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The Article

More good news: I’ve just learned the U.S. inflation rate fell in November—and at the steepest chart angle in history. I’d noticed the trend in my local supermarket. Food prices, threatening to shoot up through “global warming” (i.e. the vast transfer of grain fields to biofuel production by government subsidies to the latter, thanks to batty environmental ideas), are already coming down. There are specials especially on luxury items, and I can’t remember eating so well. (Perhaps it is just that my cooking has improved.)

There is nothing quite like a fall in demand to make everything—except governments, which do not feel guided by laws of nature—more efficient. We have watched the oil price crash; and yet people continue to act as if this hadn’t happened, and they should still feel shy about driving their SUVs. Environmentalists should be dancing in the streets. Alas, they are never happy.

Those afflicted with envy in its leftward excesses—who long to see the rich brought low, even if the poor must suffer as a consequence—might similarly exult in the spectacle of yesterday’s financial jeunesse dorée going cap in hand for bailouts. Indeed: I’ve read about gilt-edged twentysomethings dropping from their guilded loft apartments right down to street level—all their easy earnings gone suddenly to “money heaven,” and their sparkling jobs to job heaven, too.

They ride down in the elevator, of course, few jump. One of the great myths of 1929 was that leaping stockbrokers were a safety hazard for pedestrians along Wall Street.

I’ve never known a man to kill himself after losing all his money; only after looking at his insurmountable debts.

Our governments are doing what they can to prolong this recession, which might otherwise blow over after a few raging months.

Vast public subsidies, that will take the taxpayer decades to pay off, and cost many times their face value in interest and cumulative administrative costs, are being used to hose down the fire. And the very firms that proved maliciously incompetent are at the front of the line for payment.

It is no surprise that when polled (at least in the U.S.) the people who will have to pay these bills are opposed to the bailouts. They never made $70 an hour on a Big Three auto assembly line, or even bought one of the clunkers it turned out. They don’t understand why they should get the bill.

But Nanny State isn’t listening to them. She believes a falling tide lowers all boats, and she is determined to enforce this theory.

So how about a bailout for the author of what has been revealed as a Ponzi scheme vastly bigger than any of which Charles Ponzi ever dreamed? (Though not the biggest in the history of the world, as misreported in the media: see below.)

Bernard Madoff, the “respectable” former Nasdaq chairman, by his own admission burned through more than $50 billion—and quite possibly twice that; enough to bail out Ecuador—by the traditional Ponzi method of using fresh investments to pay previous investors inflated returns on their money. He did this with a staff consisting of one accountant and one secretary, and he did it for many years, conning some of the most sophisticated investors on Wall Street along with a broad field of “innocent” starlets and glitterati.

Mr. Madoff himself, well-connected in Washington as well as Palm Beach, Florida, through his generous contributions to Democrat Senatorial campaigns, didn’t really benefit from this scheme. He ends with nothing, his clients with everything they pocketed along the way; except, the ones left holding the bag at the final curtain. Many are public charities; they are easy to package in the media as “victims.”

And the same bailout principle designed to save Detroit’s unions by bankrolling management might be applied in this case. Just bail out Mr. Madoff’s Ponzi scheme until the economy improves, and it becomes self-funding again.

Why not? For decades, every government in the Western world has been using current revenues to pay health, unemployment, old-age, and every other kind of “insurance” and “pension” entitlement. This is the core financial principle of the welfare state. It is a Ponzi scheme on a scale vastly beyond even Bernard Madoff’s imaginings. But instead of having the people who conceived and executed this scheme arrested, we have honoured them as great humanitarians and “progressives.”

The authors of what is actually the biggest Ponzi scheme in the history of the world have needed a constantly growing population, earning constantly more dollars per head, being constantly inflated (both the dollars and the heads), to keep their scheme running. And gloriously enough, we have been able to meet these conditions more-or-less continuously since the end of World War II. That is even longer than Mr. Madoff kept his scheme running.

David Warren
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