The Road From Capitalism to Socialism and Why The US is F**ked

By: Jeff Berwick | Wed, Aug 31, 2011
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It is perhaps the saddest story ever told and it has been told over and over again for millennia. It is the never-ending urge to dismantle capitalism after it has created great amounts of wealth.

This has been going on since Roman times as can be seen in this quote from Cicero circa 50 B.C.:

"The budget should be balanced,the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

Sounds a lot like what needs to happen in the US today, no? In Rome they had economic freedom and it created a massive amount of wealth and innovation. The Government that grew up around it, however, slowly drained and warped the economic climate to the point where people, as many in the US are today, were unproductive and dependent upon the state for their survival. Soon after, it completely collapsed... as will the US.


CHINA - FROM COMMUNISM TO CAPITALISM TO SOCIALISM AGAIN

China has been the most modern case-study of this reversion from communism, back to capitalism and again back to communism. Under Mao's "Great Leap Forward" (government program names never cease to amaze in how egregiously opposite they are to the stated goal) tens of millions of Chinese died of starvation and the once proud Chinese culture was decimated to the point of subsistence living.

Finally, by 1976, it collapsed. Since then the Chinese Government has had to allow some economic freedoms. Either that, or starve the entire country to death.

The magic of economic freedom did its work incredibly quickly in China just as it did with Japan and Germany after World War II where it rebuilt two completely destroyed nations into the powerhouses they became by the 1980s.

Within the span of a few decades China went from being a nation of rice farmers to being a global economic powerhouse and is now the biggest creditor to the US - who has been going in the exact opposite direction.

But, now that so many Chinese have become so rich comes the backlash. The outcry that they need to spread the wealth. How quickly they forget what "spreading the wealth" did during Mao's time.


A flashy gold car in China

According to this news article, too many of China's new rich are driving around in flashy cars and have nice things. This makes other people who have not been as productive "feel bad". So, once again, the Government has to come in and play Robin Hood. Steal from the rich and give to the poor.

The Chinese government has even announced plans to implement a "seniors' pension scheme" - along with improved social health care services - by the end of 2015.

If history is any indication, China will keep treading back to socialism until all the wealth has been shared and it will collapse yet again.


THE US - FROM CAPITALISM TO SOCIALISM

The US has been, by far, the most dynamic and productive country of the last century. Nothing comes close. The main reason being that more than any other country during the 20th century, the US railed against socialism. It wasn't perfect in this regard. Not at all. But it still held more true to capitalism in the 20th century than any other country.

The creation of the Federal Reserve in 1913 (central banks are one of the main tenets of communism) began the long, slow road down, however. By 1933 the US had already gone bankrupt and had to confiscate gold to survive. Then, again, by 1971 they were bankrupt again and broke off any link from gold in order to survive a few more decades.

Policies such as FDR's "New Deal" and LBJ's "Great Society" helped to bankrupt the nation along the way. And today easily the most socialist President in the history of the United States presides.

Not that it even matters that much. The following chart provided by GoldSwitzerland.com shows that things have been going in the wrong direction steadily for decades.

After decades of the government (which destroys wealth) becoming a larger part of the economy while the private sector (the one that creates wealth) shrinks, this graph is about to complete what dirty minded technical analysts refer to as a "phallic" chart pattern. The "shaft" part of the formation began in the 1960s and things turned even worse after the "head" formation began to be traced out after the 1990s.

Now with government spending about to cross over and become more of the economy than private spending it will complete the phallic formation. It's only fitting that this chart has drawn out the shape of a penis after all these decades because now, due to all this government involvement in the economy, the US is good and truly f**ked.

 


 

Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website, Stockhouse.com, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use Stockhouse.com for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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