Hyperinflation is coming to the United States: You're not going to like it

In olden times, middle-class people had checking accounts; and they kept close track of their account balances. No one wanted to inadvertently write a "hot" check that would "bounce" back to them. Oh, the shame! The embarrassment!

Those days are gone. Today, many Americans don't pay much attention to their checking account balances. If they don't have money in their account to buy a suitcase of Miller Lite, they just put their purchase on a credit card.

That's basically what our government is doing. The national debt tripled between 2008 and 2019 and reached about $20 trillion when Trump came into office.

By the third year of Trump's term in office, the national debt had risen to $22 trillion. Last summer, Congress passed a two-year deficit budget at a time when America had a booming economy with historically low unemployment.

Then came the coronavirus pandemic, and our government whipped up more than $2 trillion to deal with that. State and local governments are running massive deficits because tax revenues are down, and the Democrats want to dole out another $1 trillion to send to the states.

So that brings the national debt to what--$24 trillion? Folks, we can never pay back this money, and no one believes we can.

If the federal government can't pay its debts—and it can't—it only has two choices: It can default on its obligations or inflate the money supply.  It will choose inflation, and the consequences won't be pretty.

Inflation, the wise economists tell us, is a way for the rich to steal from the poor. When hyperinflation starts, the people who will be hurt are the elderly living on fixed incomes and young people whose wages won't be enough to pay for the inflated price of necessities like food and rent.

Germany suffered hyperinflation in the 1920s as it struggled to pay war reparations to the Allied powers after World War I.  The German government responded to this onerous burden by printing more money. This triggered hyperinflation that soon drove the value of the German mark to virtually zero. The mark became worth so little that people had to carry baskets of paper currency to pay for their daily needs.

Historians tell us that this period of hyperinflation destroyed the German economy, causing massive hardship for the German people, whose lives devolved into a day-to-day struggle for food. The anger and bitterness that resulted laid the groundwork for Nazism.

Adam Ferguson wrote a book about Germany's inflationary period titled When Money Dies. Ferguson warns us about the existential danger of hyperinflation. "The question to be asked," Ferguson wrote, "is how inflation, however caused, affects a nation: its government, its people, its officials, and its society."

If the experience of Germany is anything to go by, Ferguson cautioned, "then the collapse of a national currency unleashes such greed, violence, unhappiness, and hatred, largely bred from fear, as no society can survive uncrippled and unchanged." In Germany, racial passions were unleashed, and nihilistic sexuality prevailed in 1920s Berlin.

Already, our national politicians make hysterical and groundless charges of racism against their political opponents. State and local governments refuse to abide by federal immigration law even as they demand more federal money to prop up their sagging budgets.  Our elite intellectuals have cast off almost all sexual norms and obsess on transgender bathrooms.

Is contemporary America exactly like Germany in the 1920s? Of course not. But like 1920s Germany, our government is running up debt that it can't repay. Will this lead to a 21^st century Hitler?  Probably not, but our future is definitely going to be unpleasant.

The coronavirus pandemic: Is it time to stock up on canned goods and ammunition?

On the last day of February, I was attending the annual meeting of the Texas State Historical Association in Austin, Texas. I was thinking about history, not the coronavirus.

Today, I am "sheltering in place" in my home in Baton Rouge and 10,000 Louisianians have been diagnosed with COVID-19. As Bob Wills and the Texas Playboys reminded us during the Great Depression, "Time changes everything."

In the twinkle of an eye, the stock market plummeted more than 11,000 points. Retired Americans lost a substantial amount of their saving, which they probably won't recover. The Federal Reserve Bank of St. Louis predicts an unemployment rate of more than 30 percent in the coming months, higher than during the Great Depression.

In my own extended family, four people have lost their jobs. My niece and her husband worked in New Orleans restaurants, and now they are both out of work. They have two small children.

Handguns, shotguns, and assault rifles are flying off the shelves, and some stores have run out of ammunition. A gunshop in my city ran a firearms sale recently, and you could pick up a 9 mm semi-automatic for less than $300.

Is it time to start stockpiling canned goods and ammunition?  I say not yet.

Americans are confident and self-reliant people. Our medical researchers and researchers in Asia and Europe will come up with a vaccine for coronavirus, and then we will all get vaccinated.  I believe we will conquer this virus within a couple of years at the latest.

The economy, however, is another thing entirely. President Trump signed a $2 trillion relief bill intended to head off a Depression.  But our government was running a deficit budget even before the pandemic began, and a $2 trillion bailout by itself won't bring my relatives' jobs back.

For a long time now, Americans have been living like "the road goes on forever, and the party never ends." But the party is over. At the governmental level and the personal level, we've borrowed too much money, and we can't pay it back.

We can take out more credit cards and print more money, but our reckoning day is near. When will it be time to start stocking up on canned goods and ammunition? Perhaps when the California and Illinois pension funds collapse.  Or when China starts dumping U.S. bonds.

Bethune-Cookman University reports $17.8 million operating loss as administrators' salaries go up

Bethune-Cookman University, a Florida HBCU, reported an operating loss of $17.8 million in its most recent tax return. That's a 12-fold increase over the previous year, when it reported a budget deficit of only $1.5 million.  Fitch Ratings downgraded the school's bond rating for the second time in six months. B-CU's bond rating now hovers just above junk status.

Should B-CU tighten its belt and cut expenses to deal with this crisis? Hell no!

According to the Daytona Beach News-Journal, salaries jumped from $41.5 million to $49.2 million in just one year.

Here are the details, quoted verbatim from the Daytona Beach News-Journal article:

• Salaries at the school jumped nearly $8 million, from $41.5 million to $49.2 million, accounting for a large chunk of the increased expenses.

• The school's top leadership took away a combined $2.69 million in compensation--an average of $207,000 for each of the 13 [executive] employees. The previous year, its leadership took in $1.4 million, an average of $175,000 for only eight top executives.

• While his base pay was lowered, [President Edison] Jackson received a raise of $40,000 when additional compensation was factored in, giving him a total salary of nearly $410,000.

• Fifty employees were paid at least $100,000, up from only eight in the previous year.

And there's more. B-CU borrowed $7 million from its endowment funds, about 13 percent of the total. Five million dollars of that amount was to pay--you guessed it--administrative expenses. Meanwhile, its investments suffered a 11 percent loss, even though the stock market was going up.

In short, it appears that B-CU's senior administrators are giving themselves raises while the school's budget deficit spirals out of control.

You may remember that Bethune-Cookman made the news recently when many of its students turned their backs on Secretary of Education Betsy DeVos and booed her when she spoke at the university's spring graduation exercise.

Isn't it remarkable how college students turn their anger on external parties instead of examining the competence of their own institution's leadership? Most of Bethune-Cookman's students have taken out student loans to finance their studies at a university that apparently does not know how to manage its own financial affairs. B-CU's students booed the wrong person at last spring's graduation exercises. They should have been booing President Edison Jackson.

References

Erica L Green. Bethune-Cookman Graduates Greet Betsy DeVos with Turned Backs. New York Times, May 10, 2017.

Scott Jaschick. Large, Growing Losses at Bethune-Cookman. Inside Higher Ed, June 26, 2017.

Seth Robbins. Tax documents show B-CU losses mounting to $17.88 million. Daytona Beach News-Journal, June 24, 2017.

Valerie Straus. Booing students at Betsy DeVos's commencement speech told to shut up or get diplomas sent in mail. Washington Post, May 10, 2017.