Wednesday, 30 April 2014

September 11, 2011 - Governor Perry is Right, Governors Huckabee and Romney are wrong about Social Security. A Blast from the Past!


    After the Reverend Mr. Huckabee's appearance on Fox and Friends - Weekend this morning, the Old Gringo was moved to respond.   The Reverend Governor has a bone to pick with Governor Perry because Perry came out, somewhat stupidly, four years ago and supported Mayor Giuliani for the Republican Presidential nomination.   As a fellow Dixieland Governor, perhaps Huckabee had a right to scratch his head and wonder.

     The Rev. Gov. Huckabee now figures turnabout is fair play.   If you do something stupid, let me do something stupider, seems to be his operative mode.   Huckabee, and his closest ally in the argument, Mitt Romney, has ridden to the half-defense of Social Security.    He and Romney both think that we need to be "reasonable" in how we deal with Social Security.   "It's a popular program with millions of Americans and has been a big help to millions of Americans in the past," seems to be their observation.   Little matter that Social Security is a cyanide tablet covered with an hypnotic chocolate sauce.

      When questioned about whether, in fact, Social Security is a Ponzi scheme, the good Rev. Gov. Mr. Huckabee finally suggested that perhaps it might be a "modified" Ponzi scheme, but....since the central government can print money, there is a final, fail-safe system that guarantees that Social Security can and will always pay its obligation.    It might pay with money that cannot buy anything, but it will pay.

      Those payments ultimately will have to be something like.."Do you want a system by which the Government sends you a check for 40 billion dollars that can buy perhaps a half-slice of stale bread and a 5 billion dollar lottery ticket.   Or, should we "democratically vote" for a system that would continue to provide 1,000 dollars per month as previously established....that 1,000 dollars would be enough to buy 3 grains of salt, for delivery in six years."   
      You see?...It's not a Ponzi Scheme...we complied and paid all of our obligations.

     The Old Gringo reminds people that this is not a far-fetched comparison.   I witnessed it in Mexico during the 1970s and 1980s.   Luis Echeverria Alvarez and Jose Lopez Portillo, two of the very worst presidents of Mexico ever, drove the currency and the economy into the tank by printing money to such a point that it is difficult to describe to people nowadays.

      Figure that in 1900, cavalry and other soldiers at Fort Brown, in Brownsville, Texas and others at various other forts and outposts on the Texas border with Mexico created disturbances on-base, protesting the Quartermaster's decision to pay the soldiers in greenback dollars.   They had been told that one of the benefits to serving on the border was the soldiers would be paid in Mexican coin at the rate of one peso to one dollar...and that that payment would be made in silver or gold equivalent.

      There was a settlement of sorts, when the quartermaster's people finally went over to the banks in Matamoros and exchanged dollars for rolls of Mexican silver 10 centavos (five pesos the roll) to be used for the monthly paymaster muster.

       Figure that the Old Gringo could buy a hamburger, a Coca-Cola in one of those nifty small green bottles, and leave a gratuity at a decent place in Miguel Aleman, Tamaulipas across from Roma, Texas in 1963 for ONE PESO!!  The gratuity  left was in the form of a huge and beautifully stamped copper 20 CENTAVO coin!!!!    For a decent meal, in a decent place, with normal looking clients and workers.

       By 1976 - 1980 the two above-named socialist-slug Presidents  had debased the currency and confused the Mexican economy to the point that it set Mexico back a minimum of 30 years in terms of socio-economic development.    They and their leftist, rational, reasonable, compromising, let's spread the wealth, social engineering  advisors, Secretaries of This and That had decided that the problem with Mexico was that there were too many poor people and too many rich people   So...they made it difficult for businesses to make profits and they froze rents and other charges, redirected agricultural harvests out of production areas and into areas that had no market for such products or capacity to process the harvests....they nationalized everything from two boat family net-fishing operations to the entire sugar processing industry.   They regulated the banks in increasingly un-predictable and capricious ways, ultimately nationalizing them.

      The peso began a trek that took it from 12.50 / 1.00 against the dollar...already beat up from the turn of the century due to the excesses and stupidity of previous socialist experiments and ensuing corruption which is endemic to all socialist even new heights, or lows depending upon whether the truck hit you from behind or head-on.    After the episodes of the 1970s through about 1988 when some braking had been forced by reason to be applied, the peso finally began to slow down in its collapse.   Before it was done, however, it had fallen from the 12.50 level mentioned above to 4,000.00 / 1.00 .     Quite a legacy for the 20th century.   And to think that the Morgan Trade Dollar was devised to be 10% larger than the silver Mexican peso back the the 1870s so as to counteract the dominance of the Mexican currency piece as the primary medium of currency for international trade in the Orient.

