"21st Century Debacle"
Two decades of debt, deficits, war and inflation...
by Bill Bonner
If at first you don’t succeed, try again. Then, give up.
No point in being a damned fool about it.
~ W.C. Fields
Baltimore, Maryland - "Markets were closed yesterday…we spent the day at home, gentle snow floating down in tiny flakes. And today, the headline news from Bloomberg: "Trump Trounces Rivals, Advances Toward Biden Rematch."
Last week, we were guessing about the real challenges faced by the US empire. What will really affect our wealth, security and happiness? The Houthis? Nah…they aren’t going to make any difference. The war between Russia and the Ukraine? Nah…it doesn’t really matter who wins. AI? Old people? Crime? Immigrants? Racism? White Supremacy? Global warming? Inequality? Most are distractions…made up threats, designed to make people afraid, so they will grant more power to the elite to protect them.
How about the race for the White House, between (currently) two geezers? Nope again. Both of them have already shown us who they are and what they will do. Whichever one wins, the powers-that-be will remain the powers-that-are…agencies and departments will continue to function as they do now…deficits and wars will continue. Voters must know what they got during the last 8 years; the puzzling thing is that they seem to want more of it.
The Empire’s Twin Threats: What are the real threats America faces? We don’t have to look very hard; they’re readily available in the history books. And they can be reduced to two main ones – war and bankruptcy (inflation). Making war requires enemies; eventually they humiliate you. Overspending, meanwhile, wrecks your economy. Wars cost money; they have to be financed somehow. Taxes are raised. Money is borrowed. And then, the deciders turn to inflation. Deficits become routine. Real interest rates rise, to make it easier for the feds to borrow. Investors, fearing inflation and eager to take advantage of higher rates in the real economy, withdraw from Fed debt auctions. That leaves the central bank as the only source of funds…and the printing press as the only way it can get them.
But wait, there’s always more to the story. The whole point of having deciders, is that the elites can make better decisions, on behalf of the public, than the common man. They’ve demonstrated their superiority by becoming richer and more powerful…better educated…with more responsible positions than the rest of us. The great Italian economist, Wilfred Pareto, spelled it out. The top 20% decide. The bottom 80% go along. Always. Everywhere.
The elite are elected to Congress and appointed to various posts in the bureaucracy. They’re also on the boards of large corporations…they teach in prestigious universities…and write magazine articles and books that tell the rest of us what to think. That’s why they’re the deciders. But why, then, did they make some of the worst calls in American history, by going to war in the Middle East…and taking 20 years to get out of it? And by adding $29 trillion to US debt?
The “America Last” Policy: At the beginning of the 21st century, the deciders had a choice. They could have learned their lessons from Korea and Vietnam…they could have just said ‘no’ to more pointless wars. They could have decided to ‘give peace a chance;’ they could have adopted an “America First” policy.
They might have learned something from America’s economic history too. Lyndon Johnson’s ‘guns and butter’ spending set the US up for the recession and inflation of the 1970s. There is no law that says we have to go deeper and deeper into debt. Our $34 trillion in debt? It’s not fate…it’s a choice made by the deciders.
They could have simply decided to do what every householder in America does – balance the budget. No more deficits. Just limit spending to what they could raise in taxes. The economy was very healthy at the end of the 20th century. It was the envy of the world. Tax receipts were more than enough to fund important federal activities. No grand acts of genius or grandstanding heroics were required. No superhuman show of discipline was necessary. All they had to do was not do something stupid. They had to balance the budget and avoid unnecessary ‘wars of choice.’ If they had only done those two simple things, our debt today would be only around $5 trillion, not $34 trillion…we wouldn’t have to borrow trillions more just to pay the interest on it…and we wouldn’t be facing a catastrophic debt crisis.
Alas, they failed miserably…Bush, Obama, Trump and Biden – from 1999 to 2024. And now, two of the deciders who failed most spectacularly are the frontrunners for the White House 2025-2029. If elected, they will surely fail again."
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