VANCOUVER, Canada (Bullion Bulls Canada) -- When Greece's traitor government inflicted "austerity" on its people, I stated the obvious: Savage and senseless budget slashing of money being spent on people would make its deficit worse, not better, and lead to the total collapse of the economy. That is exactly what happened.When the U.K. began its pseudo-austerity, where it slashed spending on people while continuing to print lots of new "money" for its criminal bankers, I predicted that its deficits would get worse, not better, and eventually destroy its economy too. The deficits have gotten worse, as this
Obviously there are enormous economic costs to widespread stealing, and the only means of preventing theft is through incarcerating the thieves -- and warehousing them in jails/prisons at somewhere between $70,000 to $100,000 per year. Or we could allot these economic victims a tiny fraction of that amount in welfare and save on the costs of theft, the costs of policing theft, court costs for prosecuting theft and the massive costs of warehousing thieves in prisons. There are numerous other examples where spending money saves money. Thus it was the simplest of predictions that slashing spending on vital (and cost-effective) social programs could only cripple these European economies even further. Note that mindless austerity doesn't simply add other (hidden) costs, it destroys revenue, too. The "fat" has long ago been
cut out of government spending. Now, every $1 cut from spending destroys $2 in tax revenue. How do you ever "balance a budget" with that dynamic? You can only commit economic suicide as Greece has already done, and which Spain, the U.K., and other traitor governments in Europe are mimicking. This brings us to a more fundamental defect. The colloquial definition of insanity is to do the same thing over and over and over but expect a different result. This is precisely what is taking place in Europe -- both individually and collectively -- where governments copy the failure of other governments, and then continue those policies when they have already failed in their own economies. This goes beyond simple insanity. It is nothing less than deliberate economic suicide. Which brings us to the real question: Why are Europe's governments engaged collectively in intentional economic suicide? The answer to that question is multifaceted, and I have addressed all of those facets in previous commentaries. The real issues here are both political and economic in nature. In terms of economics we have an obvious dynamic: All Western governments are plummeting toward bankruptcy. There are only two possible ways to (positively) address this dynamic: Eliminate unproductive government spending and/or increase revenue. What austerity has done is to eliminate productive spending and destroy revenue. Obviously, doing the exact opposite of what is necessary must result in total failure.
There are two massive sources of unproductive spending across all Western economies: interest payments to the Bond Parasite, and corporate subsidies. The solution to the "problem" of the Bond Parasites -- sucking back more than 20% of every revenue dollar across the West -- is simple, and has been discussed by many, beginning with Steve Keen: Debt Jubilee.
Burn the Bonds (of economic slavery) and Western economies will be halfway toward salvation. The other necessary step is to eliminate all corporate subsidies, more than 90% of which (by dollar amount) go directly into the pockets of multinational oligopolies. Here is where the utter ignorance of the economics profession is completely exposed. For more than 40 years we have seen a perfect correlation across all Western economies: Subsidies increase for corporations while unemployment gets worse and worse and worse. To understand why this is happening, we must first ask ourselves what these megacorporations do with all their subsidies. The answer is that they buy machines in order to eliminate jobs. For more than 40 years, our traitor governments (backed by the brain-dead economists) have been subsidizing big business to help it slash jobs. While the real solution to the problem of oligopolies is to smash them all into little pieces (with existing antitrust laws). At the very least we must stop subsidizing their destruction of our economies. This brings us to the revenue side of the picture. As I've explained previously, Western economies are currently experiencing the worst revenue crisis in our entire history. Here the problem is even more obvious. Ordinary people and small business have already been squeezed dry. Meanwhile, our governments refuse to tax either big business or the ultra-wealthy (who happen to own most of big business). Thus our economies are dying from taxation anorexia. With taxes for large corporations and the ultra-wealthy at the lowest (effective) rates in history, our politicians remain willfully blind to the only cash cows who can ease their revenue crises. However, this mass betrayal of the Western nations by our own governments also has a political component.
As I documented in a
previous commentary, only one western nation has escaped the economic slavery imposed by governments serving corporate oligarchs: Iceland. It threw the banking cabal out of its country, and adopted people before parasites in its economic policies. The oligarchs vowed not to let another nation escape its slavery. This is the true goal of austerity: to turn citizens into serfs, since serfs are much easier to govern. We saw this in Greece, where after its economy had already been destroyed the oligarchs used the combination of fear and propaganda to get Greek serfs to re-elect the same traitors who had destroyed their economy in the first place. It's time to stop the insanity, stop the betrayal and throw all of these governments out of power. The failure to stop this devolution of our societies back to serfdom implies the unthinkable: a high-tech Dark Age where a tiny minority live lives of utter opulence, while the masses eke out lives as low-tech peasants. This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.