Global Prosperity Hiding Behind Government Bureaucracy

Apr
24

By Charles Biderman

 

My lovely wife, Virginia, says I almost always end these videos with a forecast of gloom and doom. As usual, she is right. However, in my reality, I am very optimistic for both the short and the longer term. It is only about the medium term that I am concerned, very concerned. And while it could get quite bad, my guess is that the bad times won’t last more then a very few years.

 

To summarize, I am optimistic over the short term primarily because the financial markets are allowing themselves to be conned into believing that the $85 billion of fake money being created each month by the US Federal Reserve is real. That’s a daily infusion of some $4 billion of fake money being used to buy existing financial assets. Another reason for my short-term optimism is that a record amount of buybacks have been announced over the past few months. Therefore, what you get over the short term, is more money chasing a relatively smaller amount of shares. That means the overall stock market should keep going up, for now.

 

However, at some point soon – maybe within a few months – the financial markets will wake up to the reality that governments cannot create economic prosperity by using fake money to pay their bills as well as prop up stock and bond prices.

 

Until people wake up, the majority of Americans will continue to believe that government can effectively provide services, despite the fact that governments have never effectively provided services over the longer in the past, the key word being effectively.

 

Some NY Times type columnists all seem to believe the real question facing us is how to fund government so it can provide the services the columnists seem to think we need. Instead, the real conversation should be since government cannot effectively provide services, how can we as a society create the services we all need?

 

Let me repeat what I said, maybe in a different way. The real problem we are facing is that despite all of the central bank money printing, the underlying US, European, Japanese and even Chinese economies are not growing and will not grow fast any time soon.

 

So if money printing is only keeping stock prices higher and is not helping the underlying economies, then at some point the markets will no longer believe that the fake money being printed daily is the same as already existing money. That means that at some point not only will the economy be on its butt, but so will the stock and bond markets.

 

At that point the government will be forced to admit not only that it cannot create economic growth, but that it will have to in essence declare bankruptcy. The conversation then will change from how to fund government services, to how can our economy create the services we need without government.

 

There is only one solution that I can visualize. And that is that a government financial collapse will end representative government. Only after that, can we begin real conversations about how to create a new form of self, not representative based, government.

 

As I have said in previous videos, it is easy to forget that the constitutional convention of 1787 for the first time created a government by the people, for the people and of the people. Before then, either heredity or physical force determined who ruled. And, back in 1787, representative government was the only form logistically possible in the world before steam engines, telegraph and even a managed mail service. It took George Washington four weeks by horseback to go from Mt. Vernon to NYC to be sworn in as the first president.

 

But 200 some odd years later, representative government has been taken over by the special interest groups who control the representatives by providing them the campaign contributions needed to get elected and then reelected. Who are the special interest groups? Easy answer, just look who is being funded by the government. Therefore, since the special interests own our government in reality there can be no change over the near term in government services.

 

What all this means is that it will take the equivalent of government bankruptcy to bust the special interests. Only after can we begin conversations and discussions as to how we can effectively govern ourselves using all the technology available now and in the future.

 

The world I envision in the longer term is one where every email address on this planet is the equal to every other email address. The rule of law will apply globally, meaning one’s life and well being will not be in danger simply by being in the wrong place at the wrong time anywhere. Instead of government destroying value by confiscating assets and then try to provide services, government will reduced to acting as judge and referee in maintaining a level playing field.

 

The end result will be an unprecedented global prosperity.

 

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12 Responses to Global Prosperity Hiding Behind Government Bureaucracy

  1. Dave in Alberta, Canada. on April 25, 2013 at 4:33 am

    Charles, I tend to believe the “Powers That Be” won’t lose control and domination without a truly long, drawn out struggle. I have no idea how long money printing can continue (a while since everyone else is), however I believe it will take years for major change to happen. When is anyones guess, but I think a decade or so.

    It’s a crazy, crazy world.

  2. lenita marie johnson on April 25, 2013 at 4:36 am

    Thanks for keeping it real!
    Government for the people and BY THE PEOPLE is the bottom line. Not government for a few and good luck to the rest…

  3. Stephan B. Feibish on April 25, 2013 at 2:24 pm

    The trouble comes when Joe Six Packs draws up the rules.

  4. Daniel A. Morris on April 25, 2013 at 4:33 pm

    Insightful as usual, Charles. I wish I could be as optimistic as you are. With some people on this planet living in the equivalent of 1200 AD, the concept of self government is entirely alien.

    Having lived in Ecuador and Colombia, I can tell you that large parts of the population live outside not only the world economy, but they live outside their own national economy. Huge numbers are functionally illiterate.
    Their leaders manipulate them, just as ours manipulate the gullible in America. The big difference is that violence and intimidation are their every day tools used to control those at the bottom of the income scale. Bull Connor would be a welcome alternative to most of these people to their current police forces. This is just South America, not counting Africa and Asia, where conditions are even worse.

