"Nothing for Something"
One trillion in interest payments per year...
just to keep pace with the past.
by Bill Bonner
"What a lousy way to thank me
After how I've tried,
Ah, don't you think I've got a right to cry..."
~ Marty Robbins
Youghal, Ireland - "Nowt comes from nowt. Every person on the planet has a mother and a father. And every thing had some other thing come before it, opening the door for it and making introductions. So it comes to be that when a generation of Americans got something for nothing, the next generation got nothing for something. It must pay $1 trillion-a-year just to keep up with the interest on the things their parents and grandparents consumed.
The young are getting tired of being ripped off. They are beginning to revolt. That may be the real meaning of Milei’s victory in Argentina. Milei ‘came out of nowhere’ to clinch the top job, running against one of the savviest, slickest, most professional politicians in Argentine history – Sergio Massa. Stephen Kinzer, writing in the Boston Globe: "The victory of Javier Milei, until recently a little-known economist who had served only a single term in Congress, is a symptom of global anger at sclerotic political elites. For decades, Argentina has been run by a corrupt and self-interested clique that has failed to provide the nation’s citizens with security or prosperity. This month’s election was a rebellion against that elite, which Milei calls “the caste.”
Milei’s victory is no aberration. Opposition candidates have won 17 of the 18 elections held in Latin America over the last four years. That same impulse is palpable in the United States. This is a main reason Donald Trump defeated Hillary Clinton in 2016, and why he may win again next year. When an entrenched political class runs out of energy and loses voter confidence, more people adopt a “throw the bums out” attitude.
The Political Caste: Argentina has no real immigration problem. Its problems are financial. The ‘political caste’ has spent too much money and fouled the economy. The US follows along. Today’s dollar is worth only about 55 cents, compared to a dollar in 1999. Some ordinary people have kept up with it. Many have fallen behind. But for all people working for wages, it has been a struggle. A lousy way to thank them all.
‘Inflation,’ though difficult to explain or control, is the price we pay for letting a corrupt and dissolute elite tell us what to do. They told us we should invade Iraq…fight in Afghanistan…support conflicts all around the edges of the empire…and boost the economy by printing money to increase ‘demand.’ Of course, the new demand was as phony as the fake money and the fake interest rates. But it had its effect; more money bought more things…now rusting, collecting dust, used up and derelict. The new money also increased prices for the assets that the deciders owned…and for the products that the non-deciders now want to buy.
The things we needed to buy with money we didn’t have can be put into three categories – the absurd, the useless, and the dangerous. Sanctions…trade restrictions…subsidies to selected industries…trillions for extra ‘defense’ … diversity programs…. sex change operations (even in the military)…we needed to fight drugs, poverty, global warming, urban decay, misinformation, infection, white supremacy and anti-semitism. We needed to do this….we needed to do that…to find those ‘weapons of mass destruction’…or to shut down the economy for ‘two weeks to stop the spread’…– and everything had a price tag.
Mo’ Money: Between 1999 and 2023, the Fed ‘printed’ nearly $8.5 trillion in new money to pay for these things. That, along with borrowing from private sources brought US debt to $33.7 trillion today. Growth rates sagged. Most people didn’t get richer…they got poorer. They sank deeper and deeper into a sea of debt – public and private….with interest rates rising to 21% on credit cards and 4.4% on the best credits in the world – US Treasury bonds.
Is it any wonder that the masses – especially the young – are in revolt? Dragging the burden of the past….how will they ever afford a proper future? They are among the malleable millions…the multitudes who pay taxes, count themselves lucky to have a paycheck and don’t ask too many questions. And now, they may go through their entire lives trying to pay for the things that only exist in hollowed out husks and discredited slogans...things their parents thought were necessary, but were unwilling to pay for. Haven’t they got the right to burn a bus or two?
Already, the cost of the interest on the US debt comes to aout $10,000 per family per year. Soon, the debt will pass $40 trillion…and then $50 trillion (there is no plan to cut it back). Extra borrowing will have to be met with higher interest rates and more money printing. At 8% interest, and $50 trillion outstanding, the interest charge will come to about $3 trillion per year (it is not all refinanced at once). That will be $30,000 per family.
Revolt of the Masses: There will be no question of paying it or even keeping up with it. Then, we will be with the gauchos…with collapsing public services…wallpaper money…galloping poverty…and voters ready for a change. We are seeing the cutting edge of this ‘revolt of the masses’… where else – in Argentina, itself. Javier Milei is unlike Donald Trump, in that he actually has ideas about how an economy works and real plans for how to rescue it from 70 years of crony mismanagement.
Normally, Milei would be as unelectable…well…as Trump himself. He used to teach tantric sex. We’re not sure what that is, but it sounds like it might be fun. He also believes his dead dog told him that he would become president. He is not a mainstream politician, but a ‘marginal’ one. And now, there he is in Argentina’s highest office. Does the US have its own Milei…stalking the 2024 election? Maybe. Stay tuned…"
Note from the Research Desk: The interest payments on the national debt are close to $1 trillion a year (see below). But that’s not the only rising cost since the pandemic. According a report published earlier this week in Bloomberg, it now costs $119.27 for a family to buy the same goods and services it cost just $100 to buy in 2020. Remember that next time someone tells you inflation is dead. Real people live in a world where the actual price level (higher) matters more than the rate of change (still high).
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