“People come to believe what they must believe when they must believe it,” we said today at breakfast.
“Where does that quote come from?” Elizabeth asked.
“It comes from me...from The Daily Reckoning. Many years from now, as historians search through the ruins of our civilization, someone will come across that line. Then, they’ll wonder what it meant. Finally, they’ll realize how profound it is...and probably misattribute it to some great thinker, like Thomas L. Friedman.”
“Oh stop picking on Tom Friedman...”
“Okay...but seriously, you can’t understand our era without understanding how intelligent people can come to believe such absurd things.”
“What do you mean?”
“Well, for instance, there’s a report in today’s news. The SEC did a study of the rating industry – you know, the people who decide how creditworthy various investments are. Institutional investors rely on them in placing money for pension funds and insurance and so forth. Well, they found that the rating industries engaged in what they called ‘flawed practices,’ meaning that instead of telling investors that subprime debt was trash, for example, they gave it Triple A ratings. Any dope could see that when you lend money to people who can’t pay it back you’re going to have trouble. But the rating agencies made a lot of money by rating the subprime debt. If they said it was trash, they wouldn’t get the business.
“That’s just a relatively small example. More broadly, history...and life itself...follows certain inevitable patterns. When you’re a teenager you have to think like a teenager, in other words. When you’re an old man, you have to think like an old man. If you live in Switzerland you have to think like a Swiss person. If you live in America in 2008...for good or for evil, I don’t know...but you have to think like a card-carrying member of the reigning imperial elite...that it’s your duty to police the world. If you live in an economy that is really growing and booming, you save your money and invest, in order to profit from it. But if you live in an economy that is peaking out or in decline, you just make the most of it, spending and borrowing as much as you can...and then, you gradually adjust your thinking to the new reality.”
“Yes, but how do you know thought follows action...rather than the other way around? If Americans had saved and invested...rather than borrowed and spent...wouldn’t the economy be growing, rather than declining?”
“Well, Americans would be in much better shape, financially, of course. But relative to the rest of the world, the United States would still be in decline. An old man can’t become a young man just by acting like one. All he can do is accept old age with grace and dignity.”
“You may be reaching too far with this idea...it’s a very fatalistic view of things. But why do you bring this up?”
“Oh...because I just read in the paper about poor Obama.”
“Poor Obama? I thought he was way ahead...”
“He is. But according to the report, he’s worried that he can’t attract the old Hilary stalwarts...the white, lower-middle class democrats. So, he’s modifying his views on things like Iraq, abortion and child rape. He’s coming to think what he needs to think to win the election. And what he needs to think is what appeals to the yahoo voters – the mob of electors in a late imperial period. They want to kick butt all over the world...and they want to worry about abortion and child rape, rather than bother to think about the real challenges the country faces – bankruptcy and declining living standards, for example.”
“Well, child rape and abortion are important moral issues.”
“Yes, exactly, they’re moral issues. They are the sort of thing that get a man sent to Hell. But they’re not important for the state. Whether a child rapist gets life in jail or the scaffold doesn’t matter to the health of the empire. We don’t even know which punishment is worse for the offender. But rather than bother to think about how the feds are going to close their $57 trillion dollar financing gap, or how to bring the Pentagon back under control, Obama is talking about frying child rapists. Don’t get me wrong. As far as I’m concerned the electric chair is too good for them. But these issues are like terrorism...they’re distractions, they’re bugaboos; they’re not serious challenges to a great nation. But the mob wants bread and circuses. They want Medicare, victory in Iraq...and public hangings. Obama – like every other candidate except Ron Paul – is ready to give them what they want.”
Bill Bonner
The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by John on 12 July 2008:
It's funny how you put "except Ron Paul", you probably learned by now that without that qualifier you get a dozen emails reminding you