Does Representative Democracy lead to Unsustainable Debt, Inflation, Lower Standard of Living?
Does Direct Democracy lead to Minimal Debt, Disinflation, and a rising Standard of Living?
We see a big difference between representative democracy and direct democracy and its effects on the economy, debt, inflation and the standard of living. Obviously there are many factors but we have attempted to develop a flowchart of how representative democracy - election of politicians - leads eventually to unsustainable government debt which in turn forces higher inflation and a resulting lower standard of living.
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To give the example of the U.S., since World War II, representative democracy has led to a massive increase in government debt, with politicians promising ever increasing costly programs and initiatives through increasing government interventions and involvement in the economy and in geopolitical affairs of the world. Some of these programs and initiatives have been spurred by citizens looking for free services, handouts and assistance at all levels of the economy and life, and some of these programs and initiatives have been spurred by lobbyists and special interest groups which legally help politicians get elected in the first place.
In almost all cases, inflating away the debt is the course of action by governments as the other alternatives are much less likely:
defaulting on the government debt - bond holders would be screwed on their holdings of government bonds, this is also essentially the undermining of the “rule of law” and property rights
increased taxation is not palatable with the general public
reduced spending and fiscal prudence is not palatable with the general public
Therefore the course of action is creating inflation through the printing of money by the governments and/or central banks, effectively devaluing the purchasing power of the currency and resulting in inflation through the monetary phenomenon.
In the case of the U.S., the initial founders of the country and the U.S. Constitution did not intend for all citizens to vote.
A podcast we did with finance blogger and author Charles Hugh Smith which elaborates in more detail on the above:
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Specific Holdings in Our Portfolios
Let’s delve in to view our portfolios, with holdings we have qualified using our qualification criteria to target helping us address the challenges of investing in an inflationary environment and declining purchasing power of the currency …
And also we present two equities we are considering in our portfolio, which are cover a few of the following derivations and products made from oil and gas:
Let’s delve in …
