Where We Are Now

Week 17 of quarantine

There is something pagan in me that I cannot shake off. In short, I deny nothing, but doubt everything.

19th century poet, Lord Byron

Freedom to glory…and when that fails, to wealth, vice, corruption…and finally, barbarism.

That was how the 19th century English poet, Lord Byron, described the cycle of empires.

We proposed a corollary: that you can tell where you are in the cycle by checking the monuments. They go up in the glory stage…they come down as you get close to barbarism.

Libertarian crap

Some dear readers took offense. We received this message from Kevin R:

Are you seriously claiming that taking down monuments erected by racists to honor traitors is evidence of a decline in our civilization? And, even though Jefferson was a genius, he also owned hundreds of human beings, sexually assaulted and impregnated at least one of them, and did not free his slaves in his will. So, please stop with your bulls**t libertarian crap, and especially your insinuation that Truscott is disgracing his grandfather’s memory by writing books and not dropping bombs on civilians.

I noticed that since you appear to have graduated from college in 1970, you also appear to have done well in the draft lottery. I doubt you will have the guts to publish my reply to your insipid, simplistic article.

Our reader seems to know a lot more about Mr Jefferson’s private life than we do…and believes his reply is so devastating that we would be afraid to publish it.

But he has missed the point. We’re not talking about ‘civilisations’…or whether it is better to bomb than to write. (Our books often do both!)

‘Better’ is beyond our scope. Like Lord Byron, we are doubters here at the Diary. We’re just observing how empires come and go…and wondering if the poet wasn’t on to something.

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Freedom

But let’s see if his formula really holds up.

Our rough guess is that the ‘freedom’ stage came to an end for the US at the beginning of the 20th century. The US was already 124 years old. Its empire builders and big-mouth messiahs were already getting the better of it.

The US took over the Philippines in 1899 as a result of the trumped-up Spanish-American War. As Mark Twain put it in his letter to The New York Herald in October 1900…

We have pacified some thousands of the islanders and buried them; destroyed their fields; burned their villages, and turned their widows and orphans out-of-doors; furnished heartbreak by exile to some dozens of disagreeable patriots; subjugated the remaining 10 millions by Benevolent Assimilation, which is the pious new name of the musket. We have acquired property in the three hundred concubines and other slaves of our business partner, the Sultan of Sulu, and hoisted our protecting flat over that swag. And so, by these Providences of God — and the phrase is the government’s, not mine — we are a World Power.

Being a great nation seems to chaff against being a good one. A world power needs to throw its weight around. And for that, it needs the heft of unhedged support from compliant people. And it needs institutions that set up the government as master of them, not as servant.

These institutional changes came in a rush in 1913. Changes to the Constitution created a powerful central bank — the Federal Reserve — along with federal income tax and the direct election of US senators.

Four years later, President Woodrow Wilson pushed the US into another misbegotten foreign war, the First World War…and Congress passed the Espionage Act, followed by the Sedition Act of 1918, making it a crime to dissent.

By then, the freedom promised in the sacred founding documents had been largely snuffed out; the feds could do almost anything.

Glory

The glory stage was next. But it was short-lived. It probably peaked out in the Second World War. The US won in both theatres — against Germany and against Japan — leaving it with undisputed control of the Pacific and the Atlantic.

But the glory ended much as it began — with war crimes. Harry Truman dropped atomic bombs on civilians in Hiroshima and Nagasaki, killing about 180,000 of them.

Then began an even darker chapter in US history — unwinnable wars in woebegone places such as Korea, Vietnam, Iraq, and Afghanistan.

Wealth

As the glory failed, the pursuit of wealth became paramount. For the first three decades after the Second World War, US industries turned out some of the best products in the world — the best cars…the best houses…the best movies.

Detroit was the richest city in the US. From ‘Motown’ came some of its hottest music, too. Hollywood was the world’s movie maker.

As we saw yesterday, in 1968, a student could earn enough in the summer to pay his college tuition for a year at an ordinary state university. At the average wage, a person could earn enough in a single day to buy an ounce of gold. In a bit more than a month, he could buy the 30 stocks on the Dow Jones Industrial Average.

Vice

But then, vice was already sneaking into the Empire in the form of fake money. The post-1971 dollar no longer had any connection to the gold or silver that the Constitution seemed to require.

First, stocks fell. Next, stagflation took hold, with a slumping economy and, by 1979, double-digit inflation.

Paul Volcker, the US’ last honest Federal Reserve chief, rose to the challenge, hiking the Fed’s key interest rate to 20% (now 0.25%). By 1983, inflation rates were falling fast — along with interest rates.

And then, US wealth continued to grow.

But gradually, the fake money did its damage. Manufacturing was outsourced overseas. Why bother making things at home if you can just buy them, with your almost unlimited money, from foreigners?

Instead of earning money by making valuable goods and offering valuable services, people turned to making money with money. ‘Financialisaton’ became the business that paid. And bankers, hedge fund operators, and stockbrokers became what mommas wanted their babies to become.

Manufacturing centres, such as Detroit, Michigan and Gary, Indiana, fell hard as new centres of money and power — Manhattan and Washington, DC — rose up.

Wall Street flourished. By 1999, the dotcoms were all the rage. Stocks had gotten so high that it took 44 ounces of gold to buy all the Dow stocks.

Still to come

But then, in gold terms, the Dow — made up of the biggest and most important companies in the nation — fell.

It now stands at only 14 ounces of gold…a two-thirds loss over 20 years.

And the wealth of the 90% of the population that sells its time by the hour, the week, or the month has fallen along with the real value of stocks.

Today, it would take the typical college student a whole year to earn enough to pay his tuition fees. It would take the typical working stiff two whole weeks of work to buy an ounce of gold…and more than half a year to buy the 30 Dow stocks.

Wealth peaked out 20 years ago…

All that is left are corruption and barbarism.

‘Til tomorrow…

 
Signature
Bill Bonner,
For The Rum Rebellion


Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.


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