The U.S. Department of Commerce said on Monday it had ordered Taiwan Semiconductor Manufacturing Co. (TSMC) to $6.6 billion CHIPS Act grants to manufacture computer microchips in Phoenix, Arizona. TSMC will also receive up to $5 billion in low-cost government loans.
In return, TSMC will increase its planned investment from $40 billion to $65 billion and add a third manufacturing facility in Arizona by 2030. The company will produce the world’s most advanced 2-nanometer technology at the second facility starting in 2028.
The Department of Commerce estimates that this development will create 6,000 long-term manufacturing jobs and 20,000 short-term construction jobs. As the AI arms race rapidly escalates, semiconductor manufacturing on U.S. soil may become strategically essential. Nevertheless, there are ongoing costs to using U.S. taxpayer dollars to subsidize industries (in this case, foreign companies).
This is just one of many examples of how the American economy no longer functions through free and reciprocal exchanges between individual citizens in a market place. It is subject to extreme intervention by government planners.
These planners include members of Congress. And they pass outrageous spending bills that keep Americans in debt for life. Friendship contracts. Pork barrel waste. Manufacturing subsidies. Social transfer payments. All of these costs are added to the national debt ledger.
For example, the recent $1.2 trillion spending bill is over 1,000 pages long and includes massive contributions to a variety of departments, including the Departments of Defense, Homeland Security, Labor, Health and Human Services, Education, and State.
Are these departments actually using this money for the greater good?
It’s not capitalism
The effect of all this government spending is to twist the economy in strange and unnatural ways. Money is extracted from people and businesses who earn money by providing valuable goods and services. It is then injected into agencies, departments, and government contractors who would otherwise not be able to stand on their own two feet.
To be clear, this economic system has nothing to do with capitalism. Rather, it is a centrally planned economy that feeds on the fruits of capitalism, trampling on individual liberty and personal freedom.
Call it favoritism. Call it fascism. Call it tyranny. Call it what you want, but don’t confuse the current malaise with the failure of free-market capitalism.
Huge government spending bills have nothing to do with free market capitalism. And they have everything to do with rising consumer prices. But that’s not all.
While Congressmen are handing out money like candy to freshen breath, another beast called the central planner is devouring people’s labor and extracting value for the benefit of its member banks. We are talking about the Federal Reserve, the central banking system of the United States.
This cartel provides a tremendous benefit to the big banks. When the economy expands, the bankers make a significant profit. But when the economy contracts, often as a result of reckless lending by the bankers, the Fed bails out the banks with credit created out of thin air. This has the effect of passing the losses on to the public.
The U.S. government has added $29 trillion in new debt since 2000. How was all this debt possible? How was it financed at such low interest rates?
Simply put, all of this was made possible by the expansion of the Federal Reserve’s balance sheet.
Decrease in currency value
Still, there is no such thing as a free lunch, and even in a fiat currency system where new money and credits are created with a few keystrokes, there are limits.
The massive money printing Saturnalia of the coronavirus failure pushed consumer price inflation to its highest level in 40 years in mid-2022. And prices have continued to rise ever since. And the results are making life incredibly unpleasant for countless people.
This week’s CPI Report Consumer prices rose 0.4% in March, up 3.5% over the past 12 months, the Fed said. The 3.5% annual CPI increase reported in March is 75% higher than the Fed’s arbitrary 2% inflation target.
However, looking back only one year gives an incomplete picture of consumer price inflation. Remember that the 3.5% increase over the past 12 months is on top of the increase over the previous few years. So it is appropriate to look back a few years to get a better sense of the rampant currency depreciation that we have been experiencing.
The world changed dramatically in March 2020 when governments shut down the economy and started sending out stimulus checks. We all went through it. And we continue to experience the aftermath. So let’s look back.
Since the coronavirus madness began in March 2020, the CPI has increased by: From 258.115 to 312.332. That’s a 21% increase. Has your income kept pace with inflation over the past four years?
If the answer is no, you did nothing wrong. You are simply suffering the consequences of central planners who are hell-bent on destroying the currency. By implication, you are in a worse position than you were four years ago.
Moreover, all of the above figures are courtesy of the Bureau of Labor Statistics, and therefore are understated to hide government failures. By our estimates, consumer prices have risen about twice (40%) over the past four years as reported by the BLS.
Gold is doing its job
The rapid rise in consumer prices is the result of the joint money printing operation of the Federal Reserve and the Treasury. In other words, the rise in consumer prices is an expression of too much artificial stimulation. Moreover, the entire edifice of economy and finance depends on it. If you take it away, it will collapse.
Central bankers like Federal Reserve Chairman Jerome Powell know they have only two options: keep stimulating the dollar until it loses all value and society collapses into chaos and disorder, or stop the simulation and cause a complete credit collapse and 1930s-style depression.
Neither scenario is particularly appealing. But as you probably know, the choice has already been made. The Fed will continue to inflate and devalue the dollar, managing a slow burn toward an eventual hyperinflationary collapse.
With a little luck, the Fed could delay this for a few more years. The goal is to delay Doomsday until the baby boomers have emptied the planet. Then the younger generation will clean up the mess.
Meanwhile, chaos is already brewing in many places. High consumer prices. Unsustainable debt burdens. Widening income and wealth inequality. Massive urban homeless camps. Border chaos.
These are all hallmarks of an economy with terrible fiscal and monetary policies and serious corruption and fraud. But you don’t have to be a victim.
Physical gold and silver have provided wealth protection in times of turmoil for thousands of years. As the effects of decades of currency devaluation and corruption continue to affect the United States, it will undoubtedly continue to provide this vital service.
Gold is up more than 15% in dollar terms so far this year. Silver is up about 20% over the same period.
Actually, gold and silver are doing their job. Was there any doubt that they wouldn’t?
[Editor’s note: It really is amazing how just a few simple contrary decisions can lead to life-changing wealth. And right now, at this very moment, I’m preparing to make a contrary decision once again. >> And I’d like to show you how you can too.]
thank you,
minnesota gordon
For Economic Prism
The return to gold is playing its part in the economic prism
