First Argentina, then Hungary, now Poland, Tomorrow Detroit?

First Argentina, then Hungary, now Poland, Tomorrow Detroit?

The philosopher George Santayana was evidently correct when he said in Reason in Common Sense that "Those who cannot remember the past are condemned to repeat it and only the dead have seen the end of war." I would amend that last part to say “and only the dead have seen the end of Progressive Collectivists’ efforts to find a way to keep our failed global debt based fractional reserve banking system afloat at least until they have finished laying the groundwork to remake the “crashed” world “closer to the heart’s desire”. The only question is how far back into the “past” do we have to go to find what we need to remember?

I’ll not get all historical today, lets only go back as far as the economic collapse in the Argentine Republic 1999 - 2002 [if you are unfamiliar with the collapse I recommend a brief history - even the Wikipedia version - it will be very instructive when modeling our future]. At the height of the Argentine financial crisis, brought on by falling commodity prices, excessive government spending, inflation and the unwillingness of international bankers to lend the country additional money at interest rates that the country could afford, the government nationalized all private sector pensions. One day you owned your retirement accounts, the next day the government took your money and gave you a promise of a payout at retirement.  In the interim, the government did not have to borrow as much to cover this year’s deficit.

Next came Hungry.  For many of the same reasons as the Argentine Republic, Hungary found itself with large and growing deficits, increasing national debt in absolute terms and as a percentage of GDP, shrinking tax collections, increased borrowing costs, and the lack of political will to cut government spending. So in November of 2010, they nationalized private sector pensions similar to IRS allowable 401(k), 403(b) and IRAs to the tune of $14.6 billion dollars and replaced them with a government “Promise to Pay”  [Is that a domestic analogue to the international Responsibility to Protect - R2P - just say’en it sounds similar]

Last week, the Republic of Poland did much the same thing for many of the same reasons.

A quick digression.  Why should you care -  short version. Governments with large current deficits, large national debt, shrinking tax collections, and the lack of political will to make changes, must sooner or later deal with market realities.

Currently, These United States can not sell its debt to other nations [China] or individuals [Bill Gates] in sufficient amounts to funded current operations never mind re financing the national debt that is currently due.  So in our case, the Federal Reserve [a private bank] has been printing [digitizing actually] the money into existence and then using this “new” money to purchase US debt. This “Fiscal Stimulus” or “Quantitative Easing” or “Kicking the Can Down the Road” will eventually cause inflation both in prices and in interest rates but before it does this cheap readily available cash will cause yet another bubble and crash in the stock markets. 

Sooner or later the value of the US Dollar will crash [no one will want to hold it] and its status as the world’s reserve currency will cease, at which point the standard of living of everyone in this country will drastically decline. Think about gas at $15.00 a gallon or a gallon of milk at $10.00, forget about fresh fruits and vegetables out of season or imported consumer electronics.  I will refrain from outlining any more of the decline in our standard of living [at this point most folk’s Normalcy Bias kicks in and [if they have not already] they tune me out].  

The crash of our monetary system will not be pretty.  Some say that at best there will be civil unrest in most cities with a significant population of Takers on the scale of the Watts Rebellion and at worst others say that there may be martial law, state nullifications, successions and even civil war.  A future that the PTB want to avoid [at least until they complete the militarization of the local police and the transformation of HSA into the "civilian national security force that's just as powerful, just as strong, just as well-funded" as the military and even then, it will not be pretty].  

So if they nationalize the Sheeple’s private retirement savings [can’t do it for the children so they’ll have to do it for the seniors or the good of the collective], take your money [they will not have to issue any bonds this year] and promise you a guaranteed return and SAFETY [after all you have a government guarantee and no market risk], what will you do?  Forget that you no longer have title to your assets, can’t buy a home on the lake, or that used motor home and tour the country but hey it’s for the greater good!

So how do you sell this to the Sheeple without bringing them into the streets and burning DC to the ground?

And along comes the Detroit bankruptcy!

And it is a two’fer!  You bail out the unionized workers’ pensions that were going to take a significant haircut in bankruptcy by nationalizing the city’s pension obligations.  Most of these obligations are future obligations, payable over the next 30 years [yeah right good luck collecting on those promises better get in line behind Social Security, Medicare, Medicaid, Veterans obligations, Federal Pensions System payments, the Post Office, etc]. BUT in the spirit of FAIRNESS the government will also nationalize the money already in Detroit's pension plans and bingo a significant current period windfall for the government [take that you pesky debt ceiling].

Now once Detroit's workers are “guaranteed” their pensions - watch out - the line is going to be out the door with other cities, states, and private companies asking the government to do the same, see we did not nationalize private assets, we only did what our constituency asked us to do.  Once everyone else is in the new “National Retirement” system, rolling up the balance of individual accounts will be NBD [you greedy folks just want to keep your own money not invest it in the common good].  

Add in a new mandatory funding scheme requiring every employee to deposit  3% of their current wages [see California's new proposal] and every employer to “contribute” say 6% and the Federal government can push back the day of financial reckoning for another 2 or 3 years. Make that a 3’fer.  Bailed out unions, improve current cash flow / ducking the debt limit, and MORE DEPENDENT SHEEPLE, outstanding plan!   Cue Dionne Warwick to sing a cover of the 1968 summer classic Do You Know the Way to San Jose.  The 2013 version is Do You Know the Way to Galt's Gulch. The Makers are going to drop out and leave the collapsing Ponzi Scheme to the Takers!

One of my all time favorite PBS documentaries was the 1978 series Connections by James Burke [IMHO the best way to teach history ever programed, if you have not view the series consider it, even though it is a bit dated by today's production standards]. One of my favorite episodes is Number 4 “Faith in Numbers" in which Burke postulates that the Renaissance resulted from the number of deaths caused by the Black Death.  Not exactly the Butterfly Effect of Chaos Theory fame but close!  

Well a desperate Argentine government tried it in 2001, Hungry tried it in 2010, and Poland is trying it now, that should be enough data points for any Progressive Collectivist [remember the goal was to use the money now to bailout the government and payback the citizens at some point in the future with worthless inflated currency which almost NO BUYING POWER].  With compelling logic like this, could Detriot be far behind and if Detriot why not eventually all US pensions and Individual Retirement Accounts?

And if you object, fear not your participation status in the new “National Retirement” system [which is in addition to Social Security] will most certainly not effect your request for that bypass surgery you require.  After all if the Progressive Collectivists get their desired “fair death tax of 100%”, your retirement savings are going to be belong to the government eventually.  Isn't an all powerful State grand!  I Miss America!