Archive
The motivating madness of government fascism
People don’t see crises coming because they believe in the rationality of government. They don’t see the dynamic inherent in a coercive rent seeking entity that necessarily compels governments worldwide towards madness again and again and again.
WWI was madness. The Great Depression was madness. WWII was madness. Hiroshima was madness. The Cold War was madness. Chernobyl was madness. The deliberate death of the Aral Sea was madness. The destruction of arable land worldwide to convert this precious fertile land into low-density residential development is complete madness. Deliberate and govt-supported over-fishing worldwide is unsustainable madness. The GFC was predictable madness. The continued presence of the West in Afghanistan is madness.
Why do governments the world over act with such apparent suicidal, manic-depressive blind stupidity, such venal short-termism, such environmental destruction, such barbarity?
Because very simple incentive structures built up over time around the coercive activities of government compel it towards destructive barbaric madness. Simple.
Those contractors supplying government make money out of what government does. Government (originally) was developed to provide a limited range of essential services – law and order and defence. Suppliers to government have a natural incentive to try to convince government to spend more, to make government bigger. It’s an easy gig because governments can print to finance their own spending habits (unlike the private sector).
Governments then get bigger doing things they shouldn’t do. And because there is no appeal process beyond government (all you can do is appeal to another agent of government), government has a natural tendency to get bigger because nothing can stop it short of complete anarchy. So it keeps growing until chaos really does ensue.
This happens again and again throughout history and every time people are “shocked” by the chaos, by the suddenness of the social breakdown. The Soviet Union, Iran, the US in the ’60s, Cambodia, the former Yugoslavia, Europe after WWI… all these regions experienced government-induced chaos, government supported madness.
The US will experience exactly the same social breakdown, the same insane bankruptcy, the same comic-tragic stupidity. Why? Because the dynamics of government compel the country towards this inevitable denouement.
Let me explain by providing a quote from Bill Bonner of Daily Reckoning:
Bethesda is one of America’s wealthiest suburbs. Money from all over the nation rolls this way. The playing field is tilted in Bethesda’s direction.
“I was sitting in the Starbucks, having a cup of coffee,” Elizabeth reported. “One man next to me was on the phone. He was talking about some deal he had done with the US Army in Afghanistan. It sounded as though he was very happy with it. The man next to me on the other side was on the phone too. He was a jollier fellow, talking loudly about how much money he had made. I thought he was a stockbroker or something like that. Then, I realized he was talking about a contract with the government.”
While the rest of the nation has suffered a setback over the last ten years…the Washington metropolitan area has boomed more than ever. Real estate prices are down…but less than other areas.
And when we looked for a house to rent, we expected to be able to name our price. We thought it would be a buyer’s market. Not so. Nice houses in Bethesda are still being sought after. How so?
Wars…bailouts…boondoggles – this area loves them. Federal employees’ earnings keep going up…and a higher portion of the US national income goes to Washington.
People make money out of the government’s fascist madness. So the fascist madness increases.
Simple.
What’s hard to understand about rent-seeking?
Times top editorial cartoon of 2009
Who am I to argue with the venerable Old Lady of old media?
Why isn’t Steve Keen an Austrian?
Fantastic Steve Keen interview with Max Keiser below:
I’m genuinely puzzled by Steve Keen. He correctly, brilliantly, diagnoses the problem – unsustainable growth of Ponzi debt finance that has grown like a cancer in every corrupt-at-the-top Western economy. He correctly, brilliantly, identifies this Ponzi-finance system as the antithesis of true capitalism. He correctly, brilliantly predicts that Japanese-style resuscitation efforts will only result in Zombie banks, Zombie companies, Zombie governments and a Zombie economy. He correctly, brilliantly points out that politicians like Obama have been duped by corrupt advisors into thinking that giving trillions of e-dollars to the bankers will somehow kickstart the economy (it won’t do anything other than save these Ponzi-schemers’ own corrupt skins).
