– Good Times Roll, by The Cars
America’s Recline and Flail Goes On
The storming of the U.S. Capitol Building on Wednesday was a wacky and wild escapade. But it shouldn’t be a surprise. These things happen when a nation’s in decline. And, as Wednesday demonstrated, America’s recline and flail goes on.
More telling is the fake outrage by politicians to score political points and justify additional control over the populace. Chuck Schumer compared it to Pearl Harbor, calling it a date “in American history that will live forever in infamy.” President-elect Joe Biden characterized it as “one of the darkest days in the history or our nation” and “an unprecedented assault on our democracy.”
Schumer and Biden conveniently overlook the irony of their statements. They may be accurate. But only for reasons they never intended. Lost in the ruckus was any candid consideration of election counting shenanigans. This is the real assault on democracy that will forever live in infamy.
But, again, proper perspective must be maintained. A fraud election should come as no surprise. These things happen when a nation’s in decline. We don’t like it. But these are the facts.
At the same time, the nation’s leaders have little clue what’s going on. Schumer. Pelosi. McConnell. All the clowns in Congress. They think that with that ogre Trump out of the way, they can let the good times roll again. They know not what they face.
How wealth is created and naturally dispersed is complex and multifaceted. Attempts to explain it, like attempts to explain the development of the human embryo, are generally lacking. Nonetheless, for amusement and the benefit of members of Congress who may be reading, the following rough attempt is extended.
Where All Roads Lead
Countless factors influence an economy’s vitality. The fundamentals include sound money, respect for private property, and the rule of law. These are followed by technological advancement, demographic trends, and the level of international trade. Interest rates, the credit cycle, and public and private debt levels are also significant factors.
When a nation’s population is young, its money sound, and its institutions fresh, there are greater prospects for economic growth. People are relatively free to do what they want, so long as they don’t threaten or commit violence against another person or another person’s property.
But as with spring and then summer, there’s also fall and then winter. Life first grows and flowers. Later it decays and dies.
Over time, the size of government grows and laws and regulations become more and more restrictive. Then corporate lobbyists arrive on the scene and things really devolve. The practice of inserting pay to play arrangements into legislation becomes commonplace.
As a nation’s population ages and the reach of government increases the economy stagnates. Pension programs become top heavy. Public and private interests become entrenched. Barriers to entry multiply. Legacy costs pile up and institutions decay into disrepair.
Indeed, economic decline and the stagnation of incomes are the result of many different factors. Though all roads lead back to aging populations, bloated government, fake money, and extreme public and private debt levels. GDP growth of 6 percent was common many decades ago. Now, under the weight of all the excess, 3 percent is as good as it gets.
Let The Good Times Roll
The confluence of these unfavorable circumstances cannot be reversed. There’s no policy prescription to magically restore health and vitality. The progression must run its course. Promises must be broken. Institutions must fail. Governments must default. Currencies must collapse.
Of course, those with a vested interest in maintaining the status quo will do everything they can to resist. Insiders will use money games and currency devaluations to stretch things out. Politicians will use government policies to try and abate circumstances beyond their control.
Presently, in the United States all means for preserving the status quo are on the table. The Federal Reserve, for instance, creates credit from thin air and loans it to the Treasury via bond purchase. The Treasury, in turn, shovels the money to defense contractors and other preferred service providers – like the big banks.
The Fed also uses its credit creation machine to suppress lending rates. Zombie companies use the cheap credit to rollover their debt. And when that doesn’t cut it, the Fed directly purchases corporate debt.
These policies stand the economy on its head. They concentrate wealth into the hands of the insiders to the detriment of workers. After several decades of this madness the workers and the growing population of the unemployed stick their hands out and demand they be filled too.
Wealth disparities and the resulting discontent spark cries for redistribution schemes. Thus, the Treasury tosses some bread crumbs in the form of stimulus checks to citizens and noncitizens alike. Before long, stimulus checks become a constant. And the population is dependent on the benevolent hand of government for sustenance.
Mad economic policies, like Modern Monetary Theory (MMT) and universal basic income (UBI), are dreamed up to justify the insanity. The government gives money to zombie companies, goes the rationale. Why can’t it give money to actual zombies too?
Make no mistake, these are policies of desperation. They’re a last ditch effort to preserve the status quo and let the good times roll. But for who?
for Economic Prism