The Sovereign Man, Simon Black, explains how our very system of modern government public sector financing is … just like private sector financing … nothing more than a Ponzi scheme.
Don’t miss his comment at the end, about how the UK government is effectively stealing citizens’ super. It’s just one of the several ways that our own government has already set in train the policies to do the same (emphasis added):
Say what you want about him, but Bernie Madoff was a guy who knew how to keep the party going. For years, he ran one of the largest private-sector Ponzi schemes in history and always heeded the golden rule of financial scams: make sure your inflows are greater than your outflows.
He was finally done in when redemptions exceeded new investments. He didn’t have enough cash to pay out investors, and he wasn’t able to scam more people into paying in to the scheme. As a result, Madoff finally had to admit that the whole thing was a total fraud.
Governments around the world are in similar situations right now with their own public sector Ponzi schemes. Faced with failed auctions, declining demand, and rising yields, politicians are having to resort to desperate measures.
Like any good scam artist, they’re appealing to the masses first; all over Europe, governments are sponsoring new marketing campaigns suggesting that it’s people’s patriotic duty to buy government debt.
In Spain, they’re actually issuing instruments called ‘Bonos Patrioticos,’ or ‘patriotic bonds.’ Ad campaigns say that the bonds are “good for you, good for the future.”
In Ireland, they’ve issued “Prize Bonds” which carry a 0% interest rate; instead of receiving interest, bondholders are entered into a weekly lottery contest. Naturally, lottery winnings are only possible as long as people keep buying the bonds… pretty much the definition of a Ponzi scheme!
In Italy, they’re rolling out the country’s sports celebrities to encourage everyone to buy Italian sovereign debt.
What’s ironic is that Italy’s dismal balance sheet is almost universally acknowledged. It’s as if everyone knows the country has almost no chance of making good on its obligations, but they still feel the need to willingly throw away their hard earned savings for the greater good of political incompetence.
Thing is, it’s not the millionaire sports stars, wealthy business leaders, or political elite who are buying these bonds… at least, not in anything beyond a token, symbolic amount. It’s the average guy on the street who really stands to get hurt when the government finally capitulates.
This is a truly despicable act and amounts to theft, plain and simple.
The United Kingdom, which is rapidly reaching this banana republic sovereign debt status itself, has unveiled a plan to issue roughly $50 billion in infrastructure bonds. This would be the equivalent of issuing $300 billion in the US– not exactly chump change.
Given Britain’s already colossal debt level, private investors aren’t exact diving in head first to loan the government even more money.
Undeterred, British Chancellor George Osborne plans to ‘highly encourage’ UK pension funds to mop up about 60% of the total amount. “We have got to make sure that British savings in things like pension funds are employed here and British taxpayers’ money is well used,” he said.
In other words, ‘we are going to make sure that British people buy our junk, one way or another.’
The last year has seen numerous pension funds around the world, from the United States to Argentina to Hungary, be raided for the sake of keeping these Ponzi scheme going. The UK is already lining up to be the next.
It’s one of the last acts of a truly desperate government to begin directing public and private savings into their Ponzi schemes.
Fast-forward a few downgrades and you can plan on seeing the exact same thing in the United States– appealing to people’s patriotism to loan their hard-earned savings (if they even have any) to the Federal government at a rate of interest that fails to keep up with inflation.
It’s nothing more than a very clever (and subtle) form of theft.
Those UK plans ring any bells?
They should … alarm bells.
Your humble blogger has been ringing that same alarm bell ever since the May budget, when our government quietly announced exactly the same plan:
… Barnaby is warning that it could happen here too.
The first steps in that direction have already begun.
From Global Custodian (Australia edition), 11 May 2011:
The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.
In light of the botched “school halls” program, and the stalled white elephant NBN – which so far has only achieved a 12% takeup rate, versus their predicted 58% – would you really trust this government to wisely and prudently invest your super in Government infrastructure?
Others have their doubts.
From The Australian, 12 May 2011:
The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.
First, a little “encouragement” for super funds to invest in government spending programs.
Then, when the costs blow out, or when the government debt becomes unmanageable?
“No super for you!”
We also said this:
Labor’s PM-in-waiting, the Minister for Financial Services and Superannuation, Bill Shorten, already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.
From The Australian, 4 May 2011:
Superannuation is our sovereign wealth fund
This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.
… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.
Have no illusions, dear reader.
Green-Labor already have their eyes firmly fixed on stealing your super, using exactly the same “infrastructure bonds” scam as the Pommy government.
After all, why not?
In their twisted rationale, your super is a “significant national asset”.
“Nation building” infrastructure is a “national asset” too, right?
You know … electrified ceiling insulation, overpriced school halls, “green scheme” rorts, the no cost/benefit analysis Nation Bankrupting Network.
So of course it makes perfect sense to “encourage” your super fund (mis)manager to “invest”
your super the “significant national asset” in … significant national infrastructure assets.
Then, when the economy nosedives, the banks collapse, our government hocks the taxpayer (and their children and grandchildren) to the moon to bail them out, and ultimately (like the rest of the West) goes cap-in-hand to the IMF for loans, your super that’s been invested in that “national infrastructure” … will get handed over to the IMF as collateral on unpayable sovereign loans.
Just like in every other country where the IMF is asked for “help”.
If you’ve not yet woken up to the reality that neither “side” of our political spectrum can be trusted (at all, much less) to keep their hands off your retirement savings, then consider this.
Labor has already begun the subtle, insidious process of “encouraging” your employer to funnel your future super payments directly to the ATO.
A policy stolen from the Liberal Party.
I got their letter:
Wake up Australia!
It’s time to take the red pill.
(h/t reader JMD) Another example of a desperately over-indebted government trying to bribe/coerce/con the citizenry into keeping the Ponzi scheme going:
‘Gold For Bonds’ in Japan as Bond Buyers Get Gold Coins
Japan will reward investors who buy reconstruction bonds with half an ounce of gold, an added incentive that could boost the return by nearly six times according to Japanese Finance Minister Jun Azumi.
Individual investors who purchase more than 10 million yen ($129,000) in the debt with a 0.05 percent return and keep it for three years will receive a gold commemorative coin weighing 15.6 grams (0.55 ounces), the Finance Ministry said in Tokyo today, worth about $948 based on current prices for the precious metal.