GENEVA, Switzerland – When we left you yesterday, we were describing why neither democracy nor central planning works on a large scale.
Austrian School economist Friedrich Hayek described the problem with great thoroughness in his book The Fatal Conceit.
Central planning is a necessary feature of life. We have to plan our day… our year… our business… our vacations… our budgets – we plan for everything in our lives.
And generally speaking, the better we are at planning… and at following through on our plans… the better things go.
Naturally, we assume that this sort of planning will be helpful at all levels – from our personal schedules to an agenda for the entire nation.
But there’s a problem: Planning requires detailed knowledge of our goals and resources.
Along Come the Feds…
If you’re going to build a factory, for example, you need a lot of information.
You need to know where, when, how, and why, covering a vast range of issues.
How much will it cost? How long will it take? What will it make? How will the goods be delivered? Where will employees come from? How much will they earn? Etc., etc.
You do that planning as best you can – sometimes right, sometimes wrong – and always knowing that you’ll have to live with the results.
But then, along come the feds. And they’ve got their own plans…
“You can’t build a factory there,” they say.
“We’re raising the minimum wage,” they add.
“You’ll have to get a license… a permit… clearance from the FDA, EPA, FBI, TSA, NSA, DOJ, SEC, NLRB…
“And, oh yes, your product must be sold at the price we set…”
The problem is not one with planning, per se, but with a conflict of plans.
You have your plans – based on specific information about what you want to do and what you have to work with – and the feds have theirs.
You want to spend your money; the feds want to take it away to fund their own projects. You want to live in St. Petersburg. They want to put you in a gulag in Siberia.
Shot to Hell
You save money for your retirement. You plan ahead. You calculate how much you need, and for 20 years you hold back enough… sticking to your plan until your 65th birthday.
Then here comes the Fed… cutting interest rates so drastically that your entire plan is shot to hell.
By edict – with no vote from you or anybody you ever voted for – roughly $8 trillion in interest payments has been confiscated from savers and handed to debtors… making them richer at your expense.
When you put your plans forward, they are based on a free give-and-take with the rest of the private sector – raising the money you need, buying the resources necessary, and hiring workers.
Nobody is forced to do anything. It is all voluntary; everyone involved believes he comes out ahead.
But along come the feds. They tell you their plans take precedence. They have the Gestapo, the NKVD, the Stasi, and the ATF behind them.
You can negotiate and persuade with customers and suppliers. The feds simply levy fines… put you in jail…. or worse.
It doesn’t matter what you want or what you think: You go along… or else. Families, businesses, and small towns, too – all must bend to the will of the central government.
And then what?
Inevitably, the central planners in Washington, Moscow, London, and Paris make a mess of things.
Growth slows. Money is lost. Wars are launched. People are killed.
Who pays the costs? The central planners?
Not on your life. The costs of their errors and shenanigans are always imposed – by force – on the people whose own plans were disrupted: investors, taxpayers, consumers, and communities.
The “fatal conceit,” says Hayek, is that they believe they can make a better world by interfering with private plans and imposing their ideas about how the world should work.
It is like a pair of twins – one scam and the other wishful thinking… and often hard to tell them apart.
We want to think that the common people – in their wisdom – will always make the right choice, after they’ve exhausted the wrong ones.
You fool all of them some of the time, as Abe Lincoln said (and proved), but you can’t fool them all the time.
But what we see in history is that most people are ready for almost any kind of mischief, day or night. There is nothing so stupid, murderous, and counterproductive that they won’t get up to it sooner or later.
“But at least they get what they deserve,” you might say. Surely public policy will reflect the will of the people, won’t it?
Well, even it did, it would still be repulsive and ineffective. Even with the support of 51% of the population, central planning would still disrupt the plans of the other 49% – leading to mass larceny, less output, and involuntary servitude.
But there is almost no chance that central planning on a national scale will be understood and supported by a majority of the people anyway.
