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We have met the zombies - and they are us!
Calm action on Wall Street yesterday. After hitting a new nominal high, the Dow backed off a bit. Gold, on its way to $1,800, also dropped back for a rest.
But that’s just noise. The real story is that the major governments of the world are running huge deficits... and the world’s major central banks are printing money. Where does that take us? That’s the real question.
Printed money is not the same as real money. It is cheating. Counterfeiting. Putting out something that pretends to have real value, but is nothing more than paper.
And the more the feds cheat, the more everyone else cheats. When the feds connive and cheat on the money, everything else gets fiddled up.
Instead of encouraging work, production, and real wealth-building, the phoney money causes people to wonder, to speculate, and to cheat. Instead of working for a living, they try to get the free money.
This is the process we call ‘zombification’. People are turned from honest workers into parasites, zombies, and chisellers, each trying to get as much as he can, as quick as he can, from the fiddled-up system.
Too bad Mitt Romney didn’t explain. But he’s got the zombies on his back too. There are so many of them now, they’ll decide this election.
As time goes by and more and more of the nation’s wealth is redistributed, redirected and re-‘invested’ by the feds, more and more people get in line. That’s why there are 46 million people on food-stamps; 2.65 million on the direct federal payroll; millions more who work for its contractors, suppliers, and federally-favoured industries; and more people, during the Obama administration, who chose disability payments rather than work.
It’s also why we have $1.2trn, fully loaded, of ‘security’ related spending when the biggest threat the nation faces is bankruptcy.
Of course, a society can only carry so many zombies. As the costs mount, the productive sector bends and staggers under the weight. At some point, it has no choice. It shrugs off the burden, or it collapses.
But not without a fight. We call that battle the 'zombie wars'. Here’s the Associated Press with a report from the front in Rhode Island: $1.4trn in pension fights on the table
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Are zombies bad people? Are they bad firemen or bad teachers? Is everyone who benefits from zombification a bad person?
We hope not. Because we’ve been a major beneficiary! Yes, dear reader, a confession: when the feds fiddle the money it greatly increases financial uncertainty. And that makes more people want to read what we write. Because we try to understand it... to explain it... and to tell dear readers how to protect themselves.
People pay for subscriptions to the financial press... to magazines, newsletters, and newspapers... to find out what it going on... and what to do about it. We don’t give specific investment advice in this column, but follow almost any of the links and you’ll find some.
Normally, ordinary people don’t need much investment advice. They work... and save their money. But when the feds fiddle the money... everyone needs to know how to protect themselves. That’s why we love Ben Bernanke, the feds, and the zombies... they’ve been great for business.
Zombification has gone so far that there is a little bit of zombie in every family. Someone gets Social Security. Someone gets unemployment comp. Someone works for the government.
But watch out. A society can only stand so much zombification. War is inevitable. And the zombie war may not be much fun. It is a war with more than just a few isolated battles. It’s a nationwide struggle, pitting father against son and brother against brother. In The Atlantic, a young man goes after his father’s Baby Boomer generation
Judging by the last ten years, stocks will make zero real progress during the lifetimes of our children.
This will force them to actually save money, the old fashioned way, if they want to get ahead. But good luck with that. The IMF estimates that they will have to endure a 35% hike in tax rates plus a 35% cut in benefits, in order to keep America’s social welfare systems from going broke.
On health care alone, a couple retiring this year should reap about $200,000 more in benefits than they paid in taxes. As for the next generation... they’ll be very lucky if the system is still functioning.
That’s why the next generation must fight to get the zombies off its back.
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