.
As you watch Greece today, you see disintegration right before your eyes. In recent years, Greeceâ€™s government kept spending the country into todayâ€™s resulting chaos (think â€śKeynesâ€?). The country may or may not be â€śbailed outâ€? by the European Union. Of course, bailing out Greece means that other struggling countries will be forced to come up with the money to do so. What condition will those countries be in? After all, they are not in good shape today.
The next observation is also a very important one when we talk about heady topics like â€śeconomic collapseâ€? and the resulting social disintegration:
THE #1 REASON WHY ECONOMIES COLLAPSE IS BECAUSE GOVERNMENTS
AND THEIR SPENDING (DEBT AND INFLATION) GREW OUT OF CONTROL.
Thatâ€™s rightâ€¦excessive and growing government is the #1 reason why economies collapse. Throughout history, various groups of people petitioned the government for money and assistance because they think that there is some endless pot of goodies called â€śgovernment moneyâ€?. Government does not have its own moneyâ€¦it only has what it can extract by force from others (taxes). In the case that it prints money, this is also not a â€śfreebieâ€?. Printing money leads to inflation and inflation is nothing more than an insidious stealth tax than consumers ultimately pay. Runaway inflation also leads to a currency collapse.
Throughout my life, I have always strongly called for limiting government. Yesâ€¦the main reason is that I have seen over and over again, the dangers of growing or unlimited government. Whether you call it â€śsocialismâ€? or some other â€ś-ismâ€? like communism or totalitarianism, it is still in the general realm of â€śstatismâ€? and this is something that mustâ€¦MUSTâ€¦be limited. Not only for the good of society but also ironically for the good of government itself.
The â€śgood-heartedâ€? among us like to see the government be there in those cases when individuals need a helping hand and this is fine. The problem is when the situation grows out of control. At that point, no one gets any help. It becomes desperate as government itself becomes a casualty of its own excesses.
Is America next? If America continues on its current path, the answer is a sad yet resounding oneâ€¦YES.
For Americaâ€™s sake, it needs to reign in government at all levels. It needs to drastically cut spending, reduce taxes and scale back the blizzard of regulations that are choking economic activity at all levels.
The sad truth is that the people in power now are not doing this at all. They are in fact escalating their efforts with massive trillion-dollar spending, rising taxes and producing more bureaucratic burdens for us.
Just look at the healthcare reform and the financial reform acts. These monstrosities are thousands of pages of inane, confusing and counterproductive bureaucracy with lots of economic harm and very little good.
As we face the abyss up ahead, we have an overzealous government at the driverâ€™s seat and it is accelerating forward. Sadly, our short-sighted politicians donâ€™t seem to care. God help us!
What we can do as individualsâ€¦
- Keep up your individual efforts to accumulate physical gold and silver and get your â€śfinancial house in orderâ€?. Just because the government is pushing us toward bankruptcy and chaos, that doesnâ€™t mean that we should do the same. Keep managing your costs, lowering your debt, etc.
- As I have mentioned in prior essays, support those candidates and policies that lower the size, scope and reach of government (at all levels).
- Keep building up your network of friends and allies. That will come in handy later on.
Also, take a moment to sign up for the Prosperity Alert newsletter since I will be adding more resources and strategies for coping in todayâ€™s economy. In a forthcoming issue, I will make some economic forecasts to keep you â€śahead of the curveâ€?. Take control and â€¦take care!
Taking the right steps now will help you and your loved ones get to the other side with greater safety.
Paul Mladjenovic, CFP is the author of â€śStock Investing for Dummiesâ€?, a national seminar leader and the editor of the Prosperity Alert Newsletter. His website is http://www.SuperMoneyLinks.com and his blog is at http://www.Mladjenovic.blogspot.com.