"A Different Kind of Order"
By Bill Bonner
YOUGHAL, IRELAND – "Over the weekend, the Senate passed the $1.9 trillion COVID-19 boondoggle. And the U.S. 10-year Treasury note – the bedrock of the entire American capital structure – now trades at more than three times the yield it had last August. There are two overlapping narratives to explain the rise in bond yields. The one favored by Wall Street and Washington is that the economy is entering a fantastic growth phase… with businesses borrowing heavily to keep up with expanding demand (thus pushing up yields). As long as “growth” is so robust, say the bulls,
consumer price inflation won’t be a problem. The other hypothesis is that bond yields are rising because the feds are increasing the money supply about 15 times faster than GDP growth. Investors are looking ahead and
seeking protection against inflation.
Friday’s jobs report allegedly showed a healthy up-tick in hiring. But while jobs in the service sector increased, those in mining and construction actually went down. And considering that mining and construction jobs pay about three times as much as waiting on tables or handling baggage at an airport, what this really shows is further deterioration of the economy – from one that creates wealth to one that consumes it, by giving people fake money.
So far, all we’ve seen are a few nuts and bolts dropping out of the engine.
SPACs (special-purpose acquisition companies) fell some 20% last week… Bitcoin is about 15% off its high. And the headlines are beginning to talk about a “tech sell-off.” But as American households, businesses, and the government struggle to refinance $80 trillion in debt… it’s going to get harder and harder to keep the jalopy on the road.
World Improvers: In the meantime, let us tell you about our trip back to Ireland. A week Friday, we sat in a hotel bar in Managua, Nicaragua. Eight TV screens hung over the bar. Those with loud latino music made sure no conversation was possible. Which was okay with us. We had no one to talk to anyway.
We reflected on the differences… the things that make one group different from another – culture… race… nationality… religion. The “Third World” always seems disorderly. Traffic goes every which way. Trash gets tossed into the trees and gullies. People don’t form up into neat lines. There is an order; it is just a different one.
This kind of thinking – about what separates one group from another – was very popular in the early 20th century. People thought race explained why some groups were so much more advanced than others. Africans were far behind, they thought, because they were Africans! And the world-improvers of the time thought they could improve the world by improving the people in it. “Eugenics” it was called, supported by the Carnegie Institution, the Rockefeller Foundation, and rich families such as the Kelloggs and Harrimans… and backed by smart people such as Alexander Graham Bell.
They were motivated to improve the human race by reducing birth rates for “inferior” groups. Efforts were also made to sterilize mental defectives (“Three generations of idiots is enough,” famously ruled the Supreme Court.) Also, less “fit” mothers – Black, Hispanic, Native American – were the targets of forced sterilization efforts, that didn’t go very far.
By the way… the “Native American” tag is a bit of subterfuge. No peoples are native to the Americas. All are immigrants. At least Christopher Columbus made an honest mistake; he thought he was in the East Indies and called them “indians.” But the whole field of race relations and cultural politics was – and still is – crowded and muddled. And naturally, the feds made it worse… with the Immigration Act of 1924, in which “nordic” races were favored.
Giving Racism a Bad Name: It was (mostly) harmless crackpottery until the Nazis got in on the act. They gave eugenics a really bad name… pretending to be better than everyone else… and murdering those they considered inferior – the Untermenschen.
Houston Stewart Chamberlain was a scientist… a scholar… a learned man, who had traveled around Europe with a Prussian tutor. Very unlike the louts who invaded the U.S. capital, he learned to speak German, French, and Italian and studied anatomy, botany, geology, and physiology. And yet, for all his learning, he came to conclusions that today, we would regard as not only scientifically incorrect… but morally wrong, too. That is, he worshipped the Aryan gods… and feared that Jews – like a virus – were infecting the Teutonic race. In 1935, Germany passed a law making marriage between Christians and Jews illegal.
Still, his ideas, scholarship, and a good marriage with the composer Richard Wagner’s daughter, brought him fame. And when he died in 1927, a young Adolf Hitler attended his funeral. Hitler lost World War II, of course. And eugenics and racism were discredited.
Comeback: But now, racism is making a comeback… Once again, people think it explains why some groups are more successful than others. To put this in perspective, “Hispanics” are generally not as rich as “Nordics.” Even in their own Latin American countries, those with more “European blood” tend to be better off than those with less. The whiter the skin, the higher the income. That is just our observation. Whether it is supported by academic study or not, we don’t know. But we’d be surprised if it weren’t true.
