Ben "Bozo" Bernanke

Our overlords at the U.S. Federal Reserve are going to pump an additional trillion dollars into the U.S. economy. That’s trillion with a T there folks. Now, I’m not an economist but I can predict what this will lead to. This will obviously lead to inflation or perhaps even hyperinflation. When the Federal Reserve “pumps” money into the economy, it prints the money out of thin air. It’s not wealth creation. Wealth is created by industry and enterprise. Wealth creation is the result of goods and services being freely exchanged in the marketplace. What the Fed is doing is de-valuing the dollar making everyone’s currently held assets worth much less overnight.

As a debtor nation, this act of de-valuing the dollar is bound to raise the ire of our creditors. The Chinese are clearly pissed. Who can blame them? They’re being swindled. Their government purchased trillions of dollars in U.S. bonds. Now with the increases in inflation and Federal spending those bonds are going to be worth only a fraction of their original price. It’s no wonder that Beijing gets nervous when Washington starts spending money like a drunken sailor with syphilis.

This will not bode well for the Federal government in the near future. Our creditors aren’t stupid. They’re not going to buy into our currency when its value is plummeting due to the incompetence of the Federal Reserve and the U.S. Congress. Ultimately, this means the U.S. government will no longer be able to engage in deficit spending. Since most Federal programs depend upon that deficit spending, those programs will die an abrupt and violent death. It’s even likely the Federal Government will not survive.

I have mixed feeling about this. On one hand, the demise of an incompetent and bloated Federal government sounds like a splendid thing. It’s expanded beyond any semblance of decency and sustainability. It deserves to die. On the other hand, I’m a little worried about what might happen if and when it does. People are generally prone to panic when long-established organizations evaporate before their eyes. And when people panic they usually do incredibly stupid things. Remember the Patriot Act? That was passed in the wake of the panic induced by the 9-11 attacks. As it turns out it was an incredibly stupid reaction.

I fear that the panic induced by the death rattle of the Federal government might induce some folks to accept a more authoritarian form of government. After all, that’s what happened in Germany in the wake of the First World War. Germany was bankrupt, inflation was out of control and the country’s infrastructure was in shambles. Instead of embracing an opportunity for sensible small government, they installed a dictator who led Germany into yet another disastrous war.

Despite the warning cries from the pages of history, I’m still going to remain optimistic. It’s going to be rough for a while. Prices will rise, the net worth of everything will plummet, and the dollar will not be worth the paper medium upon which it is printed. The government will collapse under its own weight of bloated incompetence, but we won’t make the same mistakes the Germans did in the 30’s. We’re Americans. We laugh in the face of adversity. When it becomes clear to everyone that the dolts in Washington have betrayed us, I hope we will fall back upon our unique tradition of liberty and individual sovereignty.