Don's Column, March 3, 2009 .
(Don Stott, Colorado Gold)
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America is de-capitalized
This is not an exaggeration or miss-statement. How did that happen? The de-capitalization of America began with vigor when the first welfare programs were proposed by FDR, and voted in the affirmative by his Democrat Congress, way back in the 1930's. When someone receives 'something for nothing,' which is what welfare, handouts, and public housing are, the nation is being de-capitalized. Not as an individual directly, but indirectly, by having one's currency de-valued, which means prices rising. In 1930, a tube of toothpaste was 27 cents, a loaf of bread 8 cents, gasoline a dime a gallon, porterhouse steak 20 cents a pound, and a new five room bungalow was $3750. Who then, has been decapitalized? America, because wages in 1930, allowed a typical working class family to easily live off one the man's income, with the wife staying home and being a mother and housekeeper. The family ran up no debts, as there were no credit cards or bank overdrafts allowed, and mortgages were for 80% of a home's purchase price, and usually for 20 years or less. No ARM's, interest only, or other absurd repayment plans in 1930.
Wars de-capitalize a nation directly and indirectly. Directly, by consuming capital to buy guns, planes, ammunition, and other types of killing devices. Indirectly, by the killing of millions, permanent injuries, care for the injured, debt repayment, and loss of character by the nation who began the conflict, such as America in Iraq and Afghanistan currently. The cost of two world wars, Korea and Vietnam, have not only de-capitalized America, but its long term difficulties, injuries, and mental illness cannot possibly be calculated.
Beginning about fifty years ago, another type of de-capitalization began, while the rest continued unabated. Remember the first Jap transistor radios which invaded America back in the 1950's? No, you probably don't, as you aren't as old as I am. They were tinny little battery powered radios, which sold for a dollar at times. America invented the transistor, the Japs stole it and paid no royalties. Japanese labor was but a few cents an hour, and America charged a pittance in tariffs to offset it. The beginning of the end. Transistor radios were followed by transistor powered calculators, cash registers, TV sets, and by the early 1960's the first two cylinder Honda cars. Japan was flourishing, while America began losing jobs.
The well-oiled gentry of the Land of the Rising Sun, became so enamored of their profits and prosperity, that their land prices and stock market went to the heavens. Land was selling by the square foot in Tokyo, and the Nikkei went to 39,000. The Japs tootled their wares around the world. and all seemed to be hunky dory. Then the Japanese bubble burst. It was simply a bubble that had self inflated because of prosperity, imagined or not. Not that their stuff wasn't selling, but wages and costs were rising, and land prices had gone so high, that there was buyer resistance in Japan. It all crashed, in other words. The Japanese stock market is now, about where it was twenty five years ago, or maybe even further back in time. What did the Japs do to get out of their depression? They reduced the interest rate to zero, and spent trillions and trillions of yen on make work projects, bailing out everyone and everything, and presto! Nothing happened, except they are in debt up to their ears, and may never recover.
China then came on the scene, and Sam Walton died. Sam, bless his departed soul, was a strong, hearty, "Buy America" man, and his Wal Marts sold American made merchandise. When Sam died, his kids became some of the world's richest, spoilt brats, who cared nothing about the 'sell what's made in America' philosophy of their Dad. They discovered a whole new source of shoes, cameras, and clothing. China! Wal Mart's example was soon followed by Hobby Lobby, K-Mart, Target, and a whole host of other chain store, and 'big box' retailers.+ American jobs by the thousands a month were transferred overseas, to be followed by NAFTA, with hundreds of thousands going to Mexico. The process continues to this day. The spark plug satrapy of big corporations, are as hard as nails, think nothing of biting the hand that feeds them, while going down the tubes economically, and gleefully accepting golden parachutes as they egress the corporate door, and hand in they keys to the executive washrooms.
Capital is created by working, making things, growing things, and mining things. Take one as an example. As mines mine, the EPA and other greenie bureaucrats raise vulgar eyebrows, and slap impossible rules and regulations on mining, which makes mining virtually impossible, other than coal. Silverton Colorado's gold and silver mines are sealed shut with concrete, even though there are ample stores of metals remaining in the surrounding mountains. Ever hear of MSHA? It's the mining equivalent of OSHA. That bureaucracy of infinite destructive capability, coupled with the EPA and others with "US Government" applied to their pickups, have destroyed mining in America.
Capital has been destroyed by declining value currency, in the form of the dollar, because of seemingly endless wars. Compare prices in 2009 with the prices above in 1930. It's the same eggs, bread, gasoline, bungalows, and toothpaste, with variations. Their price in dollars has risen, because the dollar has shrunk, which has de-capitalized every single one of us. Not only that, but with prices so high, and labor not keeping up with the inflation, a single family bread winner has become a rarity. The result of that, is a wave of juvenile delinquency, ill-educated kids, and crime laden streets, which would make an adult living in 1930, witnessing current conditions, wish to go back to the grave.
Whenever a job is lost, de-capitalization occurs, not only to the jobless person, but to the local government which levied taxes on the defunct factory, the utility companies which served the factory, repairs servicing the factory, and machinery sold to the extinct factory. Currently, over 600,000 jobs are being lost each week, and over six million are 'officially' without work. The real total, I am certain, is far more. Before the current crash happened, jobs by the hundreds of thousands had been lost, as one by one, factories closed, and manufacturing of the same, exact products, went overseas. The exodus of American jobs started in the 1950's. I lived in Philadelphia for many years, beginning in 1962. I watched Allegheny Ave, which had Philco (which stood for Philadelphia Corporation), Stetson Hats, and Disston Saws to name three... disintegrate. Allegheny Ave, is six lanes wide, and had a busy trolley line running down the center, which was well used by factory workers. No more. Trolleys gone and factories gone. De-capitalization.
All over America, we no longer make what we use, and every item bought elsewhere, de-capitalizes us. As the de-capitalization continued and escalated, the alcoholic swollen livers of the glitterati in D.C., continually thought of new ways to disguise what they had wrought. In 1972, it was food stamps. I remember my feelings when food stamps were announced. "Government pays for food?" Incredulous, is what I was. It continued, of course, and continues to this day. Now it's Medicare and Medicaid, and I can only assume that it will eventually be "Dentalaid" or total nationalized health care. Every time government gets involved, the costs of that involvement become astronomical. Not only astronomical, but grossly inefficient, and destructive of capital. Any and all government, at any level, is destructive of capital. This is why capitalists hate large government. It is economically impossible to continue buying from overseas, what we use and need, and paying for it with credit and unbacked paper dollars. It has to end eventually.
As we became de-capitalized, and the paper dollars flew off the presses, it became chic to buy homes, and 'flip' them for a higher price. Everyone got into the act. A balloon was being blown up. Here was a nation which had been going broke for 75 years, finally placing a final spike in its coffin. Here is a nation which has no jobs, a currency which is backed by thin air, created out of vapor, by a central bank who sells it to government and charges interest on it. Here is a nation, which imports just about everything but coal and some of its food stuffs, and pays for it with credit. Here is a nation, which would crumble instantly if its creditors called in its paper. Here is a nation, whose government has self destructed not only itself, but the citizenry also.
And as a final outrage, the new President and his Congress, accentuate the illogical belief that capital and wealth can be created with a printing press. 75 years of Democrat and Republican government, has destroyed jobs, industry, and totally de-capitalized itself and its citizens. Remember John McCain rushing back to D.C. to vote affirmative on the first bailout bill, in spite of 90% citizen opposition? See why I say protect yourself? What else can one do? The horses are gone, and it's too late to shut the barn door.
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