If Steve Keen so clearly sees government as part of the problem, as a cesspool for rent-seeking behaviour, why doesn’t he grasp the only real solution – less government, less corruption, real competition in money – a return to gold and silver as money? Why isn’t he a follower of Murray Rothbard rather than (indirectly) that corrupt confused dandy, that semi-fascist Nazi-sympathiser, J.M. Keynes?
I’m sure if Keen had been schooled in Austrian economics at university he would have become a fantastic Austrian economist.
Then again, given I was unemployable as an Austrian at university and couldn’t even consider pursuing a PhD in the field (given the politics involved), perhaps he did the sensible thing and perhaps he is a closet Austrian on the inside.
So much of what I hear from him is pure Austrianism, pure Peter Schiff, pure Rothbard, I’m sure he’s sympathetic to at least some of ABCT and Austrianism more generally. Or is it just that you can’t teach an old post-Keynesian dog new tricks?
Steve, tell me I’m right. Please.
Jim Willie (a.k.a. The Golden Jackass) nails it
Fantastic blockbuster post, predicting multiple, cascading sovereign debt defaults, a run on US debt and a final run to gold and silver.
I agree with all of this analysis, as can be seen in previous posts on gold, silver, fiscal Armageddon and other entries.
This is the best current synopsis on what’s coming that I’ve seen to date. The question is timing. I cannot say this will happen in 2010. But it will happen.
The only question is when.
One year to go, Germany
On 3 October, 2010, Germany will make its final payment on its WWI debts, imposed on it by the Allied Powers via the illegitimate, coercively imposed Treaty of Versailles, which precipitated the Weimar Republic’s hyperinflation, which wiped out the German middle class and precipitated WWII.
Can you believe that through all of this, the debt was still enforced, payments still honoured, and interest paid on the debt for nearly a century?
Oh, the humanity!
James Quinn, stop freaking me out
All this Brave New World dystopian nightmare stuff is making me even more concerned for the future (if that’s possible).
Wikipedia is surprisingly accurate
Taken from the “criticism of fractional reserve banking” article:
Some monetary reformers see the prevalence of the debt-based monetary system ultimately resulting in a political crisis, between the vast majority of dispossessed who have had any accumulated net wealth periodically “stolen” during periods of “credit crunch” (and find themselves in permanent inter-generational debt, being forced to work involuntarily in the money-economy simply to house themselves and survive in the debt-based economy), and a tiny minority of inter-generational, super-rich elites connected close to the font of the money supply (being the private banking sector), who will strongly resist calls for redistributive economic policies by using all of their financial strength and lobbying power in an attempt to entrench and sustain their artificially privileged status. Given that the profession of this privileged minority is to produce nothing other than debt and inflation, and given that they face being rendered impotent if the power to print debt-free money was returned to government, it is to be expected that those associated and aligned with the private banking interests will use any means necessary to preserve their power, as they have no other skill besides the issuance and distribution of debt money.
Brilliance and courage from a government leader
Let it never be said I am irrationally negative about politicians and government employees.
Here is a courageous, correct and fundamentally sound statement from the Swedish Prime Minister, Fredrik Reinfeldt, as reported in today’s Daily Telegraph:
We have been very clear that we do not put taxpayer money intended for healthcare or education into owning car companies or covering losses in car companies. You cannot save jobs just by pushing in taxpayers’ money if you don’t have the competitiveness to survive in a tough industry with overcapacity.
Wow.
I am in awe.
He is resisting pleas from the unions and pressure from GM to pour public money into Saab to save it. He is right.
What the Australian govt did in comparison was shameful.
I note that St Vincent’s Hospital may have to reduce purchases of new equipment because of $24 million in investment losses, I note that millions of dollars have been wasted on shoddy insulation due to the govt meddling in the private market for insulation in Australia, I note that hospitals are (according to the Tele) at overcapacity dealing with the spike in new births taking place, I note that billions and billions have gone to save the local car industry and the banks. From themselves.
I’m off work because of illness right now. Losing money. It wasn’t my fault.
Where’s my handout?
Once it starts, where does it stop?
The answer is it doesn’t. Until the whole system collapses and anarchy reigns.
The future will be increased volatility
With a possible default looming for Dubai, we have, with surprising rapidity, come to the next stop on our journey to Monetary Hell: Sovereign Debt Default.
