More Nothing than Something

This weekend, as expected, the Trump Team came forward with more ways to spend the money it doesn’t have.

The package, announced by Mr Trump himself, ignored the people’s representatives — who, alone, according to the Constitution, have the right to determine how money is raised and spent — and declared a $400 per week bonus for people who don’t work.

As for those who do work, they will get something for nothing, too.

No longer will they have to pay for their own Social Security retirement plans, after Trump signed a payroll tax holiday for Americans earning less than $100,000 a year.

Today, we look at where this all leads…

Two kinds of money

There are only two kinds of money.

There is the money you earn honestly by providing goods or services to others. And there is the money you get by lying, cheating, stealing or counterfeiting.

From both theory and experience, we know that the more you have of the latter, and the less of the former, the worse off you are.

And yet, that is what President Trump, Nancy Pelosi, Jerome Powell, et al propose to do — increase the amount of ‘printing press’ money…while the goods-and-services producing economy sinks.

Mr Trump has even declared that, henceforth, the people’s pensions — Social Security — will be funded with counterfeit money.

And he says he has the power to do it! Peter Navarro explained, in Business Insider:

White House aide Peter Navarro said the “Lord and Founding Fathers created executive orders” so Trump can push orders over “partisan bickering”.

Of course, there is no mention of ‘executive orders’ in either the Bible or the Constitution. As for the Lord…we’ll let Him speak for Himself. But the Constitution is clear…

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.

 US Constitution, Article 1,
section 9, clause 7

Anathema to the republic

The whole idea of spending billions of dollars by ‘executive order’ is anathema to a properly functioning republic.

But so is transferring trillions of dollars from those who earn it to those who don’t. And so is switching from real, earned money to fake, printing press money.

But we doubt that any of these principles will stop the feds for long. Bloomberg:

It’s “incredibly important” the US deliver another round of fiscal policy measures to aid the economy as it weathers the coronavirus pandemic, said Federal Reserve Bank of Chicago President Charles Evans.

“That continues to be important because we’ve not got control over the virus spread. I think that public confidence is really important, and another support package is really incredibly important,” he said.

Get it? It’s really, really, really important to get the printing presses producing fake money.

Where it leads

Argentina is accustomed to ‘executive orders’, fake money and transfers of wealth. Since at least the 1950s, it’s been incredibly important to keep the fake money flowing.

Yesterday, we saw more closely where this leads.

The economy has been largely shut down since March, because of COVID-19. But now our province, Salta, is loosening up.

So, partly for business and partly for fun, we went with friends to visit a very old winery further down the valley.

There, the family has been making ‘artisanal’ wine for more than 100 years.

The grapes are hoisted into a big wooden barrel, open at the top, about eight-feet high and 20 feet around. They stomp the grapes with their feet…and the juice flows out of a tap at the bottom of the barrel.

The place was an absolute wreck.

The old adobe house — once elegant, with arches and stencilled walls — was falling down. The roof on the winery itself had collapsed and been hauled away.

There was junk and trash everywhere, including the business part of a toilet, which greeted us at the front door entrance.

An old, hand-operated pump sat in a corner. Dead cacti — in broken pots — lined the walls. Dust covered everything, everywhere…

Would you like to buy some wine?’ asked a woman of about 60, slightly bent…with more European features than most of the locals.

Here…I’ll give you a taste.

She passed out some little glasses.

The wine is made with local grapes. It’s called Mistela.

It tasted like fermented prune juice. Not bad, but too sweet for our tastes.

Still, she had gone to the trouble of opening the door, showing us around and telling us a bit about the history of the place…

How much per bottle?’

Two hundred pesos.’ (About $1.50.)

We bought two bottles.

Thank you so much’, said the woman, with genuine gratitude. ‘Now I can buy some meat.

When the money runs out

How did it come to this in Argentina, once one of the richest countries in the world?

The short version of the story is that the country replaced real, earned wealth with government giveaways.

The insiders benefit from special favours, crony contracts, and corruption…the poor get subsidised utilities, welfare payments and unemployment compensation.

And it all works…’ explained a friend last week. ‘Until we run out of money.

For a long time, Venezuela was able to pay for this kind of program with oil revenues. Here, we had agricultural revenues. The government took as much as half the gross revenues from exports.

But that’s coming to an end…and it looks like we’re going the way of Venezuela.

The US is a much richer country. It has more industries to plunder. But, historically, there’s no amount of wealth that a determined government cannot squander.

When we explained that a person in the US can receive $1,000 a week in unemployment compensation, our friends were dumbfounded.

Even government department heads don’t make that kind of money here.

By act of Trump

Here in Argentina, the feds can keep the jig going with relatively small amounts of money. In the US, it takes trillions.

And in the US, high and low…rich and poor…stupid and smart, all agree: It’s really, really important to keep the printing presses running hot…it worked so well for the Argentines!

And if Congress can’t agree…well, damn the Constitution…the administration will do it by ‘executive order’.

After all, the feds created this ‘emergency’…they can damned well pay for it.

In other words, Dear Reader, come hell or high water…Republicans or Democrats…Biden or Trump…Act of Congress or Act of Trump…the fake money is going to replace the real money…

…and the whole system is going to collapse into a dreadful heap.

Later this week, we should have a clearer idea of what it will cost. Senator Schumer said the Democrats won’t settle for a nickel less than $2 trillion.

‘Hey…our economic system is our most successful export’, said the Argentines, laughing.

Stay tuned…

Dan Denning Signature

Bill Bonner,
For The Rum Rebellion

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.

The Rum Rebellion