How many people understand the Fed’s zero-interest-rate policy? How many support the wholesale rip-off of America’s savers for the benefit of the rich?
Studies have proven that no matter whom you elect, the central planners work for the Deep State, not for the voters.
They continue pursuing their self-serving agenda… no matter what you want.
And since their agenda involves taking wealth and power from the many and giving it to themselves, there is almost no chance – were it fully understood – that the majority of voters would support it.
So, if you think the nuisances and indignities imposed by the feds will stop – just because you elect Hillary or Donald – you’re probably mistaken.
But wait… we have one more question to answer.
Thoughts on that… on Monday…
Then we promise to keep quiet about voting. Perhaps we could all agree to disagree?
We will respect your position, dear reader, such as it is, and you will accord the same silent contempt to ours.
Further Reading: Whether Bill votes or not… whether Trump wins or not… it really doesn’t matter what happens in the November election. The Deep State – which already controls just about every aspect of American life – will be calling the shots.
And the Deep State will do whatever it takes to win the War Against the Credit Cycle. But it’s fighting a losing battle, and the outcome is going be disastrous for all of us. Learn more here as Bill reveals how the credit collapse will unfold… and how it’ll change your life forever.
By Nick Giambruno, Editor, Crisis Investing
Editor’s note: Nick Giambruno is Doug Casey’s globetrotting analyst and the editor of the contrarian investment advisory Crisis Investing. Today, he shares his thoughts on the worsening crisis in oil.
A massive profit opportunity is setting up in the oil patch.
Let me explain…
Saudi Arabia continues to flood the global market with cheap oil.
First, they want hurt Russia’s and Iran’s economies.
The Saudis want to hurt Russia for supporting their regional rival, Syrian president Bashar Al-Assad. Iran is the Saudis’ age-old geopolitical rival in the region.
Both depend heavily on oil sales.
The Saudis have also declared war on the U.S. shale-oil industry.
In the 1990s, the U.S. imported about 25% of its oil from Saudi Arabia. Today – because of high U.S. shale oil production – we import only 5% of our oil.
By keeping the market saturated with oil, the Saudis are driving down the price. They hope to drive it down low enough, and keep it there for long enough, to bankrupt the shale industry.
Shale oil costs more than Saudi oil to produce. So, shale becomes uneconomic before Saudi oil does.
This would knock out a major competitor and let the Saudis regain lost market share.
The Saudis have had some success. And they’ll continue to cause more damage.
But the U.S. shale industry has more staying power than Saudi Arabia.
Some shale producers are profitable at $40 oil. And their pace of innovation will drive that break-even cost even lower.
U.S. shale oil will survive. The Saudis have created an existential crisis, all right – but for themselves.
Saudi Arabia’s government budget is being squeezed. If they don’t stop flooding the market, they won’t be shooting themselves in the foot… but in the head.
Either Saudi Arabia will collapse. Or they’ll surrender and stop flooding the market.
Either way, oil will eventually go a lot higher.
Now is the time to get ready to buy the highest-quality shale companies at bargain prices.
There will be explosive profits once oil prices start recovering.
Editor’s note: Turning crises into wildly profitable investments has been the cornerstone of Doug Casey’s success for nearly four decades. Next week, Nick and his team will host a special online workshop to help Diary readers put this strategy into action for themselves.
The four-day web event – not to mention some of Casey Research’s most valuable investment resources – is completely free. Go here now to register.
America’s Middle Class Is Shrinking – Almost Everywhere
A new report by the Pew Research Center reveals that the middle class in America is shrinking not just in the Rust Belt, Appalachia, and the Deep South but in just about every metropolitan area.
Is Gold Trapped in a Tight Trading Range?
Gold bugs should get ready for more frustration. Bullion is now in its third month of being stuck in a narrow range – $1,200 to $1,300 an ounce. And one stubborn factor is keeping gold range bound.
