I have no trust in the unemployment figure. If it were still calculated
as it was before 1980, unemployment would be between 13% and 19% today.
I have no more confidence in the inflation figures issued by the U.S.
government than I have in the inflation figures published by the Argentinean
government. It is in the government's interest to keep those reported
numbers as low as possible, in part because payments on things like
Social Security are adjusted to inflation. In addition, people in
government think the economy depends more on psychology than reality,
and no one wants to set off a panic. I suggest people panic now, and
beat the last minute rush.
As far as oil is concerned, I believe in the peak oil theory, which
basically says that the cheap, easy light sweet crude has all been
found. Crude is extremely hard to find. At the same time I believe
technology will solve all energy problems—oil is a very simple
compound made out of hydrogen and carbon, essentially. Technology
allows us to create almost anything so there's no reason why we'd
ever run out of oil. Fracking and horizontal drilling will make lots
of hydrocarbons available. The question is at what price?
Accumulating wealth is an important social as well as personal good.
The good to the individuals of accumulating wealth is obvious, but
the social good often goes unrecognized. Put simply, progress requires
capital. Major new undertakings, from hydropower dams to spaceships,
require huge amounts of capital. You need the wealth to accumulate
in private hands to pay for these things. If the world is going to
improve, we need huge pools of capital, intelligently invested. The
goal of government should be to provide police and to adjudicate disputes.
But if world improvement requires huge amounts of capital, who is
better placed to make those intelligent investments: self-serving
wealthy individuals or self-serving governments?
Government is based on force and coercion. Essentially, the power
of government comes out of the barrel of a gun, as Mao Zedong noted.
I do not think that is the proper way for a civilized society to function.
By its nature, government never has and never will be a producer.
It is a consumer. It acquires income by theft. Most rich people, for
example Warren Buffett today and Sam Walton a generation ago, are
not interested in consumption. They are more interested in creating
more capital. It is better to trust the people who are creating more
capital than to trust those in government who do things for political,
not economic reasons.
The government gets revenue three ways. The first is by confiscating
the wealth of citizens through taxes. There are hundreds of different
taxes and they all are quite high right now. The second way is by
borrowing. Governments are incredibly overindebted and uncreditworthy
now and those debts will never be repaid. The third way is by printing
money. They will continue to print money because, number one, it is
now the only way out. Number two, the politicians masquerading as
economists actually think printing is a good way to stimulate the
economy.
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