Who Said It? Obama or Hollande?

The United States is becoming French. Those that have should give their money to those that do not and be proud of it. That was the clear message from the President’s inauguration. How we arrived at this place is clear enough; the Democrats appealed to the less fortunate and those who do not work and those who want the government to support them and those that do work and those that do stand on their own two feet are being asked to pay as a matter of national duty and conscience. There are very few ways to couch this that do not use rather charged words or call strong feelings to the fore but there it is; America is becoming a Socialist country very similar to France.

During the recent debates on the budget deficit and the raising of taxes we have been told that entitlement programs are not up for discussion. We cannot afford what we have now and yet the only response we are given is to raise more taxes, increase the social programs and incur more debt. The Fed is going along with the program and buying the government’s debt to keep interest rates low so all of the hand-outs can continue but, at some point, there will be a score to settle and the United States will be on the losing end of the stick. It will be Inflation or Valuation and the burgeoning debts of the newly socialized America will exacerbate the polarization of a nation that used to applaud a man joining the American dream and standing on his own to feet to create wealth for himself and his family and now adamantly criticizes this notion as being un-American.

Debt is composed of three primary considerations; the total amount owed, the interest rate paid and whether the principal can be re-paid. The world, these days, as focused and primed by the central banks has focused the attention on just one component which is the interest rate. So we have lower interest rates in America and in Europe due the coordinated efforts of the central banks and various governments and yet the total amount of debt keeps growing which will overcome the interest rate factor as the economies underpinning the ability to re-pay the debts are eroding. Whether it is the United States or in most of Europe the economic decline is serious and in some cases close or past insolvency except as bailed-out by their neighbors fearing the dissolution of the European Union. In America, given the rather opaque statements made in the Inauguration Speech, we have hardly begun to see the calls for more social programs, higher taxes and curtailed deductions held high under the banner of providing more support for the less fortunate and the needy. The social safety net, long prevalent in America, is being replaced with an equalization of money and life-style past anything ever seen in the country. Karl Marx may not be quoted but he seems to be idolized by those lording power at the present. It is no wonder that Mr. Obama is held in such high regard in Europe; he is one of their own and a fellow carrier of the Manifesto.

Let me tell you this; the next four years in America will be full of more social programs, higher taxes, a larger deficit and a greater division between those that make money and those that do not. There will be a shift from those States with high taxes to those States with low taxes and even a move by the more affluent to find other places for residency. Those that have accumulated assets will look for places to protect them and the ability of the nation to fund the grand ideals of Socialism will find its capacity diminished as a result.

We are not at the end but at the beginning. America is just at the starting line of something new in our history which will shake the foundation of the nation to its core and pit wage-earners against wage-takers in a manner never before seen. We are past the crossroads and embarked upon a path that will lead the United States into new territory that I fear will be disastrous for the country and for investors. What you make and what you invest will be demanded for the fiscal equalization of the population and woe to those that protest, that want to return to the old values and who wish to accumulate assets to have a nicer life for themselves and their families. Under the guise of patriotism and social justice more will be demanded, more will be taken and the country will ultimately be poorer because of the experience.