    In South America the powers that be are extremely well entrenched and can’t be removed without a very violent conflagration. Previous attempts by the people in Colombia to alter the power structure ended in what is known as, “La Violencia”. This was a civil war that occurred between the mid 1940′s until just the last 10 years. Other than hundreds of thousands of people being murdered, not much has changed.

    Not to get to apocalyptic, but why is our government buying hundreds of millions, some say billions of hollow point bullets? This is not the kind of ammo that is normally used for practice. Normally, full metal jacket bullets are used for practice by the US Armed Forces and all police departments. Hollow point bullets are outlawed by the Geneva Convention, so our Army etc. never uses this type of ammo. Who knows what is behind these unprecedented purchases. However, looking at our current Administration, I don’t think the reason is a positive development and is totally unprecedented.

    I hope for the best, but try to keep my eyes open to what is going on behind the manipulate main stream media propaganda. I agree that the house of cards caused by the, “keystroking” of billions of dollars a day won’t end well. I intend to keep watching your videos for warnings of the end game, so I can prevent the loss of all of my hard earned savings.

    All the best,

    Dan

    • Kim G on May 1, 2013 at 2:46 pm

      Your point is an excellent one. Our system may have serious problems, but it is much better than many of the alternatives.

  5. Chuck Szkalak on April 26, 2013 at 2:33 pm

    Mr. Biderman:

    Many thanks for your video commentary. You give much to think about. I have great respect for both your courage in telling the truth and for your long term vision for the World. It appears to me that your vision of a newly enlightened socioeconomic order of equality must be based on interactions motivated primarily by individual responsibility and respect for both self and others. These fundamental characteristics are being purposely destroyed by progressive governments; witness the destruction in Detroit, Newark, East St Louis, the list is endless. I think that without those cultural values only the dark ages of poverty, bigotry and ignorance are possible.

    Respectfully,

    Chuck S.

    • cbiderman on April 26, 2013 at 2:38 pm

      Your comment, that a new order based upon individual responsibility and respect for self and others are practices, not beliefs.
      My course, Biderman’s Practices of Success & Abundance defines success as being fully present and totally engaged in those areas of life important to you, particularly when you do not want to be.
      There is no success possible when we give away responsibility for ourselves, whether to others or government.

  6. Doug Neal on April 26, 2013 at 6:36 pm

    Charles, shouldn’t we just outlaw ANY and ALL contributions to politicians, let our $50 billion per year intelligence community monitor and verify this and pay for all national elections with public money and nothing else?

    Wouldn’t this get rid of undue influence?

    What you think about term limits: either one term or two terms for both chambers?

    Of course getting rid of the Federal Reserve should be a high priority given it’s sorry record and outrageous “experimentation” underway!

  7. Dan King on April 27, 2013 at 12:46 am

    Nonsense. There is no way you’ll get the special interests out of politics. And there is no way direct democracy would be better than representative democracy. The latter is NOT just an artifact of slow transportation and communication. It arises because you need people who actually know something in office.

    Special interests are a problem, but they’re not as big a problem as you suggest. The bigger problem is the people vote for things they want (social security, medicare) and then don’t want to pay for them.

  8. Kim G on May 1, 2013 at 2:42 pm

    Could you please explain the difference between “fake” money and “real” money? It seems to be all the same to me. One fiat currency that everyone pretty much accepts as the medium of exchange and store of value, however imperfect it might be. Why is new money fake and old money real? How old does fake money have to be before it becomes real? And is real money more valuable than fake money? How could you tell?

    What would happen if the Fed stopped producing fake money, and perhaps if they took it back? Would we all be better off? How would that look?

    This posting seems to raise more questions than it answers.

  9. PHM on May 8, 2013 at 3:40 pm

    Hey Charles – Your bearish calls are the worst. You have been dead wrong and will keep on losing money. There is no point in fighting the FED. Equity markets will go a lot higher.

    • Ed_B on May 11, 2013 at 11:44 pm

      Yes, they will. But… when it finally becomes obvious to one and all that the emperor truly is naked, those same stocks will plummet back to Earth with dizzying speed. Such is life for stocks that are higher due to inflation rather than economic growth. The huge question there is… when? No one knows but it will happen because Fed-inspired inflation can only puff up a bubble for so long before a big BANG! is heard.

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Charles BidermanCharles Biderman is the Chairman of TrimTabs Investment Research and Portfolio Manager of the TrimTabs Float Shrink ETF (TTFS)

Biderman’s Practices of Success

I recently launched a new online course, Biderman's Practices of Success, on Curious.com (curious.com/charlesbiderman). The key to the practice of success is to be fully present in the moment and to be totally engaged in the important areas of life, particularly when we do not want to be. Read More.

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