The story so far has been: (1) private consumption collapses under the weight of unsustainable accumulation of debt, as banks systematically tried to indebt every sentient being, only to find everyone went belly up at the same time (2) banks run to govt for bailouts (3) TBTF banks get bailouts, but indebt govts (4) govt budgets deficit soar due to (a) bank bailouts (b) collapsing revenues (c) increased spending on social welfare due to the spike in unemployment.
Next stop: (5) a massive spike in interest rates FOR SOME MARGINAL PLAYERS due to the flood of govt bonds onto the market, causing bond prices to collapse and yields to soar. Let’s call this “Who will be the next Iceland?”
Step (5) has been delayed by govts printing up $s and buying their own bonds (particularly in the US). See this graph:
The US can do this for longer than anyone else, because they borrow in their own currency. The marginal players don’t and so they will be the next shoe to drop.
From the heart of the British Establishment publication, the Financial Times:
Markets will not soon return to the panic of September 2008: the financial sector now has state backstops. But, because of these guarantees, fearful investors have started to worry about how safe sovereign debt is. Investors are growing nervous about Greece and Ireland, in particular.
Precisely. Sovereign debt default is the next logical step in this spiral down to gold.
Picture a beggar on a busy street shamelessly going from stranger to stranger begging for a dollar. Once one person has been rejected, without a second thought, the shameless beggar goes in for another attack on another mark.
Banks – ironically – are very similar. They are shameless. They obsess about money and finding the next $, no matter where it comes from. They are desperate.
So banks have gone from prime, to sub-prime, to each other, and finally (and most shamelessly of all) to government.
What happens when government fails them?
The high-class “beggars” will go to gold.
Yes, I am aware of the recent negative correlation between crises and the gold price (gold went down on the Dubai news for example). But the US Mint has suspended sales of some coins and gold and silver are in physical short supply. You can paint a picture in the paper markets, but real physical demand is telling us something different.
At some point gold will simply be unavailable at any price. Its price will be “precisely” (ha ha ha!) infinity.
Lloyds shareholders mugged
Actually this story is incorrect.
What’s been mugged is our future.
Like all sociopathic embezzlers, bankers cannot see past today and their next spending spree. So we have no tomorrow.
Americans go on a permanent holiday to Brazil
After the removal of the last remnants of God’s money on Aug 15, 1971, it’s been a slow trip to Hell for most Americans, with a tiny minority of inter-generational super-rich elites now trapped in protected islands, living amidst a sea of dispossessed angry Americans.
Please Santa
kill off the political career of Goldman Sachs prostitute and commie ETS supporter, Malcom Turnbull, by Christmas.
ETS = BS
The Emissions Trading Scheme looks likely to pass, with both wings of the coercive government “Bird of Prey” agreeing to foist this new “Mark of the Beast” tax on the unsuspecting Australian public.
Sad, in so many, many ways.
First, it comes just as news breaks of the scale of fraudulent scientific “research” into climate change. See here and here and here and here.
Second, there were allegations in the Senate today that Dr Clive Spash’s work on alternatives to a carbon tax had been censored by the CSIRO. The CSIRO just happens to report to “Red” Carr (noted left-wing zealot). See here and here and here.
Third, no one seems to have made the OBVIOUS alternative suggestion: If climate change threatens to kill our children, and human production/consumption is causing this supposedly deadly over-heating, surely the most efficient, immediate, effective and equitable solution would be to raise interest rates around the world to 10%.
This simple measure would (a) reward savers (b) encourage capital accumulation and allow for further research and investment in alternative energy production (c) with 100% certainty reduce consumption and therefore emissions (unlike the hare-brained ETS scheme which gives back with one hand what it “taxes” with the other) (d) be equitable in the sense that it would minimise the govt’s ability to selectively impose the tax on its enemies and provide carbon credits to its favourites.
Ahhh….but that’s the very reason why it couldn’t ever be considered!
Because this whole scam is about putting in place a “Mark of the Beast”-style universal tax that will have every industry running to the govt begging them for favours. Giving tribute to Satan’s Spawn is what it’s all about. Bow down slaves and beg for life. Or else.
