I am too depressed to say much. I knew that this was the result predicted by the polls, but I really thought the outcome would be very different. President Obama made a Presidential and conciliatory victory speech, but he made it very clear what his coming policy would be; and I thought – clearly more hoped than though – that this would have an effect on voters. I have always believed in rational thought, and while I know a great number of people are not governed by rational thought, a great many are.
There will be endless analysis of the election, but it seems clear to me: President Obama promised that if he is reelected he will continue with his program of Free Stuff. A major part of the US economy consists of opening containers from China, and paying for them with money borrowed from China; while the national strategy of technology is not X Projects or even research grants, but actual investment of tax funds and borrowed money in companies the government hopes will succeed. I cannot believe that makes economic sense, and I confess I thought that the President had made it clear that he did believe that policy works. But of course with that you get Free Stuff.
If something cannot go on forever it will stop. The economic policies of the last four years cannot go on forever: there just isn’t enough money anywhere in the world to allow it to continue. The next step is to use inflation to tax away all savings and reduce all those on fixed incomes to dependency. When everyone is dependent on government, the power of government is maximized; and of course government workers enjoy automatic cost of living increases. It’s almost certain that inflation will reach 10% a year within two years. We have endured that in the past. This time the debts are much larger and it will take much more dramatic inflation to continue the spending. Of course the end of that game is the 3 pfennig postage stamp issued by Weimar Germany: the stamp was overprinted to the value of Three Mird Millionen Marks. And I used to have a 100,000 real Brazilian banknote which I got in change when Dvorak and I went down to Sao Paulo as guests of the Brazilian COMDEX about 1990. I think I got it in change when I broke an American $20 bill.
The good news is that both Germany and Brazil have obviously recovered from such ruinous inflation. The bad news is that the inflation ruined most of those who had savings. Of course new rich emerged. There are always rich people. Sometimes they are simply government employees who have guaranteed cost of living raises…
The country will recover. Brazil did. But we have not hit bottom yet.