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America: Face reality or die

Nations that willfully refuse to face reality die. Yet in the past week the only thing that most members of Congress faced was the fiscal cliff they were clinging to by their grubby fingernails.

The trouble with clinging to the fiscal cliff is that all you see is the cliff, inches in front of your nose. You don’t see the wider reality that faces America and the West in 2013: the reality of impending national bankruptcy and third-world status.

Suppose the politicians had failed to reach a deal and they’d dropped off the imagined (and imaginary) “cliff.” Then automatic tax increases and spending cuts would have kicked in. From the apocalyptic tone of the once-mainstream media, you’d have thought these changes were severe enough to fling not just America but the West into a triple-dip recession.

Rubbish. The changes were so small that they might have met about one-sixth of the federal deficit. Not so much a cliff as a hummock – what we Scots call a “knowe.”

So here’s the problem, stated in plain English. If the nation had stepped off the fiscal pimple and stumped up the extra $2,000 per household in federal income tax, the U.S. Treasury would still be borrowing hundreds of billions a year to keep your governing class in the exotic luxury to which it has become accustomed.

To balance the budget – which must now be done at once, or America is finished – the tax hikes and spending cuts would have had to be six or seven times bigger than the paltry changes that all the stramash is about.

But if neither side in politics dares to take puny measures that would cut the annual shortfall between federal tax revenues and federal spending by as little as one-sixth, then how are they ever going to get rid of 100 percent of the annual deficit and balance the books?

The answer, alas, is inflation.

If you are poor, if you are working-class, if you are on a fixed retirement income, be afraid, be very afraid. Inflation is coming.

Inflation is theft. It is robbery by the State against anyone who holds money assets. So-called “quantitative easing” – or printing money – means all existing money is worth less than before.

The rich keep their assets in real estate, art-works, bullion, vintage autos – anything but cash. To them, inflation is just about irrelevant.

To everyone else, inflation is a nightmare. But – in the short term – it is the easy option for the governing class. Inflation reduces the value of the dollar in your pocket or under your mattress or in your zero-interest checking account.

Inflation also reduces the value of the federal government’s vast accumulated debt. That is why, every time the debt gets big enough, governments turn on the printing presses and invent money that did not exist before.

It is time for governments and people to face reality. Here are some of the things Western nations can no longer afford, whether the left likes it or not:

If you think any of these measures is too extreme or goes too far, tough luck. Facing reality is not easy. But it is now necessary. Let that be our politicians’ resolution for 2013.

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