“What went wrong?” we asked the cab driver.
“Well, they give you all kinds of nonsense reasons. But it’s pretty simple. People spent a lot more money than they should. Now, they don’t have any money left.
“They put up houses all over the place. But there was no one with the money to buy them. And then the developers went broke. And then the banks that lent them money went broke. And then the government went broke. And now we’re all broke.”
Booms go bust. Wealth disappears. Debt does not. Someone, somewhere, sometime has to pay it. If not the borrower…someone else.
The story of the bubble years was the build up of debt throughout the world.
The story of the post-bubble years has been the feds’ efforts to put the debt onto someone other than the people who borrowed it. Bailout the banks…stick the public with trillions in debt…or print up more paper money, disguise debt as inflation and spread it all over the world.
We saw how the bubble story ended. Now we will see the post-bubble story develop and eventually come to an end too. How? The debt will be repaid – by somebody.
Yesterday, stocks went down 168 points on the Dow. Gold rose $21. Is the post-bubble, post-crisis rally out of gas? Maybe… We’ll wait to find out.
Meanwhile… We turn to the grand tableau of history. The story of booms, busts, revolutions, wars…all the things that go wrong in man’s collective life.
(Private acts of charity, beauty, and courage do not make the history books.)
What will the history books of the future say? How will they describe us…our time…and what went wrong?
We believe they will tell how three groups brought down the US Empire:
1) The feds
2) The banks
3) The neo-cons
The feds destroyed the empire’s economy and corrupted its political institutions.
The banks (including the central bank) destroyed the empire’s finances, and its money.
And the neo-cons undermined the integrity of its military, with their expensive mock wars.
All of them worked together to twist the system into a grotesque new shape…and populate it with a race of zombies.
And they’re still at it…
The feds are spending $4 billion more PER DAY than they take in via tax collection. In addition, they’re printing up $3 billion more PER DAY just to help make ends meet.
Where does all that money go?
Well, here’s a report from The Wall Street Journal:
The US government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.
These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to the Government Accountability Office.
The GAO examined numerous federal agencies, including the departments of defense, agriculture and housing and urban development, and pointed to instances where different arms of the government should be coordinating or consolidating efforts to save taxpayers’ money.
The agency found 82 federal programs to improve teacher quality; 80 to help disadvantaged people with transportation; 47 for job training and employment; and 56 to help people understand finances, according to a draft of the report reviewed by The Wall Street Journal.
Naïve readers will think to themselves:
“How could the government do such stupid things?”
But that just goes to show how little they understand government.
Government labors to improve the quality of our lives. That’s the line used by both major parties. It’s what most people are taught in school. Even as adults, incredibly, they still believe it.
As reported above, in the WSJ, the feds have set up 82 separate programs to improve the quality of teaching in our schools. Guess they’re serious about education, right? But you don’t really think bureaucrats could improve the quality of teaching, do you? Of course not. What do they know about teaching?
Or agriculture? Or selling stocks? Or banking? Or anything else? What improvements have bureaucrats ever made? Name one! Who invented indoor plumbing? Who invented the repeating rifle or rolled the first cigarette? Who created Facebook?
Bureaucrats do not create wealth. They transfer it. From the people who earned it, to themselves and other zombies. Efficiency has nothing to do with it. The more programs the better. The more inefficient the better. The more zombies…the more voters to back their larceny.
And what about the banks? After nearly bankrupting the system, the bankers are still in business too. They take the feds’ money and lend it back to the feds for a cool 3% or 4% difference. Free money. You can’t beat that. And 3% of this year’s budget deficit alone is $45 billion. Not bad for government work.
The bankers are self-serving enablers, helping the feds bankrupt the empire. And making money for themselves in the process.
And don’t forget the neo-cons. They’re doing their part to discredit America’s military…sully the empire’s reputation…and waste its resources. Iraq, Afghanistan…and now they want to invade Libya!
But we don’t blame any of them. They’re only doing what comes naturally. Destiny requires that every great Empire ruin itself. They’re just playing their parts…
for The Daily Reckoning Australia