The Telegraph recently observed that, “Europe accounts for just 7pc of the world’s population, and 25pc of its GDP, and yet it also accounts for a massive 50pc of its welfare spending. The point is an important one. Europe’s welfare spending is out of control, and is on a scale that is both lavish and unaffordable compared with the rest of the world.”
The Telegraph further added that, “the trouble is that welfare spending is pure consumption. It does not represent any kind of investment and it doesn’t pay for itself. The money for it has to be found from the productive part of the economy, and it has to be raised somehow – the more you spend on it every year, the more you have to tax or borrow to keep the books in balance. At a certain point, it becomes a drag on the productive economy.”
I believe that this inflection point has been reached a long time ago, and that the drag from welfare spending and in the case of the US also from healthcare spending on the productive economy combined with excessive regulation will only worsen as time goes by.
My friend the economist Gary Shilling makes the case for still owning US Treasuries. I tend to agree with him about holding some money in Treasuries (Treasuries and cash: 25% of assets), but I am far more concerned about the value of the US dollar given my negative view about the US economy.
Similarities between Paradise and Prison
“A liberal’s paradise would be a place where everybody has guaranteed employment, free comprehensive healthcare, free education, free food, free housing, free clothing, free utilities, and only law enforcement has guns. And believe it or not, such a place does indeed already exist: It's called Prison." - Sheriff Joe Arpaio, Arizona, USAI hope my readers will not be losing “their capacity for socially responsible behavior” and that their “sense of personal responsibility” will not dwindle, but always remain strong.
With kind regards
Yours sincerely
Marc Faber
via gloomboomdoom
