Recently we saw a four dollar rise in the minimum wage in
California. The consensus among the legislators was that no one could live on
$16 dollars and hour. The people in
labor force rallied around that suggestion. The trouble is, the logic failed after
it became law. The real assertion should have been, you need a roommate or two
to live on $16 per hour. Thousands were
laid off. The door, for the people just looking for that first job, to get into
the labor market has slammed shut.
[The next paragraph is from my memory; the dollar amounts may
be wrong]
A while back, maybe 15 years ago the California legislators realized
that the utility companies were buying natural gas at about $3 a therm on a 5-year
contract. They noticed at the same time that the spot price for Natural gas was
about $1 per therm. The legislators decided
to let the contracts expire and not to renew them. They were going to buy natural gas on the spot
market at the lower price. Since there was no contract for
the Utilities anymore, spot prices for natural gas shot up to $20 per therm.
Heating bills went through the roof. I
don’t think that this summary of the events has ever seen print, rather, the gas companies were accused of gouging the consumer. Another case of pure stupidity on
the part of legislators.
Here in San Diego in 2018, we were requested to use less
water and we did. Since we did such a
great job, they had to raise our rates. The problem, the amount paid no longer
covered the fixed rates of operating the utility. This is now happening all
over again as I speak.
During the Great Depression of the 1930’s, many
municipalities raised their property taxes because of the loss of income from foreclosures.
They needed more money to fund their budgets. The net effect was less revenue
generated and an increase in foreclosures. People barley holding on, threw in
the towel and picked up and left. We are beginning to realize (for the first
time- since everyone is dead that remembers the mistakes from before) that the legislatures’
have no concept of economics. Common sense suggests that if you double taxes
you double revenue. What you really get, are unintended consequences.
Right now, the national debt is over 31 trillion
dollars. I calculated it out a few years
back, and if the interest rate hits 8 ½% we as a country cannot pay the
interest on the national debt. The taxes collected will not cover the interest
on the national debt. Congress (collectively) has no
idea how previous spending is related to the money already borrowed. The mentality is, it has worked for the last
60 years, it can last forever.
You have to ask one question; was it obvious to the citizens
in previous Banana Republics (Germany, Zimbabwe and Venezuela, that inflation
would make the currency worthless? It happened very gradually. Many lost their life savings. Scrounging
through a garbage can for food was not what they envisioned for retirement.
We need to look at gold as a store of value and as an
instrument that the government cannot monitor or manipulate the price of. Our congressmen
are not going to willingly ruin our savings, their utter collective group ineptness will
doom us to financial ruin. Remember one
thing about gold, if you cannot hold your gold, in your own hand, you don’t own
it!
