Bankrupt clueless California journalists portray Texas gold depository breakthrough as Loonyville… all hail the Central Banks forever!

As I write this, the European Union is on the brink, financially, with Greece. The ruling Syriza party, socialists all, are preparing to default on what the country legitimately owes creditors at the International Monetary Fund and the European Central Bank. I say “legitimately,” because the country’s prior leadership, which was legitimately elected, signed off on the bailout as a way to prevent Greece’s economy from collapsing. It worked; the country’s economy did not collapse back in 2012 when the loans were obtained.

But it might now, depending on whether the present government – which promised to reverse the austerity measures required for the bailout – can reach a deal with its creditors. Right now, the government simply does not have the money to repay; we’ll see how that plays out. In all, this ancient power’s debt-to-GDP ratio is 172 percent, the second-worst in the world.

The highest debt-to-GDP ratio honors go to Japan, at about 246 percent. The U.S. makes the top 20 at 15th place with 105 percent debt-to-GDP ratio (meaning our national debt is 105 percent of our annual gross domestic product, the economic measure of all goods and services sold in a given year).

As for the state of debt in U.S. states, according to this chart, Nebraska has the lowest amount of debt and Hawaii the highest.

What’s wrong with hedging against an economic collapse?

In between is Texas (21st place) and California (33rd place), but the picture is much worse in California. As reported by Fox News, it is one of the “worst offenders” for the amount of debt it has amassed and for underreporting it to the public:

Illinois was one of the worst offenders, according to the report. It found that while the state says it has an “unfunded liability” of $8,133 per person, the true amount is three times higher at $25,740 per Illinois resident.

Other states have similar problems. For instance, California says it has an unfunded liability of $4,909 per person, but according to the report it is nearly $20,000.

What has California done to mitigate its debt? Keep in mind that the state is run by progressive Democrats and has been for decades, and progressives never view prior promises made in terms of entitlements like pensions as perhaps being a bit of overreach. Rather, they view such shortfalls as merely a revenue problem, and as such in recent years California taxes have gone up so much that now Californians are among the top five most-taxed residents in the entire country. And still the government is in debt.

But not Texas. There, residents enjoy some of the lower tax rates around the country (including being one of seven states whose residents pay no state income taxes). However, to manage its current debt, Texas leaders are doing two things: a) using tax and regulatory policy to attract more businesses (which provide more government revenue); and b) investing in a hard currency that has traditionally held its value: gold.

Texas is considering opening a gold depository, with $1 billion in bullion stashed inside, as a hedge against currency manipulation, default or other economic calamity. It’s a good idea to have some economic insurance in an era when the national government is going ever further into debt and has a total unfunded liability bill that some say is more than $225 trillion.

Journos who can’t see the writing on the wall

For taking out that economic insurance policy, Texas is being derided by liberal journalists from none other than the economic basket case known as California.

Michael Hiltzik of the Los Angeles Times:

Whether you call them visionaries or call them chuckleheads–or anything in between–you should tip your hat to the Texas legislature and Gov. Greg Abbott, who have now written fears of a fiscal Armageddon into state law. [emphasis added]

How funny. How clever.

And this gem:

Radical conservatives long have cherished the idea of gold as a hedge against Armageddon. The ownership of physical gold is seen as a bulwark against such violations of individual liberty as Franklin Roosevelt’s 1933 order outlawing the hoarding of gold, part of his broader plan to take the country off the gold standard to give him more flexibility in crafting a recovery from the Great Depression.

Except, liberals can also be rather “radical.” And FDR’s socialist economic policies during the Great Depression only served to prolong it.

But hey, when you’re a high-minded left-winger columnist, most of the time it’s just easier to go along with the crowd because you don’t have the courage or the visionary chops to see the writing on the wall.

Sources:

http://www.latimes.com

http://www.statista.com

http://www.foxnews.com

http://www.foxnews.com