"Pivot Fervor"
Plus, mounting corruption, armored cars,
DoD 'program increases' and the road to Buenos Aires...
by Bill Bonner
Baltimore, Maryland - "A curious ad appeared on our computer screen this morning: “Armored cars…don’t wait.” An armored car was not something we thought we needed. Is there something we’re missing? Gun sales have been strong for several years. Dan tells us that there are now 125 guns for every 100 men, women, and children in the country. Maybe we need an armored car too…to protect us from guns! And hand grenades. The ad shows a Mercedes 4x4 surviving a bomb attack.
As Argentine economics minister, Luis Caputo, reminds us, the real problem of a wayward, crisis ridden, hyperinflation-bound government is not the choice of personal pronouns, nor funding ‘gender affirming’ surgery, nor even its immigration policies. Instead, it’s the government’s “addiction to fiscal deficits.” Whether it wastes money on welfare or war, weasley misfits or parasitic cronies…doesn’t really matter. What matters is that it spends more than it can afford. Over time, the deficits mount up. The debt from the past drags on the here-and-now spending. Corruption increases. Lawlessness too.
Argentina owes $400 billion it can’t pay. The US owes $34 trillion that it can’t pay either.
“Pivot Fervor”: Inflate or Die, is the choice that confronts them both. Either they continue funding the make-believe economy with more make-believe money. Or watch it die. That’s what this week’s ‘pivot fervor’ is all about; Wall Street expects the Fed to inflate. (And it’s probably right.)
The gauchos are way ahead of us. Inflation is the easier choice for policymakers, with deficits and money-printing, rather than tough budget cuts. But the Argentines have seen what it can do. They’ve watched as it has turned the economy into a nightmare of soaring prices, chaotic exchange rates and financial ‘mistakes’ that undermined the nation’s prosperity and destroyed its middle classes.
Inflation rose over 50% in 1973…and then over 700% in 1976. Between 1974-1983, Argentina’s malcontents – mostly Marxist dreamers – kidnapped rich people…robbed banks…and fought pitched battles with the police and the army. That was when you needed an armored car. Then, a coup d’etat, led by law-and-order generals, in 1976, brought with it a wave of violence against leftist activists, students, and more than a few completely innocent by-standers. As many as 30,000 people are said to have been ‘disappeared,’ with many of their bodies dropped into the ocean.
The generals tried to distract the public by starting a war with Britain, over the Falkland Islands. They were humiliated, lost power and, years after, put on trial. The Junta leader, Jorge Rafael Videla, died in prison many years later.
And now, after 70 years of addiction to deficits, Argentina has entered rehab. Javier Milei aims to kick the habit of overspending. He says he will force the nation to go ‘cold turkey’…not just letting the bubble economy deflate, but cutting it to pieces himself.
Guns Out: The US is not even close. No one worries about fiscal deficits in the US. Already, the federal deficit is headed for $2 trillion for 2024. Do the newspapers shout the alarm? Do the influencers – from the pulpits and podcasts – warn Americans that they had better change course? Do the politicians panic…and rev up the chainsaws?
Nah. They give more money to the gun-makers. ResponsibleStatecraft.org: "Congress stuffs $25 billion into Pentagon contractor stockings." It would seem little elves have added over 1,200 'program increases' to the DoD budget for 2024." It’s that time of year, and despite all the budgetary drama unfolding on Capitol Hill, lawmakers have already finished most of their holiday shopping for their favorite children: Pentagon contractors. Through cryptic “program increases” to the defense budget appropriations for fiscal year 2024, most with no listed author and little to no justification, Congress has added more than $25 billion to the Pentagon’s procurement and research accounts for fiscal year 2024.
In private life, mistakes are corrected – swiftly. Find out for yourself. Tell your wife how much you like her new dress… ‘because it doesn’t make her look so fat.’ Or take all your savings to Las Vegas and ‘invest’ them by playing the slots. Then, on the drive home…be sure to give the finger to guys in big pickups.
Unfit for Office: But chainsaws don’t often work where they are most needed – in the public sector. In America today, there are two million people in jail…and another 3 million ‘under supervision’ by the criminal justice system. But not a single one of them is there because he started a deadly war…wasted millions of the public’s money…or lied to the voters. You can work for Amtrak…or the War on Drugs…spending billions of dollars with nothing to show for it, year after year…and still expect a budget increase next year. You can sit in Congress and vote for every misbegotten, woeful, wasteful piece of legislative claptrap that comes down the pike…and you still might be elected president.
The half-life of the average business start-up is only about three years. Half of all new businesses are history before year number 5. But the half-life of a law, a regulation, an agency, a department…etc…is forever. Or until a revolution, war, hyperinflation, or other calamity blows up the whole system.
This is more than a harmless feature of government. It is the reason governments are such a drag on human progress…and why, if they can get away with it, they create bigger and bigger problems. This is also our guess – very grosso modo – about ‘what went wrong’ in that dreadful 40-year stretch, from 1980 to 2020. And it’s why the market for armored cars may get better."
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