It is perhaps the saddest story ever told and it has been told over and over again for millennia.  It is the never-ending urge to dismantle capitalism after it has created great amounts of wealth.

This has been going on since Roman times as can be seen in this quote from Cicero circa 50 B.C.:

"The budget should be balanced,the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

Sounds a lot like what needs to happen in the US today, no? In Rome they had economic freedom and it created a massive amount of wealth and innovation.  The Government that grew up around it, however, slowly drained and warped the economic climate to the point where people, as many in the US are today, were unproductive and dependent upon the state for their survival.  Soon after, it completely collapsed... as will the US.

CHINA - FROM COMMUNISM TO CAPITALISM TO SOCIALISM AGAIN

China has been the most modern case-study of this reversion from communism, back to capitalism and again back to communism.  Under Mao's "Great Leap Forward" (government program names never cease to amaze in how egregiously opposite they are to the stated goal) tens of millions of Chinese died of starvation and the once proud Chinese culture was decimated to the point of subsistence living.

Finally, by 1976, it collapsed.  Since then the Chinese Government has had to allow some economic freedoms.  Either that, or starve the entire country to death.

The magic of economic freedom did its work incredibly quickly in China just as it did with Japan and Germany after World War II where it rebuilt two completely destroyed nations into the powerhouses they became by the 1980s.

Within the span of a few decades China went from being a nation of rice farmers to being a global economic powerhouse and is now the biggest creditor to the US - who has been going in the exact opposite direction.

But, now that so many Chinese have become so rich comes the backlash.  The outcry that they need to spread the wealth.  How quickly they forget what "spreading the wealth" did during Mao's time.

According to this news article, too many of China's new rich are driving around in flashy cars and have nice things.  This makes other people who have not been as productive "feel bad".  So, once again, the Government has to come in and play Robin Hood.  Steal from the rich and give to the poor.

The Chinese government has even announced plans to implement a “seniors’ pension scheme” - along with improved social health care services - by the end of 2015.

If history is any indication, China will keep treading back to socialism until all the wealth has been shared and it will collapse yet again.

THE US - FROM CAPITALISM TO SOCIALISM

The US has been, by far, the most dynamic and productive country of the last century.  Nothing comes close.  The main reason being that more than any other country during the 20th century, the US railed against socialism.  It wasn't perfect in this regard.  Not at all.  But it still held more true to capitalism in the 20th century than any other country.

The creation of the Federal Reserve in 1913 (central banks are one of the main tenets of communism) began the long, slow road down, however.  By 1933 the US had already gone bankrupt and had to confiscate gold to survive.  Then, again, by 1971 they were bankrupt again and broke off any link from gold in order to survive a few more decades.

Policies such as FDR's "New Deal" and LBJ's "Great Society" helped to bankrupt the nation along the way.  And today easily the most socialist President in the history of the United States presides.

Not that it even matters that much.  The following chart provided by GoldSwitzerland.com shows that things have been going in the wrong direction steadily for decades.

After decades of the government (which destroys wealth) becoming a larger part of the economy while the private sector (the one that creates wealth) shrinks, this graph is about to complete what dirty minded technical analysts refer to as a "phallic" chart pattern.  The "shaft" part of the formation began in the 1960s and things turned even worse after the "head" formation began to be traced out after the 1990s.

Now with government spending about to cross over and become more of the economy than private spending it will complete the phallic formation.  It's only fitting that this chart has drawn out the shape of a penis after all these decades because now, due to all this government involvement in the economy, the US is good and truly f**ked.

Jeff Berwick
Chief Editor
The Dollar Vigilante

The Dollar Vigilante is a free-market financial newsletter focused on covering all aspects of the ongoing financial collapse.  The newsletter has news, information and analysis on investments for safety and for profit during the collapse including investments in gold, silver, energy and agriculture commodities and publicly traded stocks.  As well, the newsletter covers other aspects including expatriation, both financially and physically and news and info on health, safety and other ways to survive the coming collapse of the US Dollar safely and comfortably.  You can sign up to receive our FREE monthly newsletter,  our Basic Newsletter ($15/month) or our Full Newsletter ($25/month) with specific stock recommendations and updates at our Subscriptions page on our website at DollarVigilante.com.

Copyright © 2011 Jeff Berwick