"Fighting Words"
Deficit spending is really just a way to transfer wealth from
‘the People’ to the insiders and the elites. Eventually and
inevitably consumers pay the bill in the form of higher prices.
by Bill Bonner
Baltimore, Maryland - "Kamala Harris, admitting that she had lost the race, pledged to keep ‘fighting.’ She must have used the word 15 times. In bygone years, she might have said she would ‘keep up the struggle.’ Or she might have said she would keep ‘working’…or keep trying…or keep the light on for us. Now, everything’s a fight. She also referred to the US military as the ‘most lethal fighting force’ in the world. In another phase of our history, it would have been called a ‘bulwark’…a ‘protection’…designed to keep us ‘safe’ in a dangerous world. Now, apparently, its purpose is to kill people. These word choices tell us about an important shift in America’s zeitgeist.
Yesterday, we posed mischievous questions. Are we really defending democracy? Is this a case of good guys vs. bad guys? And can we really worry about deficits when US policymakers are so diligently trying to build a better world? The answers seem so obvious that we won’t bother with them. Instead, we just brush them off with more questions. What’s so good about democracy if it can’t match income with expenses and robs ‘the People’ with inflation? And if it’s a question of good vs. evil, how do we know we’re on the right side?
Nothing in the historical record or current affairs suggests that the Ukrainians are better people than the Russians... or that Israelis are more favored by God than the Palestinians. (God stood by as the Germans massacred the Jews... and now is mute as the Zionists massacre the Palestinians. Whatever else might be said about Him, God keeps his own counsel.) He is silent about Americans too. Are they good... or bad? He doesn’t say.
So let us assume that we are like the rest of the human race... neither always good, nor always bad... but always subject to influence. What then is the peculiar gravity that tugs both of our political parties toward the two things most likely to destroy us: inflation and war?
We’ve already ‘followed the money.’ And yes, that seems to explain much of it. US total deficits in the 21st century are more or less equal to the ‘empire budget,’ that is, to military and foreign policy spending. America’s leaders could have said ‘no’ to both... with no loss of health or happiness in the Homeland. They did not. Instead, they gave the program an enthusiastic ‘yes’ and invaded Iraq.
And now... we are $36 trillion deeper in the hole... with nothing to show for it. Nor is there any evidence — none — that spending money you don’t have actually makes you better off. Debt used to be reserved only for emergencies. Today, both Democrat and Republican lawmakers vote for deficits; neither can tell you where the fire is. Of course, here again, money tells the tale. Deficit spending is really just a way to transfer wealth from ‘the People’ to the insiders and the elites. Eventually and inevitably consumers pay the bill in the form of higher prices. But why now? Why was the US government relatively more fiscally responsible before this century began? Why did politicians back then, generally, favor peace over war? What has changed?
You already know about the role of America’s fake post-1971 money. It made deficit spending - including huge, unnecessary outlays to the firepower industry - much easier. Big ‘defense’ budgets - not subject to Congressional oversight or audit - were recycled back into lobbying and politics, yielding even bigger ‘defense’ budgets.
But that’s not the whole story. The politicians and their favored industries always want more wealth and power. How come they’re getting it now, more than before? A hypothesis we drew out in our book, "Uncivilizing America," is that there’s a see-saw pattern in history. Society makes progress on ‘win-win deals’ - voluntary innovations that take place all the time... in business, science, learning, social relationships... clubs... customs... just about all consensual activities.
Language evolves... along with rules... customs... investments... institutions... and enterprises. This evolution builds more than material wealth... it adds art, technology, manners, culture, style... all the elements of what we call ‘civilization.’
But there’s a contrary temptation. There are takers as well as makers. A guy makes a million dollars in a profitable business. Then, a crooked accountant embezzles half of it... and a lawyer for a disgruntled employee takes the other half. Wealth is created by win-win deals. But it is taken away, and redistributed, by hook and by crook - win-lose deals.
And the things we see as government policies - whether supposedly to stop the Russians or help the poor - are actually win-lose deals meant to redistribute wealth to the elites and their favored causes. “Transfer” payments, for example, were less than 5% of GDP in the 1970s. Now, they peaked at 17% in 2020. These deep Primary Political Trends come in long waves that shift the balance from freedom and prosperity to control and poverty.
After the US ‘Civil’ War, the US and Europe entered a longish period of relative peace and prosperity. It was the ‘Belle Epoque’ in Europe... and boom-time in America. Was it perfect? Far from it. But GDP growth rates soared. The US dollar was backed by gold... with not a drop of inflation for six decades. The country had very little debt; the Fed had not been set up. Federal income tax, too, was still in the future. And senators were appointed by the states, not elected by ‘The People.’
Then, as if a virus had escaped from the lab, came WWI, the Spanish Civil War... WWII... and Korea - more than 40 years of war... inflation, depression and mass murder. That period was followed by another 50 years of (relative) peace and wealth creation, lasting to the end of the 20th century. By 1999, the US was at peace (more or less). Its budget was balanced (more or less). Its arch enemy, the Soviet Union, had disappeared. And its assets - in gold terms - were worth more than ever before... and ever since.
Since 2000, however, the Primary Political Trend appears to be towards more government, more debt, more inflation, more regulations, sanctions, controls, war - more ‘win-lose deals,’ in other words. We’ll see soon whether the new administration, aided by wealth creators Musk and Ramaswamy, can turn it around."
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