Week 33 of the Quarantine
Hard times create strong men. Strong men create good times. Good times create weak men. And weak men create hard times.
– G. Michael Hopf
SAN MARTIN, ARGENTINA – America’s weak men – in Congress, on Wall Street, in the Federal Reserve, in universities and newsrooms – getting old, desperate to hold on to their status and their money – are setting up some very tough times.
At least, that’s our guiding hypothesis here at the Diary.
But the blockheads think that, with math and mechanics – or brute force – they can escape the patterns of the past… and the poetic judgment of the future.
During the Vietnam War, for example, the number-crunchers, led by former secretary of defense Robert McNamara, tried to win by doing simple cost/benefit analysis.
They watched the “body count”… as if it were the Dow Jones Industrial Average. Then, in an effort to increase the cost to the enemy, they “sent a message to Hanoi,” threatening to bomb it “back to the Stone Age,” if it didn’t do what the U.S. wanted.
Years later, North Vietnamese general Vo Nguyen Giap said to McNamara, “We didn’t know you were trying to send a message. We thought you were trying to kill us.”
We see the same sort of simpleton logic at work in America’s “sanctions” – against Russia, Iran, and others. They are supposed to increase the pain to the foreigners and result in a gain for the U.S.
Instead, the “enemy” digs in its heels and rallies behind its leaders.
Illusion of Recovery
The mechanistic/math-based illusion is also at the center of the feds’ ham-fisted “stimulus” measures. Dropping money bombs from helicopters (or supplemental unemployment compensation… or business bailouts), they believe they can increase real “demand” and change the behavior of the economy.
Which is what led to the latest “blowout” GDP growth numbers.
According to the number-torturers, U.S. GDP grew 33% in the third quarter – a record.
But wait. How could GDP go up so much while 22 million people – 13% of the workforce – are receiving unemployment? And when actual on-the-job earnings are down by hundreds of billions of dollars? And when long-term unemployment is rising as more and more small businesses simply give up?
Oh, Dear Reader… you already know the answer, don’t you?
In the midst of the sharpest downturn in history, the feds increased Americans’ incomes by giving them more money than they earned when they were working – with more than $5 trillion in fiscal and monetary stimulus.
Since they were trapped at home, folks took the free cash and started daytrading… or bought new appliances. Now, they have new refrigerators… and a new TV to watch while they’re waiting to be called back to work.
If you just looked at the numbers, the result could be mistaken for a “recovery.” And if you were particularly thick, like a Federal Reserve governor… or a White House economic advisor… you might conclude that the economy needs more of this stimulus.
Old Wives’ Tales
But if you have any poetry in your soul… or any real brains in your head… you know you can’t borrow or “print” your way to wealth. The “recovery” has stalled. Because the mechanical/mathematical metaphor – even dressed up as the Fed’s “dynamic stochastic equilibrium” model – is a fraud.
There are deeper patterns at work… oft brushed off as old wives’ tales and moral lessons: “A penny saved is a penny earned.” “Don’t go looking for trouble – or you’ll find it.” “Marry for money – and you’ll earn it every day.”
And our favorite: “One generation learns; the next forgets.”
The generation of the 1930s and 1940s faced hard times. They learned to work, save their money, and let the economy do its stuff.
That is what produced the good times of the 1950s and 1960s… making the U.S. the world leader non-pareil, in every sense. First in economy. First in art and culture. First in military power. First in science, learning… You name it. We were number one.
But the good times produced weak men.
Richard Nixon was faced with rising inflation – it hit 4.3% in 1971. The U.S. dollar was falling. The French were coming to the Treasury, demanding to exchange – as guaranteed by six generations of U.S. Treasury Secretaries – their U.S. dollars for gold.
What did Nixon do? Stiffen his backbone… cut government spending… cut taxes… and roll up his sleeves to dig his way out of the hole Lyndon Johnson had put him in?
Nope. His knees buckled. He slithered down and ordered the “gold window” at the Federal Reserve closed.
Thenceforth, America operated with a new kind of fake money – not backed by anything except the jelly-like ligaments of future Treasury and Fed chiefs.
Inflation rose to 13% in 1980 and threatened to go higher… until Paul Volcker, America’s last honest Fed chairman, brought it under control.
This “save” bought the U.S. 20 more years of relative prosperity… and peace.
But since then, it is as if America’s Achilles tendon had been cut. Wibbly wobbly… flippety floppety…
First, in 2001, George W. Bush gave in to the warmongers and the military/industrial/surveillance wing of the Deep State… He began the longest, most expensive, most pointless war in U.S. history. There wasn’t even an identifiable enemy.
Meanwhile, Fed chief Alan Greenspan collapsed, too. Rather than let the economy heal itself after the recession of 2001, he jazzed it up and perverted it by lowering the key federal funds rate by more than 500 basis points (5 percentage points).
These artificially low interest rates caused the mortgage crisis of 2008-2009. Then, both the Fed – under Greenspan’s successor, Ben Bernanke – and the federal government, under Barack Obama… gave way.
Bernanke famously applauded his own spinelessness in his hagiographic book, The Courage to Act. Like his predecessor, he cut the federal funds rate by more than 5 percentage points… down to near zero.
For his part, Obama backed the “shovel-ready” boondoggles already in motion. And though he had pledged to get America out of Bush’s futile wars, when push came to shove… rather than go up against the warmongers… including Hillary Clinton and Joe Biden – he went limp.
No Strength or Courage
The next crisis, in February of this year, brought forth a new bowl of noodles. Donald Trump couldn’t stand up straight and confront his own health bureaucrats.
And the Jerome Powell Fed went along with an outrageous money-printing spree, in which in the second quarter of this year brought government spending to more than half of GDP… and made the deficit for 2020 greater than tax receipts.
So far, in the face of the COVID-Lockdown-Recession, there have been few people who have shown any strength at all. Instead, they watch the numbers – new “cases”… “with-COVID deaths”… hospital beds in use…
They must think that if they only had enough data, they could defeat death itself.
Somehow, the Swedes mostly resisted the hysteria. Practically everywhere else, people panicked and fled in terror.
Perhaps the greatest exception is a federal judge in Pennsylvania. On September 14, the New York Daily News reported…
A federal judge on Monday struck down Pennsylvania’s coronavirus restrictions that banned large gatherings and forced nonessential businesses to close, calling the order “unconstitutional.”
Judge William Stickman ruled in favor of four counties that had sued Gov. Tom Wolf and Health Secretary Rachel Levine over the rules.
“There is no question that this country has faced, and will face, emergencies of every sort,” Stickman wrote. “But the solution to a national crisis can never be permitted to supersede the commitment to individual liberty that stands as the foundation of the American experiment.”
As for the rest – the whole elite of judges, politicians, rich people, media figures… the soft generation that grew up in the cushy 1960s and 1970s – there is little sign of strength or courage.
Surely, the curse of history is on us all.
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