Inflationomics

Voting for the Lesser of Two Evils

Let’s start arbitrarily with President Kennedy.  We got Kennedy instead of Nixon.  How evil was Nixon?  Stay tuned.  With Kennedy as President, we added the Peace Corp, we had the Cuban missile crisis, we increased the number of military advisors in Vietnam, and we aspired to send a man to the moon by the end of the decade.  While Kennedy was reputed to have had numerous extra-marital affairs, he was nevertheless one of the most beloved presidents the United States has known.

After Kennedy came Lyndon Baines Johnson, who won a landslide victory in the 1964 election over Barry Goldwater, an arch conservative who wanted to reduce the size of government.  Instead, we got the Great Society, a panoply of government handouts, including Medicare (According to the Henry J. Kaiser Foundation, Medicare expenditures accounted for about 15% of federal spending in 2015.), Medicaid, War on Poverty, the Elementary and Secondary Education Act, and the Older Americans Act, to name a few.  And, of course, there was the escalation of the war in Vietnam, which many people believe to have been a waste of money and lives.  The lesser of two evils?  Apparently government spending wasn’t evil back then…still isn’t.

Next came Richard M. Nixon, who ran against Hubert Humphrey in 1968, the Vice President under Johnson.  Apparently, voters had  had enough of the Vietnam War and elected Nixon because he promised to get the United States out of the war.  While in office, Nixon also established the Environmental Protection Agency (EPA)(currently with roughly 15,200 full-time employees), imposed wage and price controls for 90 days (always an abject failure), and took the United States off the gold standard, thus giving the United States a totally fiat currency and allowing the U.S. government to live way beyond its means and inflate its debts away.  That didn’t seem so evil at the time, but it was the beginning of the end for the U.S. dollar…in short, it allowed the U.S. Congress to spend, borrow, and inflate the U.S. dollar.

Nixon also beat out his opposition in 1972, when democratic candidate George McGovern lost in a landslide.  McGovern was labeled as being in favor of amnesty for draft dodgers, abortion, and the legalization of drugs…apparently evil at the time.  Nixon then became the first U.S. President to resign from office because of his involvement in the Watergate scandal (spying on the Democratic party)…and today we have Wiki-Leaks and the Russians to do that…still evil.

In 1976, Gerald Ford, who had been appointed Vice President by resigning President Nixon, narrowly lost to Jimmy Carter, in part because Ford had pardoned Nixon shortly after becoming President.  Evil by association.

Carter’s reign was fraught with high rates of inflation, high unemployment, and the Iran hostage situation, which were perceived as evil.  Thus, the 1980 election began the Reagan reign.  It seems that the unknown is often better than the known evil.  Reagan went on to end the Iranian hostage crisis, lower inflation (through Paul Volcker’s raising of interest rates), lower unemployment, and lower taxes.  His popularity grew, allowing him to win the 1984 election by a landslide.  While Reagan’s years as president saw a growing economy in the U.S., it also saw a tripling of the gross federal debt.  This set the stage for future increases in the federal debt, leading to the uncontrolled and crippling U.S. debt we face today.  Many people don’t see this as evil.  They think we can just print our way out of debt by inflating the currency…but then, who’s going to want to use the U.S. dollar if we do that?  What will Americans be able to buy if the U. S. dollar becomes worthless?

By 1988, with the economy doing nicely, George H.W. Bush, who had been Reagan’s Vice President, became the next president.  No change needed…except that those deficits were getting bigger and so taxes were raised…a necessary evil.  Nevertheless, that evil and a souring economy cost Bush the election in 1992.  Bill Clinton, an unknown, became the 42nd President of the United States.  In fact, he was able to win again in 1996, as the lesser of two evils, even though he failed to reduce taxes or the deficit.  Apparently, the status quo wasn’t so bad.  While Clinton was able to win his party’s nomination easily, the Republicans had a harder time of it and chose the elderly Bob Dole whose dwelling on the past didn’t endear him to the younger generation of voters.

