That Central Banker Pill Didn’t Cure The Economy And Now We’re Stuck With The Consequences

“the consequences of “take a pill” thinking- run-away debt creation, bad policies, excessive spending, and currency unit devaluations…”

by Gary Christenson via GoldSeek

Headache? Muscle ache? Back ache? Take a pill! An over-the-counter pill will diminish the symptoms and pain. The consequences will come later.

High cholesterol? Take a pill. There are other ways to reduce cholesterol but none that produce $ billions for Big Pharma. Consequences to your body and finances will manifest in other ways.

High Blood Pressure? Take a pill. There are other means to lower blood pressure, but none that produce $ billions for Big Pharma. Side effects may require other drugs, which will also have side effects.

Economic sluggishness? Take a pill – an extra-large dose of Quantitative Easing. There are other ways to stimulate the economy, but QE bailed out banks at taxpayer expense, increased banking profits, expanded debt, printed $16 trillion from “thin air” and levitated the stock market.

Economic Side effects: Pension funds are increasingly insolvent, savers don’t earn a decent return from savings, official debt exceeds $21 trillion, a potential derivative disaster looms ahead, and more dangers will manifest in coming years.

CONSEQUENCES OF “TAKE A PILL” THINKING

• If an individual has broken his leg, massive doses of OxyContin may remove the recognition of pain, but it does nothing to heal the broken leg. Treat causes, not symptoms!
• If an individual has high blood pressure caused by any of a dozen life-style or diet choices, a pill may reduce blood pressure, but it doesn’t correct the imbalances that created the high blood pressure.
• The government and Federal Reserve have created too much debt. It can’t be paid with current dollars. Adding more debt is NOT a solution to an excessive debt problem, but that is the preferred choice of governments and central banks.
• Treating symptoms does not solve problems. Temporary pain may disappear, but at what future cost?
• Legislation usually treats symptoms. An affected group could be farmers, cotton growers, ranchers, public employee unions, other organizations, or any ethnic or racial group. The result: more bureaucracy, more social programs, increased taxes, and less productivity.

From Ronald Reagan:

“Nothing lasts longer than a temporary government program.”

MORE EXAMPLES:

The decade of the 1960s introduced new problems to the American public. Many were direct consequences of the excessive spending on President Johnson’s “guns and butter” programs. He escalated the Vietnam War at a massive cost while increasing social programs. (Sound familiar?)

“Take a pill” thinking encouraged government to spend a fortune on war and social programs and face the consequences later. Foreign nations converted dollars to gold per the Bretton Woods treaty. Instead of correcting the imbalances and spending responsibly, President Nixon did his version of “take a pill” and decreed the U.S. would no longer redeem dollars from foreign nations with gold. The consequences included the huge consumer price inflation of the 1970s, interest rates spiking into the teens in 1980, a stagnant stock market from 1965 until the early 1980s, and much social anguish.

Consequences always arise from actions. “Take a pill” thinking pretends actions are disconnected from consequences, but “the piper must be paid.”

• What are the consequences of central banks creating $20 trillion in digital currency units from “thin air?”

• What are the consequences of the Swiss Central Bank creating billions of Swiss Francs to buy American stocks?
• What are the consequences of Japanese government debt exceeding 250% of their GDP?

• What are the consequences of debt increasing more rapidly than GDP and government revenues?

THOUGHTS ON CONSEQUENCES:

• If debts cannot be paid, they will not be paid. That will cause massive defaults or huge currency inflation to pretend to pay the debts. Either alternative creates a currency crisis and devalued dollars, euros, yen, and pounds.
• If debt increases more rapidly than revenues, debt service will eventually dominate spending. What comes then? Confiscation of private assets? Negative interest rates? Higher taxes? Sovereign default? A distracting global war? Read Shelter From The Storm?
• Because “take a pill” thinking treats symptoms and not causes, the structural problems in the economy, government and foreign policy will not be resolved. The American public will dislike the consequences.
• The U.S. economy runs on debt and credit. If debts aren’t paid, credit disappears. If credit weakens, as in 2008, confidence and trust vanish and the economy slows or collapses.

A run-away train will crash. Will out-of-control spending and run-away debt create a different result?

• The ugly consequences of decades of bad policy, excessive spending and “take a pill” thinking will not smash us in the face next week, but they will arrive.

• Prepare for the consequences of “take a pill” thinking. A currency crisis will cause devalued currencies. Gold and silver will help protect your savings and assets.
• A debt default will devastate many debt-based assets. Your debt is someone’s asset only if you can pay. If you default, the asset is worth much less. Gold and silver have no counter-party risk.
• Many governments survive only by borrowing each year. When the music stops, those who prepared and faced unpleasant truths will fare better.

Be wary of the consequences of “take a pill” thinking, run-away debt creation, bad policies, excessive spending, and currency unit devaluations. Do your due diligence, and protect your savings and retirement with real assets such as precious metals.