        The Old Gringo carries to this day a beautifully engraved and stamped COMMON CIRCULATION COIN OF CURRENCY , a .720 fine, silver Mexican 50 centavo coin...known as a remind him of the danger of "being reasonable", "being moderate", "willing to compromise", "thinking rationally", "establishing a moderate, predictable discourse", and all the other bilge that brought Mexico to its knees back then, Germany of course after World War I, almost Canada durng the early 1990s and again ten years later;
Zimbabwe, Argentina, Italy, Spain, Great Britain, etc. etc. etc.   were all reasonable, adult, rational, forward looking, willing to compromise.

        IT IS ALL THE SAME BILGE.   Socialism begets unpayable debts and destroys nations.   The only solution is to somehow climb back out of the mid-air free-fall, like a cartoon character, and re-establish either a hard currency or at the very least a harder currency.

      The leftwing politicians in  Mexico had tried to  solve the problem of the poor people not having enough money and the rich people having too much, finally by making it possible for any impoverished Mexican to have 1,000,000 pesos in crisp, new 50,000 peso notes; very pretty ones with flowery emblems, official markings, revolutionary slogans and heroic images of heroic  heroes.....and with the 1,000,000 pesos a person could not buy a set of tires for his Volkswagen.    At one point, the nationalized banks were paying 150% interest on deposits of 360 days.

The 50,000 peso note in Mexico during the late 1980s
to which the Mexicans referred as "papel hygienico"
(toilet paper) and/or El Toston (the fifty cent piece).
In 1960, had there been such a thing as a 50k peso
note, it would have had a value of 4,000 USD.  By the
time the 50k note was published, it was worth a little
more than 12 USD.   The fruits of Socialism.

      The Old Gringo knew of some other Old Gringos back then who would play the interest rates and "let the Mexicans buy me another Oldsmobile"...who actually put money in during those days.   There has almost always been a set of independently well-to-do Old Gringos who liked to dabble in the interplay of Mexican Government paper, and Mexican bank paper interest rates.   Kinda fun if you like that sort of thing.   A person needs to be rich enough to allow the sure-to-follow increasee in interest rates to make up for any loss of principal due to devaluations.   It usually would take about 18 months to be back ahead of American CD rates.

         President Miquel de la Madrid finally began to return the banks to the private sector and,  in one of his last acts as a controller-by-decree, he ordered that the exchange rate of the peso to the dollar be frozen and further ordered massive spending cuts to balance the Mexican exchequer (the coup de grace for socialist programming and engineering).   That meant those last Old Gringos essentially made 150% on their Mexican Treasuries, even in dollar terms....because no Mexican government paper or bank, public or private has ever faulted on a peso debt.   A bunch of Oldsmobiles were bought on that trade.
       In the 2006 presidential elections Lopez Obrador, the pro-communist candidate for the Revolutionary Democratic Party of Mexico, laughed when it was brought up to him by press people...,"What you are proposing is just like what we went through in the recent past during the 1970s and 1980s.   Don't you think the people will reject that?"    Through his sinister giggling he responded, "The people have short memories.   We know how to implement those same policies, but this time, we shall do it more forcefully.   There will be no place to hide for those who exploit''.  Thank the Great Yahweh, Lopez Obrador lost.

      Therefore, the Old Gringo points out...Mexican Social Security (their socialized medical system), and all things in the government and in Mexican heavy industry...everything....everybody...learned clearly that socialism "gives" money to the poor, but that money  cannot purchase anything.  It has highly diminished purchasing power.  The solution of giving every derelict stumbling our of this bar to enter into another bar  a handfull of 50,000 peso notes for one more drink, is where we are heading....actually it is where we are.   And where we are soon to be is in a place where Michelle O'bama will be dropping bales of Margaret Sanger Commemorative  Golden Coathanger 1,000,000 dollar bills out her vacation planes so that all the little people can have lots of money.

      Didn't work for Eva, didn't work for the Weimar Republic, didn't work for nobody, nohow, never will.    The Buzzards they do gather.    So, esteemed Rev. Mr. Gov. Huckabee and Gov. all are good fellows, hearty fellows well met, but if you say that the American Social Security System is not a Ponzi Scheme, you are both wrong....very wrong.

      The last note is...Anyone operating a gaming arrangement identical to the Social Security System....operating it privately in ANY AND EACH OF THE 57 STATES IN THE COUNTRY THAT I AM FINALLY PROUD OF FOR THE FIRST TIME IN MY LIFE....  that person can be and frequently is correctly arrested and convicted of fraud and conspiracy to commit fraud, to wit: the operation of a PONZI Scheme!!!!!!

Thanks for your time and attention.

  And yes the Old Gringo would vote for Huckabee, Romney, or Perry for President. although he would prefer to re-establish Texas as an independent Republic with treaty-based associative agreements with whatever is left of the other 56 united States of America.