Anarcho-capitalism

Bill Bonner today made an interesting comment: The War Against Nobody, alone, will cost the typical American family about $10,000 – or about a sixth of its entire net worth. Bonner means the War on Terror when he says the War Against Nobody, which is very appropriate as the War on Terror is no different than the War on Drugs or the War on Welfare or whatever various “wars” have popped up over my generation that have led to more money being spent because more people are now criminals.

Bonner makes a good point, but the war won’t cost the typical American family anything because they’re not paying for it directly. Instead, the War Against Nobody will cost everyone something today, and it will cost everyone something tomorrow. When I’ve done tax audits for friends and family (adding up all their income and adding up all the various taxes they pay), most households end up paying almost 50% of their gross income in taxes of some sort. The average worker has to work half the year to pay for government, and only then can they pay their mortgage, utilities and living costs. A large chunk of government spending goes to pay interest in debt — this occurs at every level: local, state and national. This debt was created by the previous generation; we have our parents to “thank” for it.

The current generation has less savings and less equity (versus the median income) than the previous generation — we’ll need more public money in order to retire. We’ve placed our country, our states and our communities in more debt than in all of our history (when do you think all those bond issues get paid?). This means the next generation will have even more debt than we do today. Yet government doesn’t like to increase overall taxes beyond that 50% figure, so they find another sneaky way to pay for yesterday’s expenses today: currency inflation.

Currency inflation means the Federal Reserve prints new money that didn’t previously exist. Instead of creating more debt, they devalue everyone’s current money holdings — all the dollars we all have in our pockets, our wallets, our purses and our bank account goes down in value just a little bit. We don’t notice it and it creeps up on us over time so it is less painful when we realize that cars cost us more out of our salary than our parents’ cars did; houses cost more as a percent of our salary than our parents’ cars did, too. Your house price may have boomed, and the interest rates might have been low, but it doesn’t matter — you’ll pay more of your income for your home than your parents had.

Blame your parents, today, for the mess they left you. Then pass the token to your children, they’ll be blaming you in 40 years.

Thanks folks.

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