[4 min read]
‘Just as every cop is a criminal
‘And all the sinners saints
‘As heads is tails
‘Just call me Lucifer
‘‘Cause I’m in need of some restraint’
‘Sympathy for the Devil’, The Rolling Stones
As expected, Joe Biden will speed up the US’ encounter with disaster.
That won’t be easy. Adding speed, we mean…
Donald Trump already had the runaway bus in high gear and his foot to the floorboards. Government spending increased more under Trump than under any other president since the Second World War. From 2017–20, it rose nearly twice as much as it did under Lyndon Johnson.
As a percentage of GDP, government spending rose to 56% in the second quarter of 2020. Of course, that included $1,200 checks to 160 million Americans, the vast majority of whom were still working and didn’t really need the money.
And we remind dear readers that it is neither Supreme Court appointees…nor climate change initiatives…nor Black Lives Matter protests…nor face masks that will crash the US empire.
It’s money. Or fake money, to be more precise.
Fake money is the Devil’s fodder; it makes it possible for the feds to do things they oughtn’t do — hand out free cash…invade Iraq…jack up stock prices.
Not that they couldn’t do dumb things with real money; but fake money makes them bolder.
Nearly 50 years ago, your editor — then a callow youth, naïve and foolish — played a small role in trying to force some restraint onto federal finances. He pushed for a Balanced Budget Amendment.
He thought that requiring the feds to operate on a pay-as-you-go basis would keep the Devil on a diet.
But the drive for a balanced budget amendment ran right into The Swamp, where it sank without a trace. Restraint was the last thing the insiders wanted.
And that was in the mid-1970s, when the deficit was running between $50 and $70 billion per year…and total US debt, from the beginning of the Republic until the beginning of the Reagan administration, had still not reached $1 trillion.
Now, it is 45 years later. We are no longer callow.
And now, the sinners are saints. The cops are criminals…
The US owes $27 trillion…runs deficits of more than $1 trillion a year…and seems bound and determined to stick with this kind of Banana Republic financing until the jungle swallows it up, as though it were an ancient civilisation lost in the vines.
The whole crackpot system now depends on out-of-whack budgets funded with fake money.
As to the unbalanced budgets, no one cares. And as to the fake dollars, they are considered a mere monetary detail.
But like lug nuts flying off the wheels, they are bound to cause trouble down the road.
More, more, more
And now, Sleepy Joe, assisted by thousands of lifelong Washington insiders, has found the overdrive button.
It will be a challenge for him…racing towards destruction…to beat Trump’s speed.
But he’s the man of the hour…with plenty of geezer friends in Congress — Mitch McConnell, Nancy Pelosi, et al — who can help get the job done.
The Associated Press is on the story:
‘…the former vice president and senator will pursue a drastic shift in America’s economic policy. He [Biden] has vowed to reverse much of the Trump administration’s aggressive deregulation and indifference to domestic spending and economic development in favor of big investments in education, infrastructure and clean energy. He wants stricter rules to rein in big tech companies and to fight climate change.
‘And to help pay for it all, the president-elect would turn to large tax increases for corporations and wealthy individuals by reversing much of President Donald Trump’s tax cuts. […]
‘Biden’s view reflects the warning from most economists that until the virus is controlled, the economy cannot fully recover. […]
‘That slower growth, in turn, could intensify calls for more stimulus spending. Most economists, along with Federal Reserve Chair Jerome Powell, are warning that the economy needs more rescue aid from Congress.’
More ‘rescue aid’. More fake money. More unbalanced budgets.
More power to the feds. More money to the insiders.
Long live the Devil and the Deep Blue State!
But what can you do? The days are long past when we thought we could amend the Constitution…save the Republic…or even keep our hair from falling out.
Now, we are not so naïve as before. We’ve seen that we couldn’t keep the Republic alive. Fake money doomed it.
And now, it dooms the American Empire, too.
Nature must run her course. The Devil can’t really be constrained. One generation must die so that another can live. The fake money must expire worthless before the virtues of real money are rediscovered.
And what can you do about it? You can’t change the course of history.
But you wouldn’t have wanted to stick around in Atlanta in 1864, when General Sherman came to town…nor in St Petersburg in 1917, when the Bolsheviks ‘saw it was time for a change.’
You can protect yourself to some extent (though never completely)…and even enjoy the show.
On taxes…the best bet is to make your move now.
If the Senate remains under Republican control, major tax law changes are unlikely. (A run-off election in Georgia, in January, could decide it.)
Whatever happens, the feds will be desperate for more money — fake as well as real. Taxes are more likely to go up than down.
So the wise thing — if you can do it — is to shift income from the future to 2020…and wealth from the old and rich to the younger and poorer parts of the family.
On stocks…the word on the street is that the next stimulus package won’t come until 2021. If that is so, there is a fair chance that restless, worried investors will want to lighten up on their positions.
Besides, stocks are far too expensive — at the top of their normal range by almost all measures — and extremely vulnerable. It is only the rumour of more fake money from the feds that keeps them from collapsing.
Most likely, another crash will hit them…maybe in the next six weeks. Then, of course, the elite will panic and take the whole cockamamie scheme up a notch — with an even greater bailout.
Your editor still has some of his personal money invested in stocks, working with his old friend and colleague, Chris Mayer. But he is no fan of the stock market.
The feds’ fake money can push up stock prices…in US dollars. And stock prices will probably soar initially, as investors front-run a foolish Fed.
But the dollar, eventually, will buckle under the weight of so many fraudulent, counterfeit new bills. The feds can support stock prices with more of these fake dollars. But they can’t also support the dollar itself.
What about real estate? It is what middle-class people often buy to avoid losing wealth to inflation.
And if we were at a different stage of life, we would be tempted to take advantage of the lowest interest rates ever to buy property…and count on the feds to reduce the real cost of our mortgage payments.
But real estate needs to be maintained and managed. And the feds are likely to make it difficult for landlords to raise rents or put out non-paying tenants.
And as the economy weakens, there are likely to be more tenants who can’t pay their rents, leading to a decline in income for the landlord.
Which leads us to fixed income — bonds, insurance payouts, pensions, and so forth. They, along with the US dollar itself, will be the big losers.
In the 1970s, US government bonds were despised as ‘certificates of guaranteed confiscation’. They turned out to be among the best investments you could have made — after Paul Volcker saved the fake-money system in 1980.
Now, Paul Volcker is dead. Heads is tails.
And this time, the fake-money system is likely to die, too.
What, then, will be the winners?
Tune in tomorrow…
For The Rum Rebellion