Why the Road to Hell is Paved with Good Intensions

Recently we saw a four dollar rise in the minimum wage in California. The consensus among the legislators was that no one could live on $16 dollars and hour.  The people in labor force rallied around that suggestion. The trouble is, the logic failed after it became law. The real assertion should have been, you need a roommate or two to live on $16 per hour.  Thousands were laid off. The door, for the people just looking for that first job, to get into the labor market has slammed shut.

[The next paragraph is from my memory; the dollar amounts may be wrong]

A while back, maybe 15 years ago the California legislators realized that the utility companies were buying natural gas at about $8 a therm on a 5-year contract. They noticed at the same time that the spot price for Natural gas was about $1 per therm.  The legislators decided to let the contracts expire and not to renew them.  They were going to buy natural gas on the spot market at the lower price.  Since there was no contract for the Utilities anymore, spot prices for natural gas shot up to $20 per therm. Heating bills went through the roof.  I don’t think that this summary of the events has ever seen print, rather, it was the gas companies were accused of gouging the consumer. Another case of pure stupidity on the part of legislators.

Here in San Diego in 2018, we were requested to use less water and we did.  Since we did such a great job, they had to raise our rates. The problem, the amount paid no longer covered the fixed rates of operating the utility. This is now happening all over again as I speak.

During the Great Depression of the 1930’s, many municipalities raised their property taxes because of the loss of income from foreclosures. They needed more money to fund their budgets. The net effect was less revenue generated and an increase in foreclosures. People barley holding on, threw in the towel and picked up and left. We are beginning to realize (for the first time- since everyone is dead that remembers the mistakes from before) that the legislatures’ have no concept of economics. Common sense suggests that if you double taxes you double revenue.  What you get are unintended consequences.

Right now, the national debt is over 31 trillion dollars.  I calculate it out a few years back, and if the interest rate hits 8 ½% we as a country cannot pay the interest on the national debt. The taxes collected will not cover the interest on the national debt.  Congress (collectively) has no idea how previous spending is related to the money already borrowed.  The mentality is, it has worked for the last 60 years, it can last forever.

You have to ask one question; was it obvious to the citizens in previous Banana Republics (Germany, Zimbabwe and Venezuela, that inflation would make the currency worthless? It happened very gradually.   Many lost their life savings. Scrounging through a garbage can for food was not what they envisioned for retirement.

We need to look at gold as a store of value and as an instrument that the government cannot monitor or manipulate the price of. Our congressmen are not going to willing ruin our savings, their utter group ineptness will doom us to financial ruin.  Remember one thing about gold, if you cannot hold your gold in your own hand, you don’t own it!