In the 2000 election, Al Gore, the Vice President under Bill Clinton, and George W. Bush (son of the former president, George H. W. Bush) faced off.  While this election was the closest ever, it’s possible that Al Gore, whose association with Bill Clinton, the recently denounced womanizer, may have cost him the election.  Association with an evil conveys to the associated.  By then, George Bush’s association with his father (who wasn’t a womanizer) didn’t look so bad.  Sometimes, it’s difficult to see which is the lesser of the two evils.

Then came the attacks on the World Trade Centers on September 11, 2001, and the subsequent wars in Afghanistan and Iraq.  Surprisingly, these wars, although evil, were relatively popular, giving George Bush the popularity he needed to win the 2004 election.  Kerry’s exaggerated Vietnam War exploits were also a factor…blatantly lying BEFORE one was elected was perceived as evil.

By 2008, the U.S. economy was entering the Great Recession and the wars in the Middle East were dragging on.  We also saw an international banking crisis with Lehman Brothers filing for bankruptcy in September of 2008.  Naturally, this was laid at the doorstep of the Republicans who had been in office during the past eight years.  As a Republican who apparently didn’t see the problem coming, McCain was perceived as “out of touch” with reality, while Barack Obama was touting a change.  At that point, anything would be better than the same old same old as the economy continued to worsen.  And so we got Barack Obama as the 44th President of the United States, who won with the largest vote count ever in a presidential election.  It’s also interesting to note that Obama raised about half of his donations in small amounts, suggesting a grass roots swell in his favor.  Apparently, change was the lesser of two evils, with the failing economy and foreign wars dragging on as the worse of two evils.

By 2012, Obama’s popularity was waning…but not enough to lose the election (Compared to his victory in 2008, he won fewer states (28 to 26), fewer electoral votes (365 to 332), fewer popular votes (69.5 million to 65.9 million), and a smaller percentage of the popular vote (52.9% to 51.1%).[161]).  The economy was bumping along.  The long-term consequences of the Affordable Care Act (Obamacare) and low interest rates had not yet been felt.  There was still optimism that Obamacare would be a good thing (what tax is ever good?).  And the government statistics didn’t show anything to be amiss.  No evil to point at.

Today, we are faced with the 2016 election and the prospect of voting for the lesser of two evils, again.  Both the candidates (Hillary Clinton) (Donald Trump) are widely perceived as liars.  Which one lies less?  Depends on your point of view.

Trump is perceived as a womanizer…nothing new there.  See Kennedy and Bill Clinton.  Womanizing didn’t keep them from being popular.  Are times changing?

How’s the economy doing?

Price inflation is on the rise, despite what governments would like you to believe.  If we calculate price inflation the way it was calculated prior to 1980, we have an inflation rate approaching 9%.  That’s evil.  If the public perceives prices to be rising that rapidly, that could pose problems for the Democrats who have been in office for the past eight years.

The Obamacare tax is starting to show its true colors, with insurance companies withdrawing from the program and rate hikes appearing on the horizon.  That’s evil.

Low interest rates are still punishing savers and retirees living on interest from their savings, not to mention insurance companies.  Banks are also feeling the pinch.  In Europe, where rates are negative, Deutsche Bank, among others, is having financial problems.  If it fails, we will see another financial crisis like the one we saw in 2008, only worse.  That would be evil.

As things get worse, more tension shows itself in escalating wars around the globe.  It also surfaces as votes to separate from alliances or neighbors…think Brexit and the Philippines.

And then there’s the debt that is growing around the world.  Not only are governments’ debts growing, but so are corporate and individual debts.  How will this end?  A debt makes a debtor, a large debt makes an enemy.  That’s how.

Bottom line:  After years of voting for the lesser of two evils, we are faced with two evils, neither of which is predictably “lesser.”  And I don’t mean who the next president will be, because that doesn’t matter much.  No matter who becomes the next president, the United States and the rest of the world will still face the problems that have accumulated during the past 45 or more years of fiat money.  And then there’s the age old question of, “Will the Fed lose it to inflation or deflation?”  And which one we have (or both in quick succession) does make a difference…as to who survives and who doesn’t.  Either way, gold is money.

So go ahead, vote for the lesser of two evils…if it makes you feel better. But get ready for a continuing decline in standards of living and rising levels of strife and evil.

Robert F. Sennholz

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