Careful now, this is going to require some time and thinking to answer. Every item listed here is a historical fact. So you can't say we have not been warned.
Don't Cry for Me Argentina (Soon to be America)
This is a history lesson. It happened in Argentina, it could happen in the U.S.
In the early 20th century, Argentina was one of the richest countries in the world. While Great Britain’s maritime power and its far-flung empire had propelled it to a dominant position among the world’s industrialized nations, only the United States challenged Argentina for the position of the world’s second-most powerful economy.
Like the United States, Argentina was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers, and an accessible port system. Its level of industrialization was higher than many European countries; railroads, automobiles, and telephones were commonplace.
In 1916, Argentina elected a new president. Hipólito Irigoyen had formed a party called The Radicals under the banner of “fundamental change” with an appeal to the middle class.
Among Irigoyen’s changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy. Put simply, the state assumed economic control of a vast swath of the country’s operations and began assessing new payroll taxes to fund its efforts.
With an increasing flow of funds into these entitlement programs, the government’s payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers’ contributions. Put simply, it quickly became under-funded, much like the United States’ Social Security and Medicare programs.
The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife, Eva, aimed their populist rhetoric at the nation’s rich.
This targeted group “swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.”
Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.
High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. However, his populist rhetoric and “contempt for economic realities” lived on. Argentina’s federal government continued to spend far beyond its means.
Hyperinflation exploded in 1989, the final stage of a process characterized by “industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy…”
The Argentinian government’s practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic. Food riots were rampant; stores were looted; the country descended into chaos.
By 1994, Argentina’s public pensions — the equivalent of Social Security — had imploded. The payroll tax had increased from 5% to 26%, but it was not enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy.
A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. However, by 2001, those funds had also been raided by the government, the monies replaced by Argentina’s defaulted government bonds.
By 2002, “…government fiscal irresponsibility… induced a national economic crisis as severe as America’s Great Depression.”
In 1902, Argentina was one of the world’s richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.
The Democrat Party’s populist plans for the U.S. cannot possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.
The Democrat Party leaders of today are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.
Do you see the parallel path?|||Do I see the parallel path? Yes, and not just with the USA. Change the names and a few details and that story has been told over and over again in many different countries. The best you can do is protect yourself; an ordinary citizen cannot save an entire country.
Here is where we are at in the USA:
The current administration has already added about 1.5 trillion in new money into circulation. This is roughly equal to 170% of the previous total amount of money in circulation (http://research.stlouisfed.org/fred2/ser… History tells us that new money added to circulation takes about 2 years to work its way into the system and manifest its inflationary effects (the banks are still sitting on piles of the bailout money), so we have some time. Be aware, a TRILLION is a lot of money. %26amp; there is no way that the Fed will be able to back this $ out of the economy in time without raising rates to 45% tomorrow. How can we not have hyperinflation?
Once high rates of inflation are apparent, foreign governments will see the value of their US bonds falling and will probably begin dumping their holdings of dollars, thus accelerating hyperinflation. Once the cost of everything is skyrocketing, the government will not be able to collect taxes fast enough, and it will have to resort to printing even more money (as happened in Germany about 100 years ago when 99% of their government spending was with printed money and only 1% from tax receipts) further speeding up the hyperinflationary death spiral.
What seems to matter as far as initiating hyperinflation appears to be when government deficit spending via printing money increases to about 1/3rd of revenue. When a country crosses this line, hyperinflation starts sometime in the future, but nobody really knows how long in the future. The USA just crossed this line for the 1st time.
Inflation, or in a severe case, hyperinflation, is a local event; it does not affect currencies in foreign countries, and may even help their stock markets via shifting purchasing power to unaffected countries. It will be very bad for anyone who is not prepared.
http://swisssolution.webs.com/
If you have access to your foreign money in a foreign country, you are safe from hyperinflation, as well as bank failures that may result. In today's world, Swiss banks can issue debit or credit cards that are good just about everywhere, so you can still spend as you need to. The money you spend via debit or credit card would not be converted into the depreciating currency until the instant that the sale takes place.|||It's well known that the primary responsibility lies with the free market fundamentalism they attempted. THAT was the death knell.
Argentina agreed to the IMF, World Bank, and WTO conditions in the 90s.
"A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. However, by 2001, those funds had also been raided by the government, the monies replaced by Argentina’s defaulted government bonds. "
Wow. Where should I start? Blaming government for privatization? As opposed to socialization?
Here's what it comes down to: You are taking cherry-picking to the extreme. South Korea's state owned enterprises accounted for twice as much output as Argentina's. But you aren't talking about South Korea...
Also, some of the world's best known companies have been or are owned by governments. For instance, VW's largest shareholder is one of the German states. Singapore Airlines(one of the world's most popular) is owned by the Singapore government.|||woah yes thats very similiar, scary to say the least.|||All the countries in Latin America have had slow economic growth and ended up much poorer than the US. All the countries in Western Europe have had growth rates similar to the US and have incomes and GDP per capita similar to that in the US. Since the countries in Western Europe have extensive social warfare programs and those in Latin America for the most part do not, Your explanation for why Argentina fail to grow is far from convincing. The most common explanation is that the extreme concentration of wealth in Latin American countries gave the wealthy power over the government creating policies that protected their privilege by stifling competition.
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