Posts Tagged ‘government as the largest actor in the economy’

When government becomes the largest actor in the economy

December 23, 2011

That is “when” not “if”.

Some thoughtful soul put online a diagram to illustrate the interconnectedness of government and big business.

If this diagram shocks you, you have not been paying attention.

By and large, people are happy to present a cynical stance vis-a-vis government. In truth, few can identify the processes by which government can become a threat to the economic health of individuals or to their personal freedoms. Generally speaking, government is perceived as an entity that owes us something because it is a well worn common place to hold that government over taxes us. Furthermore, there is a fundamental misunderstanding (is it deliberate?) as to what government money is, to the extent that individuals consecrate considerable time and effort to extracting as much financial support from government as possible.

Although I don’t know how accurate the information portrayed in the diagram may be and although I am not going to check, in a context of Debt Based Fiat Money and electoral politics the symbiotic relationship of government and big business is a mathematical certainty. It cannot be otherwise.

DBFM is predicated on inflation brought about by the constant expansion of credit markets. Inflation conforms to the law of diminishing marginal efficiency. All this means is that DBFM is inherently limited mathematically. If DBFM were allowed to follow its natural life cycle, the economy would undergo regular resets during which the sponsors of the system would naturally succumb to bankruptcy. And it is this particular feature of DBFM that is most dear to its sponsors because as DBFM guarantees recurring devastating crisis, the sponsors of the system are guaranteed several opportunities to trample due process in the name of fighting an ostensible emergency that risks fire and brimstone upon society.

But the diminishing marginal efficiency of inflation also guarantees that each recurring crisis is orders of magnitude larger than the previous one. Thus, as the sponsors of the system progressively inject greater degrees of debt into same, in order to avoid saturation and catastrophic failure not only does government have to curry favor with industry and business but the monetary system must perforce assimilate other currencies and other markets too. Naturally this is a self reinforcing dynamic.

Eventually, as you do that over decades, government must perforce become the largest and most influential actor in the economy not only at home but in other countries too.

Which brings us to the moral dilemma this situation represents.

Graph of Federal Government Debt: Total Public Debt


Graph of Real Gross Domestic Product, 1 Decimal


A bunch of things….

August 10, 2010

Obvious signs of overbearing government as enshrined in the inflationary fiat monetary logic:

LOS ANGELES – A former city manager’s huge $787,000 salary is only half of the unusually generous total compensation given to the official in the small California blue-collar city of Bell, according to a city official.

Robert Rizzo’s benefits, which included 20 weeks paid vacation, brought his total annual compensation to more than $1.5 million, according to Josh Pulliam, an interim public information officer for the city.

What the great French historian Alexis de Tocqueville would make of today’s Obama administration were he alive today is anyone’s guess. But I would wager that the author of L’Ancien Régime and Democracy in America would be less than impressed with the extravagance and arrogance on display among the White House elites that rule America as though they had been handed some divine right to govern with impunity.

Which obviously results in these sort of sentiments amongst the population:

There’s a class war coming to the world of government pensions. The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The biggest political change in my lifetime is that Americans no longer assume that their children will have it better than they did. This is a huge break with the past, with assumptions and traditions that shaped us.

The ruling class’s appetite for deference, power, and perks grows. The country class disrespects its rulers, wants to curtail their power and reduce their perks. The ruling class wears on its sleeve the view that the rest of Americans are racist, greedy, and above all stupid. The country class is ever more convinced that our rulers are corrupt, malevolent, and inept. The rulers want the ruled to shut up and obey. The ruled want self-governance. The clash between the two is about which side’s vision of itself and of the other is right and which is wrong.