Bill Bonner: screw the next generation!
By
Bill Bonner Jan 16, 2009
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When Federal Reserve chief Ben Bernanke gave his speech to the London School of Economics on Tuesday, our man was on the scene. Terry Easton put a tough question to America's central banker: aren't your interventions just making the situation worse, he asked.
Amid the 'blah, blah, blah' of Bernanke's response was this: "The tendency of financial systems to boom and bust... is a very long-standing problem... but I think it's very important for us to try to put out the fire... then you think about the fire code." In his 1988 book, The Collapse of Complex Societies, Joseph Tainter argued that all societies – like all organisms – are doomed. Tainter studied ancient Rome as well as the Mayans. He noticed that problems always blaze up. Each one – whether climatic, political or economic – rings the firehall bell. And each solution (and readers may substitute "bail-out" for solution) brings more challenges and takes more resources. Finally, the available resources are worn out.
When the costs become high enough, people seem to give up. By the end of the Roman era, for example, the burdens of empire were so heavy that people sold themselves into slavery to get free of them. So many did so that the authorities had to come up with another solution; they outlawed the practice. Henceforth, Roman citizens were required by law to remain free!
An earlier philosopher, Giambattista Vico, writing in the 18th century, put the start of the decline of Rome roughly at the time of the Great Fire during Nero's reign. Nero, partly to pay for his post-fire reforms, began taking the gold and silver out of the coins. All civilizations go through three stages, Vico said – divine, heroic, and human. The divine period is ruled by the gods. The heroic period is marked by victories and statues. Then, comes the human era. (Here, we permit ourselves to add a footnote to Vico: the coin of the realm in early periods is the gods' money – gold. Later, people switch to their own money – the kind you make from trees.) This last stage, says Vico, is when popular democracy arises, along with rational thinking and the "barbarie della reflessione" [the barbarism of reflection]. In earlier eras, people do as their gods and leaders ask. In the final era, they ask: "what's in it for me?"
As late as the early 1960s, John F. Kennedy could appeal to heroism without drawing a laugh. "Ask not what your country can do for you," he said, "ask what you can do for your country." But 11 years later, Richard Nixon began debasing the money. That was a solution too; the US had spent too much. Nixon would worry about the fire code later. First he opened up with the firehose; he defaulted on America's promise to swap dollars for gold at the statutory rate.
Barack Obama tried a Kennedyesque appeal to civic highmindedness last week. We must "insist that the first question each of us ask isn't 'what's good for me' but 'what's good for the country my children will inherit''', he said. But now, like Doric columns in a trailer park, the words are ornamental, not structural. They are the homage that one age pays to a better one.
Now barbarous reflections rise up like swamp gas. The place stinks of them. Bernanke and Obama offer solutions. But their plans to save the world from a correction are little more than a swindle of the next generation. They offer to bail out the mistakes of one generation with debt laid on the next. "Regarding the current financial meltdown," writes Rony Teitelbaum, "it is very clear that two main factors underlie the political reactions to the crisis; the first being pressure originating from ties between the financial and the political elect, manifested by taxpayer bailouts of large institutions that continue to deliver bonuses to the executives and donate to political campaigns. For those of us who aren't blind, these are clear signs of political corruption which would have made the worst Roman emperor blush.
"The second factor is political pressure originating from the mass public. The kind of solutions offered so far, and I may add which were received with enthusiasm, were tax rebates and gasoline tax holidays. These are actions aimed at a public who "impatiently expected quick and obvious results", to quote Cary's description of Roman society in AD300 (A History of Rome)."
Circa 2009, there is hardly a soul in the entire world who has not been corrupted by the barbarie della reflessione of the late imperial period. Both patricians and plebes are for bailouts. Both business and labour back stimulus programmes. The taxpayers and the politicians who rule them are of one mind. All speak with a single voice: 'Screw the unborn!' The golden age is over. In the space of a single generation it passed from gold, to silver, to paper – and is now somewhere between plastic and navel lint.
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