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Lookout Below
It may only be a matter of time before Federal government has to reduce expenditures or declare insolvency and default on unfunded mandates.
The four largest budget items are Medicare and Medicaid, the Social Security Trust, Defense and Interest on the Treasury debt. Government controls over energy and healthcare are an attempt to curtail spending obligations in the first two or three of these areas as tax revenues fall precipitously.
The American people are on notice. They cannot rely on Uncle Sam to bail them out with more promises of free lunch or return of compulsory tax Trusts that seem too good to be true. They are. Bank lenders will be paid before anyone else.
Only allowing people to freely work and save half will eventually lead US out of the valley of the shadow of death. Government deus ex machina hat tricks in the misused insights of Keynes may only postpone the recovery.
FDR made gold ownership illegal before he devalued the dollar 75%, led us into World War II with a mandatory draft, required social security and income tax withholding and raised taxes to 94%.
Canadian Dome Mining and American Homestake Mining gold stocks outperformed most other assets.
http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml
Many Americans today are concerned asset confiscation with uneconomic wage and price controls may happen again.
They also watched gold grow from $253 to $1004 while the Dow went from 14,164 to 6547:
http://stockcharts.com/charts/historical/djiagold1980.html
Americans wonder if they should ship their gold or bank accounts to Canada or overseas like Joe Kennedy and JP Morgan did in 1929. Indeed, the current administration is pursuing tax evasion actions on more than 52,000 Americans with hidden overseas accounts.
America was a much different country then. Gold went from legal to illegal and most Americans complied. If that happens again, will overburdened Americans comply?