Fourth, the only Parliamentary idiot who made sense today was Senator Barnaby Joyce. He correctly (a) accused Labor of Leninist-style censorship (it’s true!) (b) stated openly that the ETS is a scam to create more gambling chips for corrupt venal bankers and brokers (c) stated that this huge bureaucratic nightmare is simply a wealth-transfer scheme to suck $s from every ordinary Australian to Sydney and Melbourne “elites” (read: PARASITES). This is the real reason for this bizarre new tax. The bwankers desperately need another paper scam if the liquidity demands currently being considered by APRA do get imposed on the counterfeiting bwankers. The bankers are looking at fleecing another sheep if they can’t make more profits through excessive monetary embezzlement.
Yet, irony of ironies, Joyce was the “victim” of ABC employee and (apparently) govt-spokeswoman Virginia Trioli’s “crazy face” accusation, which effectively labelled him (and anyone else questioning the efficacy of the ETS) as insane. See here, here, here and here.
She’s still employed by the ABC, despite this massive insulting faux pas. If you or I did this when interviewing Senator Wong, daughter of Mao, I’m sure we’d never have a career in media EVER AGAIN.
So we have a left-wing zealot play-acting as a journalist, laughing at anyone genuinely questioning this bizarre new tax – and she’s still employed. We have this “crazy” Senator being the only one making any sense today in the Senate. We have a new “Mark of the Beast” tax that makes no sense, will not do anything other than create a massive new bureaucracy and trading chips for bwankers and brokers. We have not actually addressed pollution and “climate change” (remember: the big polluters have received massive tax credits for no reason other than politican influence). We still have massive depletion of the world’s resources through debt-created over-consumption.
We are run by madmen. And madwomen (most of whom appear zealots or lesbians – or both).
Finally, just on the very legitimate point that – perhaps – gays and lesbians should (generally) not be chosen to form long-term public policy, see this controversial research by Hans Hermann-Hoppe.
Then look at Wong, and half of the Labor Cabinet.
I rest my case.
We are run by a pack of sociopathic zealots intent on controlling every aspect of our lives, incapable of addressing our real (very real) environmental problems and who will undoubtedly feed off our children like cannibals.
Death, come swiftly…
The graph. The quote. The graph. The quote.
“Just men regard repudiation and spoliation of citizens by their sovereign with abhorrence; but we are asked to affirm that the Constitution has granted power to accomplish both. No definite delegation of such a power exists, and we cannot believe the far-seeing framers, who labored with hope of establishing justice and securing the blessings of liberty, intended that the expected government should have authority to annihilate its own obligations and destroy the very rights which they were endeavoring to protect. Not only is there no permission for such actions, they are inhibited. And no plenitude of words can conform them to our charter…
Under the challenged statutes, it is said the United States have realized profits amounting to $2,800,000,000…. But this assumes that gain may be generated by legislative fiat. To such counterfeit profits there would be no limit; with each new debasement of the dollar they would expand. Two billions might be ballooned indefinitely to twenty, thirty, or what you will.
Loss of reputation for honorable dealing will bring us unending humiliation; the impending legal and moral chaos is appalling.”
You know, it’s funny. I look at this quote. Then I look at the graph. This quote. The graph. This quote. The graph. This quote. The graph.
Government is a parasite on the people
Less government is the answer, not more. Starting with the removal of legal tender laws and central banking…
It’s beginning to look a lot more riskless…
Merry Christmas from God’s little helpers!
Did Goldman get a backdoor bailout via AIG?
Deflation, then inflation…
There is no such thing as “public service”
There are only grubby backroom deals and a revolving door in government.
At least since the 1900s.
Sad.
Too late
I also think the simple printing up of fiat currency to satisfy 100% reserve “ratifies” the embezzlement and leaves embezzlers whole, which is no good thing. Let a few banks have banks runs first, I say.
Overall however, there are some good proposals here. But there is no way any of these ideas are going to be implemented, so best prepare for fiscal Armageddon instead.
Karma is King 