"That '70s Show (Rerun)"
Soaring inflation, plummeting markets, oil shortages
and tone-deaf politicos...all over again!
by Joel Bowman
Buenos Aires, Argentina - "Oh Lordy! What a week! Captain Powell’s big crash landing... hemorrhaging stock markets... plummeting worker productivity... falling real wages... soaring inflation... and the highest court in the land, leaking like a barbed-wire canoe...Never mind all that, dear reader...
Remember, that time when a distant war, between two foreign adversaries, led to a major oil embargo... when the US economy was “shocked” by a series of bone-headed governmental policies... when America bucked the international monetary system... when inflation was biting hard at home... and when abortion was the kitchen table discussion dividing families across the land?
Younger readers, for whom “way back when” refers to the rollicking, pre-pandemic glory days of the 2010s, may be surprised to learn that there was in fact a precursor to our present day dilemmas. Older Wiser readers will recall, perhaps with a wince, a remarkable decade known as “The Seventies,” in which all of the above events unfolded, almost as a blueprint/harbinger for today.
Half a century has swept under the bridge since Richard Milhous Nixon severed the dollar’s last connective tissue with gold. Said the president to a nation in strife during a special televised address, “We must protect the position of the American dollar as a pillar of monetary stability around the world.” And that, with a straight face! Misty-eyed nostalgics can relive the historical moment through the magic of the Interwebs, right here...
Ostensibly scrapped so as to liberate the greenback from the greedy claws of “international currency speculators,” the end of the Bretton Woods system, in effect, untethered the US dollar from “hard asset” reality, turning it instead into a kind of floating abstraction, a plaything for politicians. Over the course of the ensuing decade, the once-mighty greenback declined by a third. Depending on which figures you use (official, unofficial, anecdotal) the dollar has lost something in the order of 90% of its purchasing power since that fateful T.V. address. (The Visual Capitalist has some nifty charts depicting the ravages of inflation over the past half-century.)
Measured against gold, the dollar has likewise wilted like a windsock on a breathless night. The Midas Metal notched an average close of $40.80 for the year of Our Lord 1971. Even after this past month’s healthy decline (roughly -3%), gold has multiplied 47 times in dollar terms since Nixon slammed the exchange window shut. “Pillar of monetary stability” indeed!
But the decade that American novelist Tom Wolfe referred to as the “Me Decade” (what would he say about today’s iGeneration?!) was only just getting going. So, too, were the prefigurations to our present day maladies...
The Sinai Peninsula and the Golan Heights saw most of the action in what became known as the Yom Kippur War (also the Ramadan War, the October War, the 1973 Arab-Israeli War, etcetera). What was at once a local, territorial conflict in a place most Americans could not locate on a map soon ballooned (one is thankful not to use the word “mushroomed”) into a kind of post-Vietnam proxy war for the world’s two nuclear-armed superpowers.
Unfriendly Blowback: One consequence of the war, which brought the conflict home to roost for an otherwise distracted public, was the Arab oil embargo of 1973. Domestic (American) production had been in steady decline since 1969, with supply unable to keep pace with growing demand from new vehicles. The U.S was already importing almost a million barrels per day when the Organization of Arab Petroleum Exporting Countries (OAPEC), led by Saudi Arabia, announced it would no longer supply “unfriendly nations.”
Prices rose 300% (from US$3 per barrel to $US12 per barrel) between October 1973 and March 1974, when the embargo ended. The subsequent recession, which lasted 16 months, ushered in an era of double-digit inflation such as America had not seen in a generation (going all the way back to WWII). High prices stuck to the economy like beetroot on a bedsheet and would smother any hope of a recovery for the rest of the dismal decade.
Perhaps all this is beginning to sound eerily familiar? A foreign war drawing in nuclear powers... retaliation in the form of energy embargos for “unfriendly nations”... a bifurcation of the global monetary system (see A Golden Ruble) persistently high inflation (CPI currently boiling over at 8.5%)... a contracting economy (GDP was MINUS 1.4% for Q1, 2022) politicians speaking out the side of their mouths... if they can string a coherent sentence together at all...and now this week’s revelation that confidence in America’s bedrock institutions is eroding faster than you can say “Watergate” three times fast...
Long has the executive branch of the US government been populated by clowns and knaves. One might argue over the name of the last true statesman to occupy the Oval Office, but he is almost certainly not to be found among the quick. (Which only barely discounts the current resident.)
Similarly has the legislative branch been recognized as the rat’s nest of duplicity, corruption, empty posturing and, failing all else, incompetence that it is. A far cry from what Madison, Hamilton, Jay, Jefferson et al. envisioned, Congress has degenerated into the kind of institution that gives the term “ineptocracy” its very meaning.
Blind Justice: But now, further testing Shakespeare’s famous words, that “past is prologue,” we witness a crack in the edifice of what may well be the final vestige of American institutional exceptionalism: A leak from the Supreme Court. (There have been whispers before, yes... but as Politico, the outlet that broke the story, observed: “No draft decision in the modern history of the court has been disclosed publicly while a case was still pending.”)
Whatever one’s political persuasion, however grave the matter under consideration, time-honored understanding was that one did not talk out of school when it came to the proceedings of the duly venerated SCOTUS. As Lady Justitia be blind, so shall her clerks be mute while she deliberates on the laws of the land. Characterized by a collegiate respect for differing opinions, and robust debate between them, the judicial branch was always the place where respect for the institution itself was held above partisan differences, lest trust in the foundation upon which the republic itself rests be shaken.
So as that most weighty of subjects, the balance between life and liberty, once again descends upon the nation’s shoulders, as it did a half a century ago, one is left to wonder: Without trust in its great institutions to guide it through tumultuous times, on what will the Founder’s bold experiment rely to carry the day?
Ah, but all is not lost, dear reader. After enduring all manner of nonsensical, nutcase nomenclature over the past few years – see “birthing people,” “chestfeeders,” “gestational parents” and even “cervix owners” – at least the subject of pregnancy has finally been returned to the highly-cancelable, long-forgotten, near-anachronistic domain of (millennial trigger warning here)...women!
Whatever you do, just don’t tell this poor bloke...
And that’ll do for this week’s Sunday Sesh, dear reader. As always, drop any comments in the section below and please feel free to share this post with your mates. Other than that, keep an eye out for your Fatal Conceits podcast, which we’ll be mailing (with a full transcript) separately.
Bill will be back with his regular missives from tomorrow. In the meantime, we’re off to treat wifey to a Mother’s Day lunch at La Ferneteria with dear daughter and afterwards to the Museo Nacional Belles Artes for a spot of culture. Until next time...Cheers."
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