‘In our age there is no such thing as “keeping out of politics.” All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred, and schizophrenia.’
—George Orwell, Politics and the English Language
It’s coming. It’s happening.
Our dark fears and midnight tremors are coming to life. In the broad daylight.
The Bolsheviks are invading the suburbs and cities…and even the Corn Belt…all across America.
American jackassery
Both Democrats and Republicans are turning to three-part programmes — one part Soviet economic claptrap, one part Mussolini’s political bamboozle, and one part pure American jackassery.
Today, we begin the hard work of giving them the mockery they deserve. We only worry that we will run out of scorn and sarcasm before we are finished.
Politics is always and everywhere the enemy of civilisation. It is the enemy, too, of economic progress. Most important, it is the enemy of dignity and clear thinking.
And now, from cannon in front of us…from cannon to the left of us and cannon to the right…from all directions, politics thunders in all its sordid glory.
Many will want to blame Donald Trump. It was he who brought politics front and centre in economics, trade, immigration, and monetary policy.
Rarely had a US president intervened so directly in the affairs of ordinary businesses and consumers.
He cut taxes for some…and raised them for others. He started trade wars with Canada, Europe, Mexico, and China; on his own say-so, he raised prices on imports for all Americans.
The Fed is supposed to be independent of politics, but the president told Jay Powell to stop ‘normalising’ rates…and the Fed obeyed. And this past weekend, he went further, suggesting that even farming should be brought under his control.
The soggy Corn Belt must have felt a ray of sunshine on Saturday as it learned that the US president had made a great deal on behalf of our ‘patriot farmers’ with Mexico.
How the president got in the business of selling corn, we don’t know. Nor do we know why farmers are any more patriotic than plumbers or insurance salesmen.
Perhaps it is because they provide us with food to eat? But what kind of patriot takes food away from Americans and sells it to foreigners at a higher price? And what kind of president wilfully raises food prices?
Every penny the farmers get in extra income by selling to foreigners, the natives will pay in higher food prices. How is the nation better off?
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Colourful banners
Who cares? It’s about power, not economics.
Ambitious politicians want to control everything. Typically, they come up with colourful banners…fabulous new Programmes…Five-Year Plans and 1,000-year Reichs.
In the Soviet Union, Stalin went so far as to dictate how land would be farmed (collectivism) and how and when the seeds should be planted (Lysenkoism).
Attracted to the nutty theories of agronomist Trofim Lysenko, Stalin had the farmers converting winter wheat to spring wheat by planting soaked seeds directly in the snow cover. Sometimes it worked. Often it didn’t. But Stalin never went hungry.
Trump has his crackpots, too — notably his top man on trade, Peter Navarro — from whom he has drawn inspiration and quackery. Navarro encouraged the president to go to battle with the Chinese.
But on Monday, speaking to CNBC, Trump admired his adversary:
‘Don’t forget, the head of the Fed in China is President Xi. He’s the president of China. […] He can do whatever he wants. They devalue, they loosen or you would just say they pump a lot of money into China, and it nullifies to an extent, not fully, it nullifies the tariffs.’
How would a president know when to ‘devalue’ the people’s money…or when to loosen monetary policy? How would anyone know?
But one constant feature of the politicised economy is a lack of question marks. Politicians have no idea how an economy works and don’t really care. And the more control they have, the poorer people become.
Man with the plan
Price fixing doesn’t work. Central planning doesn’t work. Stimulus doesn’t work. Never did. Never will.
But politically, in a late, degenerate empire, the ‘man with the plan’ grows bolder.
For nearly half a century, the feds have twisted and corrupted the economy…with fake money and fake price signals (mostly interest rates).
This has nurtured a grotesque, disfigured capitalism where the average American hasn’t had a raise in 45 years…but where the rich and powerful have gained approximately $50 trillion of illegitimate wealth (our estimate).
This corrupted elite now dominates the White House, Congress, the bureaucracy, the universities, the military, the press, and major industries. And they use their influence to make sure real capitalism is suppressed.
Instead of dynamic, creative destruction, old, zombie companies are kept alive on EZ money.
Managers discover that it is safer and more profitable to borrow money and buy their own stock than to undertake risky, long-term new ventures.
Kids discover that it is better to stay in school with more and more student debt than to venture out in the real world and have to pay it.
And old people realise that they want the feds to protect them from everything — disease, poverty, infirmity, terrorism, Mexicans, and BMWs — and life expectancies fall.
GDP growth rates have sunk to just half of what they were in the last century. Savings rates are near all-time lows, too, as savers are systematically penalised with low rates and inflation.
And debt grows twice as fast as output…with no end in sight, dooming the whole system to a catastrophic collapse.
Cometh the hour…cometh the numbskull.
And here cometh Elizabeth Warren, with her own bombs and BS…promising to out-Trump Trump.
More to come tomorrow…
Regards,
Bill Bonner