The disastrous California wildfires are already one of the costliest disasters in U.S. history. Thanks to a combination of bureaucratic incompetence and neglect. Worst of all, guess who’s paying the bill?
By Peter Reagan
A personal story today. It will have relevance to you, though. Just stick with me a moment.
As you may (or may not) know, I live in LA Not “Lower Alabama” as Zig Ziglar used to joke, but Los Angeles, California.
That’s right, land of the wildfires. Especially recently.
So, the current situation is personal to me. (By the way, thank you for all your messages and prayers – I can’t tell you how much I appreciate them.)
This story is also relevant to you, too, though, you may not, yet, understand how.
What’s really going on in California?
Despite the politics, setting aside the taxes, California is an interesting place to live. The state’s economy is bigger than most countries (an independent CA would be the 5th largest economy in the world!) California would be a global economic power unto itself – if it weren’t already part of the United States.
And maybe that massive economic power created massive arrogance on the part of the politicians and bureaucrats in charge which often leads to (or may coexist with) spectacular incompetence.
The thing that you need to remember, though, is that when it comes to politicians and government bureaucrats being equally arrogant and incompetent, we’re far from unique.
Their nonsense happens at all levels of government, so, it affects you, too, wherever you’re reading this from.
You may be wondering at this point, “What’s this got to do with the wildfires?”
And that’s a great question.
The first thing that you need to realize about government is that, no matter how well-intentioned that they may be…
Governments don’t understand the idea of unintended consequences
Or, if I’m being charitable, they rarely understand them.
The problem is that you and I and every other American have to live with those unintended consequences.
What’s that? You need an example?
Well, how about an example that is both current and seven years old from MoJo? Elizabeth Shogren writes:
“We have 100 years of [suppression of small natural fires] that has led to this huge accumulation of fuel loads, just dead and downed debris from trees and plant material in our forests, and in our woodlands,” says [fire ecologist Sasha] Berleman. “As a result of that, our forests and woodlands are not healthy, and we’re getting more catastrophic fire behavior than we would otherwise.”
This was written in 2017, but this is exactly what’s continued to happen in California to this day.
Put simply, the California bureaucracy hasn’t allowed natural fires to burn the way that they would in the absence of human intervention. The small stuff that burns so easily now isn’t burning off in small, manageable fires when they are only in small quantities.
The government prevented the natural cycles by putting out manageable fires. I’m sure they felt like heroes in the moment. However, the result is today’s wildfires are much worse.
The results of short-term thinking
You don’t need to be a rocket scientist to understand unintended consequences. It’s probably the result of short-term thinking. When you can’t see beyond the next election cycle, well, you’re going to focus on short-term results because long-term you’re no longer an elected official.
Think of the way that the government intervenes in the economy in all kinds of ways “for our good,” of course. Which has such “wonderful” consequences as increasing inflation.
For example, remember how the “Inflation Reduction Act” was supposed to lower the crazy inflation over the last few years? How did that work out? D.W. MacKenzie, writing for the Mises Institute notes that Biden wants credit for:
…an Inflation Reduction Act that did nothing to affect the rate of inflation.
The Biden administration, using the excuse of “stimulating” the economy, spent massive amounts of money. The national debt grew by $8 trillion during Biden’s presidency! That’s not spending, that’s only debt.
The short-term consequences were checks in the mail – free money. Tax credits. Massive business incentives.
The longer-term consequences? Well, you and I see them every time we shop for groceries.
These misguided attempts to reduce inflation actually made the situation worse. Not immediately, but pretty close to it!
Short-sighted thinking without any awareness of the long-term impact. It’s the same short-sightedness the California government applied to the wildfires, well, it looks a lot like today’s economic troubles.
If one example wasn’t enough to make the point…
… there’s also the fact that the government in California diverted massive amounts of water (in a state that already has water shortage issues) to the ocean for environmental reasons…
… leaving a lack of water to fight fires in California. Even though the fires are known to happen regularly (thus causing a different type of environmental disaster).
Or how about how the city of Los Angeles slashed the fire department’s budget by $17.6 million and also donated fire department equipment including a fire truck that we could use right now? And who did they donate that fire truck to? Another country. I’m not kidding.
Listen, fire trucks are important. Every community should have access to one! But I’d really like to have that LAFD truck back right now. That’s my tax dollars that got donated overseas.
Look, I could go on and on about how the whole situation. I am pretty worked up about it, after all. But that’s not even the point that you need to get about this ridiculous situation.
Not by a long shot.
When government screws up, we pay for it
First, you need to understand that you will be paying for the mismanagement of government resources that led to this wildfire being so terrible.
Yes, even those of you who don’t live in California.
Their short sightedness will be paid for out of your pocket. Elise Hammond with CNN writes,
The federal government is increasing its funding to assist with the response to the wildfires in Los Angeles “to 100%,” President Joe Biden said on Thursday.
“I’m announcing that the federal government will cover 100% of the cost for 180 days,” Biden said during a meeting in the White House.
How nice of him to volunteer us to pay for the California government’s mistake.
And make no mistake: Paying for six months of the response to this giant fire will cost a lot. My back-of-the-envelope calculation puts the total at $5 billion, but that’s a barely-educated guess.
Of course, since the federal government’s spending has exceeded its income for the last 24 years, it will be all deficit spending. Deficit spending is the #1 cause of dollar devaluation, simply because it directly increases the money supply.
Maybe you’d like to help needy families whose homes have been destroyed? If so, here’s a list of organizations you should consider supporting. (I’ve made my donation already – of my own free will.)
That was my decision. Your decision may be different! The point is, you get to make your own decision.
But when the government steps in and picks up the check, never ever forget who’s really paying the bill.
Your financial future: Whose hands is it in?
I like to think of myself as an independent person who makes decisions for myself. (I expect you’re similar.)
When it comes to my family finances, I have a budget. I manage spending. I avoid going into debt for things I want when we don’t really need them. (Sometimes, that means making tough decisions.) I save for the future, for myself and my family. I work my butt off to create value for my employer – in exchange, Birch Gold Group has seen fit to increase my pay regularly. I choose how to invest my short- and long-term savings.
For all these reasons, I do have a certain level of control.
What I don’t control is what drives me nuts. I don’t control the purchasing power of my dollars.
That’s in the hands of the federal government. Our friends in Congress, who have only successfully passed budgeting and spending bills four times over the last fifty years. Who added $8 trillion to the national debt in just four years.
The LA-area wildfires are a tragedy. They’re also a farce. Here’s why:
The bureaucrats whose incompetence caused the Los Angeles fire to become a national emergency are exactly the same type of people who control the future of our dollars.
You don’t want these people controlling wilderness management in your location! Let alone your financial future.
That’s why you absolutely must consider diversifying your savings with stores of value that are immune to the government’s incompetence. You want to have something left after they’re done “fixing” the economy.
And, in my opinion, the best asset to diversify and protect your savings is the same as it’s always been: Physical precious metals. Like I said before, the right decision for me may not be the right decision for you. But I believe you have the right to make that decision for yourself.
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