Nor is it meant to point the finger of blame in either direction. Wealth requires work, self-discipline, forbearance, and saving. Not everyone thinks it’s worth the effort. And, who knows? Maybe it isn’t. Still, if we were to take away grudges and enemies, many people’s brains would suddenly deflate like a popped balloon. The “Europeans” blame the “shiftless Hispanics” for their lower incomes. The “Hispanics” blame the “European oppressors.”
Alternative Hypothesis: To these two hypotheses, we offer an alternative: It’s the fault of neither. The races – like individuals – are neither always good nor always bad, but always subject to influence. And there’s nothing particularly wrong with the way either chooses to live. We studied the subject over the weekend of our departure.
In order to get out of Nicaragua, we first had to get deeper into it. That is, we had to leave our
pleasant bubble on the Pacific Coast and experience the country the way the locals do. The point of the exercise was to get a COVID-19 test at the government’s “Ministry of Citizen Power for Health.” Without the test, we couldn’t leave. You get to the federales’ medical compound by weaving through a maze of slums.
In America, builders throw old tin away. In Managua, it is recycled… and recycled. Bent, broken, pierced by holes, it nevertheless is put to work as a wall or a roof. Rusty tin is probably the most ubiquitous building material in Nicaragua. Is that the way it should be? Is that the way we would do it? Do we think buildings made of rusty tin are attractive? Charming? Elegant? Nobody cares what we think.
Attitudes and Actions: The do-gooders and world-improvers always want to change other people. Themselves, they regard as the crown of creation, with no need for improvement. Others, however, need to get with the program. The “poor,” for example, should build with cinder blocks and concrete… neat little houses that look more like our own. Of course, if the locals acted like us, they’d already have houses like ours. But why should they?
Let us imagine that the residents of Managua began acting like the residents of Zurich, Switzerland. They clean the canals and streets. No more mañana… they do it today! They learn to make expensive watches, run banks, and yodel. And they insist that everything be done well – with an attention to detail that bordered on obsession. Being even a minute late would be considered shameful.
Now, can you imagine these Swiss-like people living in rusty-tin houses, with chickens scratching around in the trash for something to eat? No? Well, neither can we. Attitudes produce actions. Actions have consequences. But if people want to throw their trash in the streets, it’s none of our business.
Bedlam: After negotiating the narrow streets, weaving between chickens, busty grandmothers, desperately thin dogs, and prim school children dressed in their crisp blue and white uniforms…we arrived at our destination, only to find what we feared – bedlam. People clustered in front of the entrance. The Swiss would have a well-organized system. Here, it was hard to know if there was any “system” at all.
We explained to a man in a brown uniform that we were there to get the coronavirus test… and that we had already paid for it. We had paid online in the mistaken belief that it might speed up the process. What it did was get us directed to another line… where our payment details could be verified and our document rubber stamped. Then, another man in a brown uniform directed us towards somewhere… we weren’t sure where… People were going in every direction. “You’re taking the COVID test,” said a friendly voice in English. “Follow me.”
The helpful young man led us out a door, across a courtyard… and then, improbably, through a narrow corridor. Then, he wished us well… We continued… and were directed, by yet another man in a brown outfit, to sit down and show our documents. “Where’s your passport?” he wanted to know. “We didn’t realize we needed it. It’s out in the car.” “Yes… you need it. But I’ll keep your place for you.”
Pleasant and Helpful: One of the surprising things in a country run by a man many consider a ruthless dictator is that the civil servants are pleasant and generally helpful. And the apparent chaos can add flexibility. In a federal building in Baltimore, a guard might tell you to follow the signs to the exit… and start the process all over again. Any objection, and he’d have you down on the floor with his knee on your neck.
We simply backtracked, going against the traffic and exiting through the entrance door. And then, explaining to the three brownshirts what had happened, we were allowed to break ranks and accomplish our mission. Back in our seats, the helpful man in the brown uniform inspected our documents. Finding them in order, he bid us take a seat, along with about 30 other people.
The man next to us had a U.S. passport. But he spoke English poorly. Another man in the group appeared to be about our age. He was with his wife, or perhaps it was his daughter, who carried a very young baby. The rest of the group looked like a cross-section of Nicaragua. Most were getting the test so they could go to Miami.
Odd Method: Rather than call out numbers… or let us into the screening room one by one, the method was an odd one. Each time someone moved in to have his nose rotor-rooted, everybody got up and moved one seat closer to the front. Finally, it was our turn. Again, our papers were inspected. Our passport was taken. When the work was completed, a sticker was attached to our passport. “Come back at 3 p.m… Show them this number.” And so we did. The vital paper was delivered and we were free to leave. The “system” worked."
