We Can Only Afford One, So Choose Wisely: Social Security/Medicare, Cartel Cronyism or Inflation (Central Banking)

It’s easy to quantify the annual cost of Social Security/Medicare, and not so easy to calculate the cost of Cartel Cronyism and Central Bank-created inflation.Cartel cronyism is a hidden tax on the entire economy, as is Central Bank-created inflation.

That makes it easy for the financial-political Oligarchy to continue their skimming operations, because nobody says Cartel Cronyism cost us $1 trillion last year, and central bank skimming (inflation) cost us another $1 trillion.

The stark reality is there are limits on what we as a nation can afford in the long term. Borrowing trillions of dollars annually at low rates of interest creates a magical-thinking illusion that we can just tack on another $10 trillion, or what the hay, make it $100 trillion, and get away with it, because we’ve gotten away with it so far.

This leaves us an equally stark choice: we can only afford one of these three crushing costs:

1. Limited Social Security/Medicare (no nation can afford unlimited anything, including healthcare)

2. Central bank inflation/credit expansion. All central banks desperately want higher inflation, which acts as an economy-wide tax on wage earners whose incomes are not rising along with inflation.

3. Cartel Cronyism You know the drill: regulatory capture, monopolies enforced by the central state, cartels that eliminate competition via absurdly complex regulations imposed by the state, etc.

Correspondent J.I. (M.D.) recently sent me an example of cartel cronyism in the Big Pharma sector:

A lot of people don’t know that if a Big Pharma company makes a pill with a new dose, or new method of administration of an old, generic drug – in the eyes of the FDA it becomes a new, on-patent drug, which no other Big Pharma company can copy, thus setting the stage for making billions with minimal R&D costs.

Naloxone was invented in 1961, and was in standard use when I started my medical training in 1974. It is a terrific drug – within 60 seconds it completely reverses the effects of narcotics, making it a life-saver for folks who’ve overdosed. I have used it many times with great success. So far, so good. Per goodrx.com, I can buy two pre-loaded syringes of naloxone for $34.12 today. There is virtually zero learning curve – it works if injected under the skin, in a muscle, or in a vein. For an untrained person facing an overdose patient, you can just stab the needle up to the hilt into a buttock or shoulder, and push the plunger – it’s that easy. If it’s truly life or death, you can stab it through clothes – sound hard?

Well, kaleo pharmaceuticals have repackaged it in an auto-injecting form, with a little voice-guided thingy – somehow managed to make it a no-copay for folks with health insurance, and you can get it in my area for – are you sitting down? – $3,844.60! That is more than one hundred times the cost of the two pre-loaded syringes.

It MIGHT be worth it if it was really hard to use, and required an auto-injector and voice commands – but it’s easy as pie – I could teach you how to use the pre-loaded syringe in 5 minutes. At a savings of $3,810.48.”

The advert claims “$0 copay for commercially insured patients”. So as long as somebody else pays the $3,844.60–insurers, the government, anybody but the patient–it’s all “free,” right?

Well, actually, no. The soaring cost of cartel cronyism is paid by all of us when the federal government borrows money to pay the bills or insurers are nailed for fraudulent charges, overbilling, needless tests and Big Pharma’s 100-fold cost increases.

Medicare costs are expanding at a rate that far exceeds the GDP growth of the economy which supports Medicare spending.

There is only one end-game to this chart: bankruptcy of the federal state and the nation.

Here’s your central bank in action: credit growth has outstripped tepid GDP growth of the real economy that has to pay interest on all that new debt.

Here’s the problem with central banks seeking higher inflation: costs go up but wages don’t. So wage earners become poorer, and have to trim spending or borrow more to get by or maintain their lifestyle.

So choose wisely, America–you can only afford one: entitlements with some limits, cartel cronyism or central bank credit expansion/inflation.

If you’re having trouble making the choice, start by asking of each option: cui bono–to whose benefit?

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  • Josh Stern

    It’s helpful to think of future medical cost as a kind of theoretical mixture of different components. One component is the future cost to provide the standard of care today. An additional cost is the extra cost, above that, to provide the standard of care of tomorrow. Medical costs have historically risen a lot faster than inflation in large part because the amount of care that is considered “standard of care” has gone way up over time. This includes new treatments/procedures that were previously unknown, reduction of error rates, and “end of life care” for conditions that are not ultimately curable but for which there are options to delay death and/or provide palliative care. The result of continuing to increase the quantity/intensity of “standard of care” much faster than any decreases in cost due to productivity gains is a super inflationary cost for healthcare – it keeps trending toward a bigger and bigger chunk of GDP.

    Conceptually, people shouldn’t go into fits of despair about the above. They are getting something of value for the extra expenditure. But the decision making process that leads to the output “What basic health insurance costs this year” is not a democratic one. It isn’t polling individuals to see what they really want to pay for and what they don’t. The decisions are being made by the self-interested medical, pharmaceutical, medical device, hospital, insurance, and political sectors. The public needs to find a way to enforce a top down set of preferences on the process in order to get the output that best serves the public.

  • jo6pac

    That’s it, the Amerikan govt. can’t get involved in helping it’s citizens it to busy helping the merchants of death rake in the $$$$$$$$$$$$$$$$;)

  • David S

    So many talk about how “wealthy” this country is, and truly we are very productive and do produce a tremendous amount of wealth, but so many are so unbelievably ignorant of the massive amounts of money the government takes from the productive sector and simply wastes or hands over to their big business friends. Thank you for at least pointing to the three massive subcategories. Would you agree that the military industrial complex belongs in the “cartel-cronyism” category? Because most assuredly we are hemorrhaging massive amounts of wealth into the hands of the crony-capitalists that profit from the warfare side of our warfare/welfare economy.

    • Josh Stern

      In cases where clandestine US Intel assets holding elected office, other govt. positions, and executive control of media outlets forming opinion – crony capitalism is literally true to an even greater extent than imagined.

      We could make a big start by passing laws to ban that, and at least hope they are observed. The act itself would raise awareness of the problem.

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