SGM Metals: What Happens When People Finally Realize the 'Recovery' is a Con?

PALM BEACH GARDENS, Fla. - April 30, 2013 - PRLog -- Zerohedge.com reports: [ When Suckers Finally Realize

The fleecing of the American public continues.

The theft takes different forms, but it all serves one purpose, to transfer wealth from the average Joe to the crony corporatists & their political lackeys. Here are but a few examples of how this has been accomplished:

   Bailouts for the wealthy & well-connected are paid for by the unconnected middle class.
   Subsidies are provided for unworkable schemes submitted by political donors & favorites. These schemes inevitably fail & the tax-payer is left holding an empty bag.
   Laws are routinely ignored when “friends” need help. In identical circumstances, let's say Jon Corzine?
   Despite the biggest theft in world history, no one was prosecuted. The Savings & Loan crisis in the 1980s was trivial in comparison to the recent financial crisis. More than a 1,000 S&L executives were prosecuted.
   Ever-increasing sacrifices in the form of higher taxes from the productive sector are demanded to continue the plush living of the ruling class.

Capitalism & free markets depend upon trust, integrity, property rights & the rule of law. Without these, there are no advantages to free markets. Nor are there any incentives to create wealth. Instead, an economy becomes little more than a massive plunder scheme where the powerful exploit the weak. No economic recovery is possible under such circumstances.

When Suckers Revolt

As people recognize what is happening, they alter their behavior. Three reactions are to be expected:

1. Some will become discouraged when they realize the game is stacked against them. They will diminish their efforts to succeed, even perhaps dropping out of the game altogether. Given the enhanced returns to not working, it should not be surprising that this alternative has become popular.

2. Others will adopt the same behavior as the ruling class. They will exploit those lower on the food chain. Justice Brandeis warned of the implications of government misbehavior:

   In a government of laws, the existence of the govt. will be imperiled if it fails to observe the law scrupulously. Our govt is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If govt. becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy.

3. Others may resort to acts of violence. These reactions could be isolated domestic terrorist acts against govt. & corporations seen as the exploiters. Or the acts might be broader based where the poor see fit to attempt to take from the wealthy. They also could manifest in wide civil unrest against the govt. if it is seen as the cause of misery or if it is seen as intending to default on promises made.

All of this behavior is anti-social & it is unproductive. It reduces the output of the economy, further exacerbating the problems.

How Does This End?

It is difficult to know how the current condition ends. Here are a few possibilities, with some opinion added:

   Will our ruling class alter its behavior? That is very unlikely. History provides no examples where power is willingly relinquished.
   Will our economy collapse? That is a likely outcome, although the process could take years.
   Will social unrest occur? Probably. The govt., at some point will be unable to honor its promises. It is broke & left with the printing of money as its primary source of funds. Stopping the printing means dishonoring promises & likely plunges the country into civil unrest.
   Will hyperinflation occur? If the govt. continues to print, that seems to be the inevitable result.

Issues That Need To Be Solved

We are too far into this economic disaster to escape without an economic collapse of some sort. Return to normal economic times is impossible without a complete & thorough purging of the economic distortions & capital mis-allocations produced from decades of govt interventions.

The following issues prevent a recovery:

   No economy can prosper without a strong middle class. They are the productive class in society. They are the small businesses & job creators. Without them, society does not produce. Without production, there is only poverty.
   Inflation, the cruelest tax of all, is driving up prices while wages & salaries do not keep pace. For those without wealth, there is no way to protect against this theft. For those with wealth, they can rearrange investments to take advantage of inflation, particularly if they are privy to what is coming next.
   The economy is dysfunctional. It no longer functions efficiently as a result of the burdens it is forced to labor under. The price system has been made less efficient as a result of inflation, manipulated interest rates, subsidies, penalties & other impediments.
   Regime uncertainty discourages action. When economic actors are unable to judge the future, they pull back. Money goes to the sidelines or out of the country.
   US economic policy & the uncertainty of what comes next has been a great job creator for other countries.
   Economic growth cannot be forced by central diktats. It occurs only in a climate that is receptive & friendly to risk-taking. It is hard to imagine a worse environment than the current one. That is why there is no investment & no hiring.

What Is The Outlook?

There should be no optimism regarding govt changing its ways. History suggests it never does.

The recent plunge in the gold market suggests govt. has gone all in in its attempt to continue exploitation. Chris Martenson commented on this event:

   I am very disappointed by, but not surprised at, the latest transfer of wealth to the bankers from everyone else. The most recent gold bear raid has vastly enriched the bullion bankers at the expense of everyone trying to protect their wealth from global central bank money printing.

Gold is considered a safe-haven against govt. plunder. It is one of the few escapes from fiat currency debauchery that the small investor has. Whether this latest attack on gold was to make the bullion bankers better off or to scare those trying to protect themselves against govt. exploitation is irrelevant. When govt. intervenes in markets in such a manner, it is no longer a referee. It has chosen a side & is a participant in the game. There can be no fair competition when one team owns the referee. That is what happens when govt. participates in markets. ]

Please read it again from start to finish. Think ahead or regret your inaction later. Gold & silver bullion are Constitutional sound money & may be the only salvation we have if this 100 year federal reserve banking experiment should follow the path of every other prior attempt in history to substitute sound money for fiat currency. Don’t let the Boston bombing distract you from the real world that continues to play out around you.