A Measure of Government Robbery

I recently received a copy of the Merrill Lynch Advisor with a chart in it comparing the value of $10,000 invested in early January 1997 in each of 30-year Treasury bonds, the S&P 500 stocks, the MSCI World Index of stocks, and the MSCI Emerging Market Index of stocks. The 30-year Treasury bonds were worth $26,488 on 7 October 2008. But, the S&P 500 stocks were only worth $13,449; the MSCI World Index stocks were only worth $12,673; and the MSCI Emerging Market Index stocks were only worth $13,837. This data is actually from Bloomberg Financial Markets.

Until late 2001, the S&P Index stocks were worth more than the Treasury bonds. Since that time, the Treasury bonds have been a better investment, though the S&P almost caught up again with them in 2007. Since then, the value of stocks has taken a horrible hit thanks to erratic and irrational government policies on many fronts and the promises of a president-elect and a Democrat Congress with an enlarged majority.

The fact that Treasury bonds have proven so much better than stocks is an indicator of how much wealth the Federal government has transferred from the private sector to government and of how shaky government policy has made investments in the private sector. The private sector requires an environment in which the law is rather rational and known and its enforcement is reasonable. When whole industries are threatened by a president-elect with bankruptcy, many industries are begging Washington for handouts while others are to be sucked dry with tax increases, some unknown fraction of the richer population is to be saddled with backbreaking taxes, and humans are held hostage to all other animals and to cockeyed theories that the burning of fossil fuels will overheat the planet, only the Master of the Universe appears a safe investment. That, of course, is our tyrannical federal government.

So, my freedom-loving friends, you are challenged by this dilemna: If you ever want to retire, you must buy Treasury bonds, but to do so is to feed the brutal, bloodthirsty beast. I will just have to work until I drop.