Fire at the water tower, Place du Palais Royal,
February 24, 1848, By Eugéne Hagnauer.
"Revolt of the Masses"
Are "the people" finally losing faith in the infinite wisdom of their deciders?
by Bill Bonner
"Workers of the world, unite.
You have nothing to lose but your chains."
~ Karl Marx
Baltimore, Maryland - "Among the jitter and jive from Davos this week comes this gem. The elites are beginning to worry about a revolt of the masses. CNBC reports: "A growing detachment between political leaders and populations presents the biggest risk in a busy election year, according to Allianz CEO Oliver Bäte. The Allianz Risk Barometer published this month noted that political risk was already at a five-year high in 2023, with some 100 countries considered at high or extreme risk of civil unrest. Asked on the sidelines of the World Economic Forum in Davos, Switzerland, on Tuesday what he considers the main global risk at present, Bäte pointed to a lack of trust from populations in their governments across major democracies..."
Why might The People lose faith in their deciders? What went wrong in the 21st century’ is becoming a popular subject for historians. Here’s Ed Snowden, now ‘on the lam’ in Moscow: "If I had to explain how the American Century collapsed in just 3 points, I might say: * Impoverishing the worker via union-busting & off-shoring * Unleashing the state by abandoning the gold standard * Continuously erasing essential liberties post-9/11."
“Exorbitant Privilege”: Snowden gets 2 out of 3, which is not bad. The end of the gold standard allowed government spending, debt, and cockamamie projects to increase enormously. And, he’s right that the feds took advantage of a fearful population, post-9/11, to grab more power in the Patriot Act. Union busting and off-shoring, too, may have contributed to lower compensation for the working classes, but the real source of the trouble was the funny money itself. Rather than make things and trade with other producers, Americans could buy on credit.
That is the benefit of what Giscard d’Estaing called the ‘exorbitant privilege’ of having the world’s reserve currency. After 1971, other countries took America’s green paper and treated it as real money.
But there was a big downside. The situation was a little like that of Spain after the conquistadores had seized the gold of Mexico and Peru. Ships laden with gold arrived in Spanish ports. The Spaniards were rich. From our book, "Empire of Debt" (written with Addison Wiggin…and soon to be re-released): "…the easy money from the new territories undermined honest industry. In the bubble economy of the early 16th century, Spain developed a trade deficit similar to that of the United States today. People took their money and bought goods from abroad. By the time the New World mined petered out, the Spanish were bankrupt. The Spanish government defaulted on its loans in 1557. 1575, 1607, 1627 and 1647."
Greedy Hands: An honest economy functions as people exchange goods and services for money…and use the money to buy goods and services from others. They all become better off, together. Distort the money and you distort the whole transaction…and sour the relationship between buyers and sellers. Some people no longer have to give to get…they just have to get their hands on this cheap ‘money.’ The new money, created by the Fed passed through Wall Street. Much of it stuck to greedy hands.
No surprise then, that in the period 2009 to 2023, the fellow with a hedge fund…an IPO…a SPAC…venture capital…or just an investment portfolio… watched his stocks rise by 87% after inflation. The poor working stiff, on the other hand, put his savings into a bank account, collected almost no interest…and its real value fell by 45%. But now, America’s paper money is petering out too. The feds can still print it, but the inflation cat is out of the bag. More printing leads to higher prices and higher interest rates.
And now, the workers of the world are losing faith in their leaders. Why? Because the decisions made by the deciders were almost unbelievably bad. Iraq, Afghanistan, Patriot Act, Wall Street bailout, zero interest rates policy for 10 years, stimmies, lockdowns, Inflation Reduction Act…in every instance doing nothing would have been far preferable. And thanks to this deranged activism, by 2024, the feds had added $29 trillion to the US national debt. Are the elites stupid? Why did they make so many bad decisions?
Corrupting Power: We’ve hammered on this nail many times, but we’ll give it another whack today. The future is unpredictable. But things follow patterns. Power corrupts, as Lord Acton reminds us. There is always an elite that takes control of a society. Over time these smart ‘deciders’ find ways to make their own lives richer…more secure…or more illustrious.
Wars are losers for The People. But they are much beloved by the firepower industry; trillions of dollars come their way. Giveaways and boondoggles do little to help the common man…but they are great for the parasites, the grifters, and the insiders. Wall Street – and the whole investor class – made an estimated $30 trillion in ‘excess wealth,’ thanks to the Fed’s low rates.
But what about The People themselves? Why do they go along? How come they now cling to two proven failures – Biden and Trump? Where are the lynch mobs? Where is the rope? Where is the candidate promising real reform? Everyone plays his role in the glorious theater of history. The People, in a late, degenerate empire, have their bit parts too. They give a ‘triumph’ to their incompetent generals. They re-elect their jackass politicians. They cheer their own destruction and kiss the boots that kick them."
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