"The Dollar and Democracy Are Frauds"
By Bill Bonner
YOUGHAL, IRELAND – "The 2” x 10” x 16’ roof rafters gave us the biggest challenge. They were heavy and unwieldy. But we were conducting an experiment. We knew we had a handicap; we didn’t know how much of a handicap it was.
No Tears: Last week’s surgery left us with only one good hand; what could we do with it? It turned out not to be much of a handicap at all. Losing the use of our left hand has been a nuisance but not a serious impediment. On Saturday, we sanded and stained the staircase, using just our right hand. No problem. And then, on Sunday, with the help of a visitor from Massachusetts, we were able to frame up a toolshed. But these are trivial issues.
We’re exploring big issues here… such as the collapse of the world’s dollar-based financial system… and the degeneration of democracy in America. Here at the Diary, we’ll shed no tears for either one. Both the dollar and democracy are frauds. Both are headed for crises. How… when… what… and why is our subject in the years ahead.
High Cotton: You now understand as well as we do why the money system is doomed. Today’s dollar is fake, with no firm connection to the real world of time, resources, and output. The “wealth” it produces is fake too. We saw that last week; in the 50 years after WWII, household net worth averaged about 350% of GDP. Then, suddenly it shot up to over 500%. Where did that extra money – about $30 trillion of extra household wealth – come from?
Among the many, it’s slim pickins. Real median household income was a little over $60,000 in the late ’90s; it’s still a little over $60,000. But among the few, it’s high cotton all year round. Joel Kotkin elaborates: "The top 1% in America captured just 4.9 percent of total U.S. income growth in 1945-1973, but since then the country’s richest classes has gobbled up an astonishing 58.7% of all new wealth in the U.S., and 41.8 percent of total income growth during 2009-2015 alone…"
You already know what was really going on; the fix was in. During that same period, central banks flushed some $22 trillion in new (fake) money into the world economy. That money bid up prices for stocks and bonds, making asset holders much richer, relatively, than everyone else. In effect, the feds aided and abetted the grandest larceny in history.
Willful Imbecility: The essential fraud of the financial system is not only that the money is fake. It is also the overweening conceit that seven jackasses on the Federal Open Market Committee can control, improve, and stimulate a $20 trillion economy… as if it were a cranky lawnmower in need of a tune up.
The essential fraud of democracy has two parts to it too. First is that some voters have the right to tell other voters what to do… and second is that they control the government. As to the first, no more needs to be said; there is no divine right of an electoral majority… and no reason to think its lusts and hobgoblins are any more legitimate than those of anyone else. As to the second, the larger the government, the less any citizen – or politician, for that matter – knows what it is getting up to. Not one voter in 10,000, for example, understands how he has been ripped off by the fake money system.
Expecting voters to understand the politics of their own cities is fanciful enough; expecting them to master the intrigues of Syria or the Hindu Kush is willful imbecility. In the absence of real information or real knowledge, the voter defaults to campaign slogans, lies, and empty promises… and leaves the real decision-making in the hands of the elites in the Swamp.
Naturally, these insiders look out for themselves. Their main goal is to keep the power and money headed in their direction, which is why any reform of federal budgets or the fake money system is impossible… and why deficits, debt, and funny-money finance will worsen until they finally blow sky-high.
Meanwhile, in politics, while the masses have no idea how they’ve been stabbed in the back, they still feel the blade. That is why they preferred Mr. Trump in the last election. He may be a rascal, they reasoned, but at least his fingerprints weren’t on the knife.
In upcoming elections, however, voters – still smarting from the betrayal by their elites – may take a different direction. Mr. Kotkin continues: "…a new generation, indoctrinated in leftist ideology sometimes from grade school and ever more predictably in undergraduate and graduate school, tilts heavily to the left, embracing what is essentially an updated socialist program of massive redistribution, central direction of the economy and racial redress."
In France’s most recent presidential election, the former Trotskyite Jean-Luc Melenchon won the under-24 vote, beating the “youthful” Emmanuel Macron by almost two to one. Similarly in the United Kingdom, the birthplace of modern capitalism, the Labour Party, under the neo-Marxist Jeremy Corbyn, won over 60 percent of the vote among voters under 40, compared to just 23 percent for the Conservatives. Similar trends can be seen across Europe, where the Red and Green Party enjoys wide youth support.
The shift to hard-left politics also extends to the United States– historically not a fertile area for Marxist thinking. In the 2016 primaries, the openly socialist Bernie Sanders easily outpolled Hillary Clinton and Donald Trump combined. A 2016 poll by the Communism Memorial Foundation found that 44 percent of American millennials favored socialism while another 14 percent chose fascism or communism. By 2024, these millennials will be by far the country’s biggest voting bloc. Uh-oh."