We’re doing a lot of things that are very good, including waste and fraud – tremendous waste and tremendous fraud.
– Donald J. Trump
BALTIMORE, MARYLAND – Day by day, the empire ages… drooping unto death.
Yesterday came news that Bernie Sanders narrowly won the New Hampshire primary.
Sanders (heavily supported by the military/industrial complex) edged out Pete Buttigieg (the billionaires’ favorite), Joe Biden (heavily supported by the one-percenters), and Amy Klobuchar (heavily supported by Wall Street).
Waiting in the wings is Mr. Wall Street himself, Michael Bloomberg.
Whichever way the race goes, in other words, the real winner will be the Deep State, as it always is.
Yesterday, too, the Financial Times reported that the top 1% now owns 50% of America’s equities. This, too, is a milestone on the road to Hell…
Since 1969, wealth and power have become more concentrated. Big Government got bigger. Big Business got bigger. Big Money got bigger. And the Deep State got deeper and deeper.
The U.S. now has the oldest president it ever elected. It is also the world’s oldest democracy. Its people are older and fatter than ever. Its businesses are older and bigger than ever. Even its entertainments are old – how many times can they remake Batman?
And now it is bent over and shuffling toward the end of the oldest business expansion on record.
The numbers we showed yesterday tracked the decline of the U.S. from 1969 over the next half a century.
We remember 1969. Still in college, we worked as a “hasher” in a sorority house, washing pots and pans for food. And in the summers, we painted TV towers to pay our tuition. The work was dangerous, so we earned top wages – $5.25 an hour.
That was real money back then. If we recall correctly, annual tuition at the University of Maryland was less than $2,000. Now, it’s over $20,000. A hamburger at the Little Tavern was 25 cents. As for medical care, if we needed it, we paid cash.
But times have changed.
It is much too soon to write a history of the late, degenerate U.S. empire. It takes time for facts to evaporate, nuances to disappear, and recovered memories to fill in the gaps. What will history eventually tell us?
Here, we take some guesses…
If You Can’t Beat ’Em…
The U.S. put a man on the moon in 1969. Then, despite the shift to bad money and the takeover of government by the Deep State, it went on to a greater glory. And it got very lucky.
First, Paul Volcker saved its funny-money system. Then, Ronald Reagan’s “Morning in America” brought welcome tax cuts and a new spirit of confidence.
China decided to take the capitalist road in 1979. Soon, it was providing the world with an almost limitless pool of low-priced labor… and its goods and gadgets filled the shelves of Walmart.
Americans enjoyed Everyday Low Prices… even as the feds inflated the system with cheap credit.
In 1991, the Soviet Union, too, decided it was better to join the capitalists than to fight them, leaving America with no plausible enemy.
Later in the ’90s, along came the internet… promising huge new gains from hitherto unimagined technology. Even the lowest-caste street sweeper in India, if he had access to the internet, might find a cure for cancer… and the biggest nerd in the ninth grade might become a billionaire in the stock market.
Stocks soared, especially the Nasdaq, which went up 10 times, from 400 in 1990 to 4,000 in 1999.
Alas, the momentum that had carried the U.S. along since the ’60s came to an end in 2000. The Nasdaq crashed down to below 1,200 in 2002. This was about a three-fourths loss in nominal dollars. In gold terms, the loss was over 80%.
Yes, now gold was on the move. It was not merely going up; it was recording the fall of an empire. (Now, 20 years later, the cream of American capitalism – the Dow – is worth less than half of what it was worth in 1999, when measured in gold.)
The Nasdaq was falling not only because that’s what stocks do; they go up and they go down. But it was also signaling a failed revolution.
The Information Age turned out to be a flop. Not that there wasn’t money to be made by Apple and Amazon and other high-flying stocks.
But you can’t stop the fall of a great empire by streaming dirty movies, hailing a cab with a smartphone, or buying cheap stuff over the internet.
The internet was supposed to send the economy into a new cycle of invention and wealth creation. Instead, it sent it into a frenzy of time-wasting – chatting online… texting… spending hours answering emails… and more hours staying in touch on Facebook.
The technology of the Industrial Revolution, by contrast, was powerful.
It allowed people to use the condensed energy in coal, gas, and oil to get more output from every hour they spent on the job. And it was reflected in the great wealth produced from the mid-1800s up the 1970s, not just for the rich, but for everybody.
But wage gains for most people petered out in the ’70s. Then, the “financialization” trend – financed with funny money – shifted the economy’s focus from the Motor City… to Manhattan. That is, from producing wealth… to extracting it.
And the dark trends already underway in a decaying empire – concentration of wealth, more power in the Deep State, more debt, slower growth, fewer business start-ups, more regulation – continued unmolested.
And despite all the lessons learned by mankind over thousands of years, now available for free on the internet, humans continued to do very dumb things… such as inflate the currency and start wars.
The Fed Funds rate was cut from 5.5% in January 2000 to under 1% in December 2003.
Subsequently, the Federal Reserve would resort to more direct forms of money-printing – quantitative easing (QE) in 2009 and Repo Madness in 2019.
Meanwhile, with no way to justify further shifts of money and power to itself, the armed wing of the Deep State had to find a new bugaboo.
Almost too conveniently, a group of Saudis struck the World Trade Towers on September 11, 2001. The Bush administration promptly took action, announcing a nonsensical “War on Terror”… and then invading a country – Iraq – that had nothing to do with the terrorist attack.
And now, the pieces were in place for the two mortal enemies of empires to do their work…
Un-ending war squanders its wealth and energy. Fake money undermines its economy. Together, the two corrode and corrupt its society.
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