Now, I will note for the record that every time I try that crap with the employee pension plan or the petty cash account at work, everybody starts running around screaming about what a thieving, lying, despicable crook I am, and then everybody else starts adding to the accusatory din by saying how I'm probably the one who stole the cookies out of their stupid sack lunches, too, which weren't all that good (and kind of stale, too), so I don't know what all the fuss is about.

But everybody wants something for free, and since I look and act like a real Earthling human, don't I bleed, too? So who is the real victim here, you hateful bastards?

But the desire for free stuff is pandemic, and Frosty Woodbridge at NewsWithViews.com talks about this very point when he says that "[The] U.S. Senate along with Obama and McCain protect the interests of 20 million illegal aliens that take jobs from American citizens! Has either man stepped up to stop 400,000 annual illegal alien anchor babies and their mothers from sucking out of the U.S. taxpayer's pocket? Even while 86 hospitals in California and Arizona are bankrupted out of existence because of millions of illegals using services for free?"

See? Everybody wants something for free! And the governments (federal, state and local) are there to give it to them and charging Americans for it!

Well, Peter Chamberlin, author of The Planned Collapse Of America, doesn't mention me specifically as the patsy who pays the taxes and the inflation in prices that comes because the damnable Federal Reserve creates so much money and credit so that the damned government can borrow it because the government can't get any more from me (as the archetypical American tax-paying worker, only more lazy and undependable) to spend on their little friends.

And by "everybody else", I mean the connected insiders, as Mr. Chamberlin writes, "[the U.S.] economy [is] based on parasitic capitalism, where the small elite sits atop the heap of men and gorges on their lifeblood." He says that this "is destroying the social fabric of America" and that it "is based on a stacked deck, where the top elites always reap the profits that are made to rise to the top through the corporate profits-based system".

To add Presidential gravitas to the whole thing, 321Gold.com had the perfect quote from Ronald Reagan, which is that "government is not the solution to our problem...government is the problem. It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government."

And Americans are going to pay a hell of a price, and as Junior Mogambo Ranger (JMR) Skip G. reminds us, "Jay Leno says on the air quite frequently, 'You have the government you deserve.'", which I amend to say, "And will yield a result similar to what the old Soviet Union got when they tried that Same Silly Crap (SSC)!!!!", which I punctuate with four exclamation points to indicate just how sure I am about that, because that is the way economics works and what history has consistently shown.

And all of this getting busted out and ruined makes us little guys angry, in my case because I am too broke to afford drinking myself into oblivion. And it gets even worse when I read the essay at Oftwominds.com by Charles Hugh Smith, who titled his essay as, "Yes, There Will Be Armageddon: Government Goes Bankrupt", wherein he writes, "One financial Armageddon is entirely, easily predictable: the bankruptcy of government in the U.S.A., at every level: Federal, State, County and City. The prediction follows from very simple mathematics: entitlements which grow at 8% a year cannot be supported by an economy which grows at 3% or less."

In case you are wondering, I say that the money supply expanding recklessly, so that the government can borrow and spend and cause more and more debt, means that inflation in prices will lead to a catastrophic implosion of the economy, just because that is what always happens.

And what is the antidote? 4,000 years of history answers loud and clear, "Buy gold!" To which I will add "And silver! And oil!"

After the expected applause dies down in appreciation of getting such good advice, I will say, "And speaking of buying things, who wants to buy me a drink?" Apparently, people in line at the supermarket don't like good advice or they don't like to buy me a damned drink. Or both. And then they wonder why I hate them so much!

But at this point, nobody wonders why I love gold, silver and oil so much. And you should, too.

The Mogambo Guru
for The Daily Reckoning Australia

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We had dinner with a fellow who made a real change – Jose Pinera. As Chile’s Labor Minister in the ‘80s, he completely changed the system of public pension financing and provided a model for the rest of the world.

We’ll let Jose tell his story as he told it to us last night:

“I was one of the ‘Chicago Boys.’ That is, I studied under the great economists at the University of Chicago...and then I got my Ph.D. in economics at Harvard, which added a little bit of humanism to the hard-edged teaching in Chicago. So, they called me a ‘Chicago Boy’ and a ‘Harvard Man,’ which is the way I like to think of myself.

“Things fell apart in Chile during the Allende years. We had to rebuild the country afterwards. So, I went on TV and I said what I thought...about how to reform the pension system...or what you call Social Security.

“A little background. You see, almost all the world’s pension systems came from the same source – Otto von Bismarck. He set up the first one in Prussia and it was later taken up in almost all the developed countries. We set it up in Chile in 1925. It wasn’t set up in America until ten years later.