Resource Investing Expert: My Three Best Gold Picks
We sat down with one of the top resource investing experts in the game for a private interview. In it, he revealed his three best gold stock picks… and shared some tips for how to buy and store gold.
Another chock-a-block Mailbag today…
Here are some of the responses we got to yesterday’s Diary about Donald Trump’s plan to “discount” the U.S. national debt…
I doubt that “The Donald” understands who are the owners of the $19 trillion U.S. public debt.
He, like most Americans, thinks it is the Chinese. Therefore, for the Chinese to take a haircut would be very popular and lend for more enthusiasm from his supporters.
To suggest a haircut for Social Security and Medicare and the other government pension plans that do hold the majority of the debt, would be suicidal, even for him… don’t you think?
Social Security and Medicare do need fixing, and I believe that he is the only one that will take it on. Sometimes I think he is the other side of the Obama coin, but I will still vote… and for him.– Darryl A.
It seems there are only two ways that the debt will be dealt with. We will be forced to acknowledge our huge debt burden and bonds will take a negotiated hit. Or the Fed will have its way and get the inflation it has been working hard to accomplish.
The problem with the latter is that they may get a lot more inflation than they have bargained for. And that will greatly diminish the buying power of what the bonds pay out. Either way you lose.
The inflation route is patently dishonest and plain theft, so that’s what they’ll do.– Eric B.
Meanwhile, the brouhaha over Bill’s insistence that he won’t be voting for either Trump or Clinton rumbles on…
In regard to today’s message about Donald Dump and voting… I don’t.
Since 1962, when I got into a scruff with the government over the draft and Vietnam, I have refused to endorse the totally corrupt United States Corporation in any way.– Mike M.
I do not care whether you choose to vote or not, it is your right. I will be voting for Gary Johnson as the only viable candidate (hopefully he is the Libertarian Party candidate).
I wish more people would seriously consider this option. If EVER there was an election that held any promise to bring another party into prominence it is THIS ONE.– Kevin B.
In regards to not voting in the General Elections of our country, I would remind Bill and other registered voters that are avowed “Democrats” or “Republicans” to drop those political commitments and register as “Nonpartisan.”
Should the major political parties begin to witness a mass exodus, they might realize the need to groom viable candidates. I would also propose going to the polls to vote for a pre-determined write-in that would be uniformly recognized as a protest vote: “I want a real candidate,” “None of these losers,” or a national slogan that conveys that message.– Robert W.
I’m going to write in my vote for John Galt!– Dan D.
I share Bill’s cynicism regarding just about everything “democratic” when trying to transpose the effectiveness of a town hall meeting to a voting body of millions.
I am conflicted, as are many readers, about what to do in this Presidential election. Moving beyond that, however, I do still believe in the Constitution as a workable guide, and I therefore still believe that “the people” can effect real change in the legislative branch by being active and vocal in state elections.– Jill B.
I agree, would like to see NONE OF THE ABOVE. I’ve voted for the “lesser of two evils” for so long, I’m ready to NOT VOTE.– Alice S.
Couldn’t agree with you more. Thought I was the only boomer alive who has never voted for a single president.
The lesser of two evils is still evil. Who in their right mind would willingly settle for evil, corruption, or whatever other adjective may, or may not, be appropriate?– Toni R.
You have several principle-based reasons (not facts) for not voting for who will be your leader. Whether you vote or not you will have a leader (many actually). You can pretend that by not voting you have not agreed to following the selected leader, but that is just a philosophical mirage.
By jurisdictional rulings (laws of the state) you will be subjected to the whims of that leader. Your philosophy is moot. The only way you can avoid those rules is to be extra-jurisdictional, a citizen of the world. But that possibility does not exist.– Art A.
I like the “none of the above” approach to voting. How about doing away with the Electoral College and just going with the majority vote?– Harold S.
As Churchill once said, “Democracy is a terrible form of government, but the alternatives are worse.”– Hart. B.