When Your Credit Card Stops Working


What’s the latest? We don’t know. We spent the last couple of days in Florida. Nobody knows anything in Florida. They’re all retired down there. They don’t have to think anymore.

And one of the things they don’t think about very much is the zombie wars. You know what’s happening. The productive sector of our economy is being eaten alive by the unproductive, zombie sector — including many of those retirees in Florida.

Which is probably a good point to make a distinction. There are honest retirees…and zombies. The honest ones worked hard, saved their money…and now they live off the fruits of their own labor.

The dishonest ones live on disability…Social Security…bailouts and government contracts. That is, they live off the fruits of someone else’s labor.

“Hold on, Bill,” we hear you saying. “You can’t condemn a person for living on Social Security. After all, we all pay into the system. It’s not free. You have to earn it.”

Right! And we’re not condemning Social Security recipients. We’re just pointing out that many of them are zombies. They take. They don’t give. Maybe they gave enough already; maybe they didn’t. We don’t know. Down in Florida, it’s hard to tell the zombies from the rest of the population. They shuffle…they drool…they appear to be brain dead. Who knows? A zombie? Or a Republican?

“Isn’t this a strange world we live in,” said our tax accountant last week. “We have six people around a table…spending hours doing something that doesn’t make anyone any better off.”

He was wrong about that. But we know what he meant. We were zombie fighting. What a waste of time. At least for the productive economy and the general wellbeing of the people in it. But it is a very valuable way to spend your time if you’re being attacked by zombies! You have to fight back.

We were fighting back by using subsection 16 b, part 5, paragraphs g-l…against rule number 1,456 as applied to foregone earnings of a limited partnership that invests in unallocated, unamortized, unappealing properties subject to section 3612, as amended in the Tax Act of 1997 and re-amended in subsequent acts and deeds of which we have either lost tract or were totally ignorant all along.

Or something like that.

The zombies want more of our money. So, we use the zombies’ own weapon — the tax code — to protect ourselves. Instead of creating wealth…we are just trying to keep it away from the zombies. Neither zombie nor zombie fighter adds to the overall wealth or prosperity of the world or its people. But heck, you gotta look out for yourself.

There are two methods, or means, and only two, whereby man’s needs and desires can be satisfied: One is the production and exchange of wealth; this is the economic means. The other is uncompensated appropriation of wealth produced by others; this is the political means…

— Alfred J. Nock

In a late, degenerate system — whether it is socialism, capitalism, or whatever — half the population tries to live at the expense of the other half. In America today, they succeed. More than half the people get money from the government.

The other half is forced to spend much of its time trying to keep the zombies at bay. They hire tax accountants to help them avoid taxes. They hire estate lawyers to try to get their wealth to their heirs rather than to the zombies’ heirs. They move from a high tax state to a low-tax state. They dodge. They duck.

But the zombies are everywhere. When they send their children to college they pay a tax to the zombies — the whole educational establishment is subsidized by the feds. Even private schools are excessively expensive thanks to the federal money pumped into the industry.

Same for health care. Every part of it is regulated, prohibited, or supported by the government. A doctor who doesn’t take federal money is practically out of business. One who dares to give the best advice he can — without padding his derriere with insurance…and covering it with over-testing and excessive precautions — runs the risk of bankruptcy. The tort lawyers who control congress have made sure of that. Sooner or later a patient is bound to see an ad on a cross-town bus: “Does Your Doctor Owe You Money? Call 1-800-SHY-STER.”

And don’t forget the financial industry. Bailed out by the feds…subsidized by cheap credit…heavily regulated — as much as a third of every dollar you send to Wall Street is consumed by the zombies…rather than put to work in a productive industry.

And then, in a class of its own, is the “defense” industry. The rest of the zombies are causing the economy to go to hell. The defense industry is likely to get us all sent to hell.

In addition to signing death warrants for people who have never been charged with a crime, much less ever convicted…the Obama administration is now taking credit for starting what industry insiders are calling “cybergeddon.”

The US feds got together with the Israeli feds to create a computer virus which, apparently, completely disables a software system. Then, it put it out to work against as country with which neither nation is at war.

What gives? Is it now okay for groups of hackers to attack whomever they please…when they please? Is Internet vandalism now US policy?

If so, you could hardly fault a collection of clever Iranians…perhaps with the help of Russians, Iraqis, Chinese…who knows…for getting together to launch a counter-attack, could you? And you wouldn’t be surprised to find that they have taken key elements of the US bug, re-engineered it, and sent it right back where it came from, would you?

A Financial Times headline tells us that “the US will rue the day” it started a cyberwar. Here’s why:

One of the enduring characteristics of superpowers is that they always find some way to destroy themselves. Hitler and Bonaparte could have remained masters of all of Europe — perhaps indefinitely. Instead, they found Russia! Japan found Pearl Harbor. And now, Barack Obama has found a new area of warfare where America is most vulnerable and where its historic advantages count for almost nothing.

As to the first point, here is a question: what would happen to you if your credit card stopped working? The ATMs don’t work. You can’t buy anything with a credit card; what do you do? Go to the bank? Forget it. Within hours the banks would be out of cash. You would have no means to buy food.

But so what? There wouldn’t be any food to buy anyway.

America’s dependence on computer systems…and its vulnerability to disruption…was well researched and documented in the run-up to the year 2000. The “Y2K” problem might have brought the whole country to a dead stop.

It didn’t. And now the economy is more vulnerable than it was then. If the computers stop working, the whole system breaks down. Transportation…shipping…shopping — the whole supply chain that keeps us going — stops.

What a great idea, to encourage innovation…and deployment…of computer viruses! It is as if a person who lived in a glass house handed out rocks!

But it is worse. Because the US has huge military advantages. It is able to spend much more money than its rivals. It is able to produce more weapons. It is able to put more firepower into the field…and to blow up more buildings and kill more people.

But on the Internet its advantages are minimal. Money is important. But it is not nearly as important in computer warfare as it is in conventional warfare. This new battlefield gives America’s enemies an advantage. They don’t have to spend $700 billion (most of it wasted on zombie bureaucracy and expensive, but useless, weapons…after all, we are in a late, degenerate period) to compete. Instead, they can put together a small, talented, focused and motivated team.

And then, your credit card will stop working.

Bill Bonner
for The Daily Reckoning

The Daily Reckoning