Unsustainable Government
Government hangers-on talk a lot about sustainability but debt-laden governments are doomed to failure. They need to fail sooner rather than later.
To all intents and purposes most Western governments are bust. And yet government spokespeople, and the army of hangers-on that depend on government spending, talk endlessly about sustainability. The irony is that the government, itself, is unsustainable.
Nearly all Western governments are trading insolvently. They have no idea how they will honour pension contributions. And they’re having increasing problems getting institutions to buy their debt (that’s why long term gilt yields have been going up - gold seems much safer to institutions).
The UK is in a particular mess. Total public sector borrowing is now above £2.9 Trillion. Student debt is another £0.3 Trillion. Public sector pension payment liabilities amount to a further £5.8 Trillion. Oh and state pension liabilities…add on another £3.8 trillion or so. And then there’s all the other unfunded nonsense that the government engages in…such as sustaining an armada of NGOs, quangos, and defence contractors.
There’s only one way out of this mess. As far as the government is concerned, the ‘way out’ is some type of spending containment via digital IDs and a recalibrated currency. But this is clearly nonsense. Any type of walled garden approach to citizen control is doomed to failure. People will quickly develop a parallel system outside the ‘approved’ system. New payment systems will emerge.
There is another way. Unsustainable government will, inevitably, collapse. It’s my view that we need to face up to the fact that the government, as it’s currently constituted, is doomed. So we should put it out of our misery as soon as possible.
In my view this is beginning to happen. Democracy is dead. Governments now, willy nilly, create policies out of thin air - all of which are about containment and citizen coercion. All of the mainstream political parties pretend that the writing is not all over the wall - that the end of government is nigh. There’s barely any political party reference to the fact that the UK is essentially penniless and that government spending is only being sustained by the printing of money that’s diminishing in value with each £Billion printed.
Because, let’s face it, what is “government” these days? It doesn’t provide any meaningful services. The NHS (which employs over 2 million people) is a useless monstrosity. Our public services are closed shop employment organisations for people who want an easy life and a final salary pension. In fact the UK “government” has very successfully created a leech class. Nearly 20% of UK workers now work for the government. But probably the same percentage again works for suppliers and contractors to the government. These people produce nothing of any particular value. Hence UK borrowing (the cost of sustaining this mess) is being used (spent) on nothing of any real value.
Once the UK gets into a debt crisis (and it inevitably will) much of this edifice of waste will collapse. The United Kingdom, at some point, will have no choice but to shut down most of government ‘services’ and essentially appoint liquidators. The consequence will be a huge recalibration of the UK economy (otherwise known as a near-collapse).
There will be no bailouts available. The extent of debt that has been incurred by the UK is being mirrored across the West. America is using the fact that the dollar is the world’s de facto reserve currency to create a new digital dollar system (AKA dollar stablecoins) - so that it can extend its debt base across the globe. But this, too, will inevitably fail.
So what’s to be done? For a start, don’t sweat too much about government policies because you should be doing everything you can to work outside the system. Don’t assume that you can rely on a state pension - because they may well not be available to you despite all your contributions to the pension pot. If you work for the public sector don’t assume the government will honour its liabilities, because it is unlikely to be able to. If you’re a recipient of ‘benefits’ you should start thinking of ways not to be reliant on them (because there may be no money to pay for them).
But there is hope. The United Kingdom still has a sovereign currency. If the government (as it’s currently constituted) goes down the likelihood is that money supply will stabilise in the medium term and the private sector will recover rapidly. Currently, the public sector crowds out value from the system. But recovery will be more rapid if we have a stable currency and dead-wood cleared public sector.
But there’s another thing you can do. Ask every politician you meet what their ideas are for downsizing government (and debt). Because if they have no idea (or have no ideas that don’t involve reducing the involvement of the state in every area of our life) then they aren’t worth knowing.
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