Why the Debt Situation is Worse Than You Even Imagined By Porter Stansberry with Braden Copeland Wednesday, December 15, 2010 There are few things about which history is unanimous. Land wars in Asia, for example? always a bad idea.
Paper money falls into this category. Paper money always fails and wipes out the people who depend on it.
Or as our friend Rick Rule likes to say, paper money's track record is unblemished by success. The return of paper money to its intrinsic value (nothing) is guaranteed. All we need is time (though politics certainly help move things along).
We would not argue that organizing a system of sound money based on paper receipts is impossible. We would merely point out that keeping such systems sound and reliable has proven elusive to this point in human history.
Paper money is like many other types of idealized virtue humans cannot attain. It's simply beyond human nature to avoid perdition. Sin, as they say, is part of man.
Every government that has used paper money has succumbed to a fatal level of borrowing. Rather than a restructuring of these debts, paper money systems allow for the rapid expansion of the monetary base to facilitate paying off debts in devalued money.
_This is no different than stealing._ And yet? that is what happens every time, resulting in a massive crisis and a breakdown of social norms.
It normally happens faster in democracies, where no strong interest group votes for living within the country's means and repaying its creditors in sound money. No, people vote for more spending and more debt. And they always expect someone else to pay. Case in point? Greece.
Researching problems in the Greek economy is like reading a financial comic book. All the players are clowns.
For example, the national railroad has annual revenues of ?100 million? against a wage bill of ?400 million and another ?300 million in expenses. The Ministry of Agriculture hired 270 people to digitize photographs of Greek public lands? with one digital camera.
In 2001, the Greek government borrowed $1 billion from Goldman Sachs to help balance the budget. The deal relinquished future receipts from the national lottery, national highway tolls, airport landing fees, and even funds promised to Greece in the future from the European Union.
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