“Bismarck was very clever. He offered people a pension on what is called here in France a ‘repartition basis.’ That is, all the money goes into a pot...and you get from the pot whatever the politicians decide you can have. Bismarck offered people who retired at 65 a nice pension, for the time. Bismarck knew that the average life expectancy in Prussia at the time – this was the middle of the 19th century – was only 45 years old. So he knew he couldn’t have to pay out many pension claims. But the average person didn’t know how long he would live, so he could imagine himself living to a ripe old age and taking advantage of the public pension system.

“Bismarck also knew why he was doing it. He said he aimed to make the population ‘docile’ so they would ‘serve the state,’ more easily.

“Well, now, everyone is living much longer...and the politicians aren’t as smart as Bismarck. They’ve promised greater and greater benefits, and even lowered the age when you can get them...so the pension systems are going broke. They’re all going broke – you can count on it.

“Now, I’m going all over the world explaining this to governments and urging them to put my system in place...to make a radical change in the way public pensions are financed. Recently, I was in China, for example. You want to see a pension problem...look there. That policy of one family, one child is a catastrophe from a pension financing point of view. They’re going to have hundreds of millions of old people, and very few young people to support them.

“Anyway, back in the ’80s, I went on TV in Chile, with ideas about how to reform the pension system. I was just a young economist...only 29 years old. But the president of the country saw me on television and he said he wanted to talk to me. He called me in. I said I would be happy to explain to his people how to reform the pension system. But he said that if you were really going to reform it, you had to start at the top. So, he appointed me Minister of Labor.

“Then, I had to explain to the people what was wrong...and had to explain to them how to fix it. So, the first thing I needed to do was to win their confidence.

“I went on TV again. This time I took my mother’s egg timer and I held it up and I said, ‘I’m only going to talk for three minutes. Give me three minutes and I’ll explain what’s wrong with the pension system and what we’re going to do with it.’ And I told the cameraman to just cut me off after three minutes.

“This worked beautifully, because it made me look humble...I wasn’t going to waste the people’s time with a long, windy speech like Castro...I was just going to tell them something simple, fast.

“Of course, I couldn’t explain everything in 3 minutes. But I told them that I had good news and bad news. The bad news was that the public pension system was broke. We had no money. But the good news was that I had an even better system.

“They called me the Minister of the Egg Timer...but they began to trust me. And then, I went back on TV...over and over...each time for only 3 minutes...and each time with my egg timer to keep me honest...and I laid out everything...why the system went broke...and what I was proposing to put in its place – a different system in which, instead of dumping all the money into a big pot that the government could do with as it pleased, each worker had his own personal pension account. It took some explaining. But I kept going...each time explaining more and more. I had to explain, for example, that the idea of the ‘employer contribution’ is a myth. The employer just looks at it as part of his labor cost. But once you call it an ‘employer contribution,’ the employee gets the idea that it’s not really his money that finances the system and he feels he has no control over what he gets out of it anyway.

“My system is very simple. The worker makes exactly the same contribution as he did before. But it’s his own money and he knows it. And he has some control over how it’s invested. And if he dies, it goes to his family. He’s an owner of it, not just a recipient of government handouts.

“So, when I had finished laying all of this out, over a 9-month period, I then admitted that I could be wrong. ‘Maybe this won’t work as well as I think it will,’ I said. And I said I didn’t want to force anyone to go with my system. So, we decided that anyone who wanted to stick with the old system – which is the system you still have in France...and America – could do so. Or, they had the option of getting into the new system with individual retirement accounts than they could manage themselves. Now, guess how many people went with the new system? We thought 51% would be a victory. Instead, 95% signed up for private retirement accounts.

“And here’s something interesting. About a third of the population of Chile are leftists...socialists, communists, or Hillary Clinton liberals. Even these people – when it came to their own money – preferred to have it in their own retirement accounts, invested in stocks and bonds, rather than in some black hole in the government accounts.

“And the best thing about this is that it turns the whole country into capitalists. Even the leftists think twice before they vote for higher business taxes or more regulations. They worry how their retirement account will be affected. And that’s why Chile is now the richest country in Latin America.”

A companion noticed the problem right away:

“That must be why the left fights so hard to resist this kind of reform,” he said.

“Yes...but it will come. You just have to wait until your current system goes bankrupt. And it will, sooner or later.”

Chile is now the richest country in Latin America. What a shock it will be to the gringos when it is the richest country in all the Americas!

Bill Bonner
The Daily Reckoning Australia

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