PARIS – We live in an Era of Busted Dreams (EBD). Yesterday, we looked at one of them – the banged-up hope that Donald J. Trump might turn things around.
It seems more and more unlikely.
First, because he doesn’t know what is going on. Second, because he doesn’t really want to change it (it made him rich… and POTUS).
Third, because he couldn’t change it anyway (the Deep State decides the important issues).
And fourth, because that’s not the way dreams bust; they need to be more than dented… they need to be completely crushed… and ground to powder… before the rebuilding can begin.
Fiends and Malingerers
Tuesday morning, more dents appeared. Republicans and Democrats reportedly agreed to let Mr. Trump build a few more miles of wall, leaving approximately 1,400 miles of border with neither wall nor fence.
If it is true that there are hordes of fiends and malingerers trying to get across the border, they will still be able to.
If it is not true, The Wall is just a waste of money. (There was no wall in the 1950s… when, arguably, America really was great. What is different? There was no war against drugs or widespread welfare system, either.)
But the EBD didn’t just happen. As we explored last week, among our most ancient and powerful instincts is the “us versus them” impulse. Always challenged… under threat… menaced and harassed, we learned to stand shoulder to shoulder with the “us” against “them”… and build walls to keep them out. That is how we survived.
But the simple “us vs. them” analysis doesn’t really explain how we got where we are. And it won’t help us understand what is coming up next.
Over the last half century, the sinister trends – more debt, more wars, more centralized power – continued, through both Republican and Democratic administrations. Sometimes slower, sometimes faster… but nobody from either party put on the brakes, or much less turned around.
Not once was the federal budget genuinely balanced. The insiders gathered up more clout and cash. The elite became bolder, richer, and sassier… and the average citizen became weaker, more cowed, and more dependent.
“We are born free, and we will stay free,” said Mr. Trump in his SOTUS. But that is a busted dream too.
Americans are now among the most heavily policed people in the advanced world. There were three federal crimes in 1789; there are more than 4,000 today.
With so many laws, it is no wonder that so many break them. The U.S. has the largest prison population in the world – with 10 million picked up by its gendarmes annually and more than 2.2 million in its gulags (5 times as many as in 1970) – half of them for a made-up crime, involving marijuana.
Its government agents – using “civil forfeiture” rules – steal more wealth than common thieves.
Its armed troops garrison close to 800 foreign outposts and, in the last half century, are responsible for more deaths than Russia, Iran, North Korea… and the whole “Axis of Evil” put together. Barack Obama, like Stalin, personally approved each day’s assassination list.
And rather than rise up against their whip-masters, Americans say “thank you” to the TSA for rifling through their underwear!
That is the real state of the Union and perhaps the biggest busted dream of all: The American Dream has become an aging, heavily indebted empire struggling to hold onto its place in the world, led by a corrupt elite whose only real goal is to keep the juice flowing – to themselves.
And like every degenerate empire before it, this one is doomed to a financial collapse. And since our usual beat is money, we turn our attention now to the monumental crisis that is coming.
Bring the Punchbowl
The dream was that smart people with Ph.D.’s in finance and economics could do a better job of guiding the economy than market forces.
Led by Milton Friedman, in 1971, they changed the money itself – removing the constraint of gold so they could manipulate the currency more directly.
Then, they began using “counter-cyclical monetary policy” to offset the market’s moods. It was William McChesney Martin, the longest-serving Fed Chair in history, that said it was his job to “take away the punchbowl just as the party gets going.” In other words, tighten up the money before things got out of hand.
All too human, the nation’s money custodians proved to be very good at bringing out the punchbowl; they were very bad at taking it away.
Then, in 1987, Alan Greenspan, then Fed chief, went further. He let it be known that he’d come in with as much alcohol as necessary to keep the party going. The excitement increased… louder and louder… wilder and wilder… until 1999, when someone must have called the cops.
But the crash of the dot-coms put only a temporary damper on the fun. In came the feds with more cases of Jack Daniels… and it was “Party On!”… until 2007.
This time, the problem was serious. Homeowners couldn’t keep up with their mortgage payments. And this time, the feds came not just with more liquor… but hard drugs, too.
Quantitative easing, QE, they called it. Thus, did they not just make EZ credit EZ-er, but added some $3.6 trillion in new money, too. It was an emergency, they said, promising to “normalize” later.
And of course, now it is 10 years later.
And now, the Fed says it won’t be normalizing any time soon. This is the new dream that is coming into focus… that deficits don’t matter… that debt can increase indefinitely… and that the feds can simply add money whenever the going gets rough.
Republicans and Democrats will both go along with it. “Us” and “Them” will come together to protect the flimflam they both benefit from.
Borrow! Spend! Print! Do “whatever it takes.” Damn the deficits!
And then The Wall will make more sense – as a shovel-ready public works project!
But that is when the going really begins to get rough… and millions of private dreams are busted too.
More to come…