Thank You Sir May I Have Another

Government hazing is painful, yet the people keep asking for more.

So many of us seem to be masochists.

Retirement

Ida May Fuller of Vermont, the first monthly Social Security recipient, paid in $24.75 and collected about $22,900 before she died at 100. She got a good deal. Good for her. Franklin Roosevelt’s program now takes forty-plus years of payroll tax and returns far less than an index fund would. Die at 62 and the account you funded for decades pays you nothing.

Do the math on Social Security someday. Allowed to keep his money and invest it in the markets, a low-paid laborer who never even gets a raise in his entire life would end up a millionaire in future dollars and retire at 60, live off the earnings and leave his accumulated million-plus dollars to his spouse and children.

In contrast, with Social Security forcibly absorbing 12.4% of his wage, he works until 67, accumulates no savings, retires on a meager Social Security check, and when he dies a surviving spouse gets $255 to bury him—the same death benefit as in 1954. And his grown-up kids? They get left with diddlysquat.

Thank you sir, may I have another.

Health Care

In 1942 Roosevelt’s National War Labor Board froze wages, so employers competed for workers with medical benefits. The IRS ruled those benefits would not be taxed, and Congress locked that in during 1954. This created the whole system of employer-based health insurance. What a stupid idea it was to have employers in any way involved with medical care. But stupidity is the second most common element in the universe.

The system created job lock as employees with a sick family member couldn’t afford to leave. With someone else paying, people stopped asking the price that medical services cost, and so, of course, prices rose. A lot. That’s moral hazard. So faceless insurance clerks who didn’t give one crap about patients took on the role of controlling medical costs. We all hated that.

Barack Obama, a lawyer and former community organizer, doubled down in 2010 with more subsidies, more taxes, more mandates, and more third-party payment. The patients were already poisoned by insurance. Obama prescribed a bigger dose of the same poison and then forced it down everyone’s throats. Medical care costs and premiums shot upward, and the waits for specialty care began lengthening.

Thank you sir, may I have another.

Energy

Richard Nixon’s price controls turned the OPEC embargo into the gas lines of 1973. Jimmy Carter answered in 1977 by creating the Department of Energy. The shortage ended in 1981 when Ronald Reagan lifted the controls. But the department stayed. Forty-nine years later it is still interfering in the markets.

Thank you sir.

Currency

On August 15, 1971, Nixon closed the gold window. The statists then had free rein to inflate the currency to the moon, and they have. Richard Cantillon, an Irish banker writing in the 1730s, explained who wins. Whoever receives new money first spends it at old prices. Government (and the banking system) gets the money first. Prices rise as the money spreads, and the average Joe stands at the end of the line. Every president since Nixon has kept the press running. Savers and laborers get screwed. Wealth disparity increases. Government power expands.

May I have another?

Overseas Wars

Randolph Bourne, an essayist who opposed World War I, wrote that war is the health of the state. He was so right. Dwight Eisenhower, a five-star general, warned about the military-industrial complex on his way out of the White House in 1961. Presidents and Congress didn’t listen. Lyndon Johnson escalated Vietnam over a second attack in the Gulf of Tonkin that never happened. Various smaller sport wars popped up here and there. George W. Bush sold the Iraq war on WMD that were not there. Afghanistan dragged on for twenty years, and the Taliban walked back into Kabul in 2021. The post-9/11 tab was above $8 trillion by 2021, paid with borrowed and printed dollars. Now we’re doing the war dance with Iran.

Thank you sir, may I have another.

The IRS

The Sixteenth Amendment authorized a permanent income tax in 1913. It started as a tax on the rich. Hah. Employer withholding made the tax feel less horrifying. The tax code has since swollen until Americans burn billions of hours a year complying with it. We live in fear of government, which is the key ingredient of tyranny. Some useful idiots still proclaim that they don’t mind paying taxes, or that it is one’s civic duty. Congress’s contribution is another form to file and another threat if you don’t obey completely. The Justice Department contributes criminal cases against tax preparers, to ensure the accountants work for the government, not you.

Thank you sir, may I have another.

Property Tax

Pay off the mortgage and you still rent the house from the county. One year the assessor raises your assessment because the currency debasement lifted every price, and the county supervisors boast that the rate stayed the same. The next year the board raises the rate. Miss a few payments and the county takes the house. You can pay off the bank, but you can never pay off the county. You are a serf, allowed to live on the property of the feudal master.

Thank you sir, may I have another.

Elections

Voters, donors, and consultants burn billions of dollars and oodles of energy every election cycle. We all get worked up about how our guy is good and the other guy sucks. Or, at least how the other guy sucks, because, sure, we know our guy is a bit of a bum too. And we keep getting the same bums, or new bums who cause similar problems as the old bums.

Thank you sir, may I have another.

What to do?

It’s very hard to defend against this stuff the statists foist upon us. But very hard does not mean impossible.

Don’t trust any politician to solve problems. If they even want to solve problems, they won’t be able to. Most of the time, anything they do makes the problem worse.

Other than leaving your home country to find yourself a place with fewer statists—or at least less competent statists—the best tricks to deal with this are 1) to spend time understanding what the state does to control you and turn you into an indentured servant, and 2) to increase your wealth so you have as much control over your life as you can.

Money can provide protection. Get positive cash flow. Earn more than you spend, which often means spending less, but earning more helps a lot too. Be wise with your savings—speculate and invest cautiously and with as much knowledge as you can. Protect the savings from currency inflation. Think twice or three times before paying off a low-interest fixed-rate mortgage early. Learn sound economics and good morality and teach them to those you care about. Or anyone who might listen.

Join us at Crisis Investing, where the paid subscribers get more than the free subscribers do, because that’s how markets work. Although we are grateful for all subscribers.

And perhaps forward this letter on to someone you know who just keeps asking to get his butt smacked.

Sincerely,

John Hunt, MD
Editor, Doug Casey’s Crisis Investing