The end of politics in America, part 2

How did Trump become the leader of the most powerful nation on Earth?

A lot of people are asking that question, while a lot of other people already know (hint: it wasn’t the Russians). But I want to get beyond the circus that is Washington DC, and answer that question by asking another:

Can politics solve our nation’s greatest problems?

I think there is a dawning realization among Americans that it doesn’t really matter who lives on 1600 Pennsylvania Avenue. Republican or Democrat, the outcome is pretty much the same.

Never at any point in living memory have we been so politically divided, but the party distinctions have become increasingly meaningless. Trump campaigned on providing universal healthcare. Clinton campaigned on escalating our military involvement in Syria. Which one was the Republican, and which one was the Democrat?

In the previous post, I said:

I am convinced that the grand key to understanding United States history in the 20th century—and by extension, current events in the 21st—is a deep knowledge of monetary policy and the financial system.

What is that system?

It is a system of debt. Pure and simple. We have turned our debt into money, and made every other form of money illegal. And the rest of the world has followed us gleefully off the cliff.

Washington is bankrupt. Literally bankrupt. Every year, the Treasury runs an internal audit, and every year, that audit fails. The government’s single biggest asset on their balance sheets is… $1 trillion in student loan debt. Social Security is insolvent and, according to the government’s own reports, will completely run out of money in less than twenty years.

So if Washington is bankrupt, why haven’t they declared bankruptcy? Because they can just keep printing money through the Federal Reserve.

Because of this, the US dollar has lost about 97% of its value since the Federal Reserve system was established in 1913. A time traveler from the new Wonder Woman movie couldn’t buy $5 worth of stuff with $100 of our dollars today. And to keep up this Ponzi scheme we call “money,” Washington has gone nearly $20 trillion in debt.

How much longer can we keep that up?

If we could grow our economy fast enough, and never stop growing, we could keep up the Ponzi scheme for a very long time. But growth is no longer a solution, because the debt is bigger than the economy. The debt is the reason we can’t grow.

If we could innovate fast enough, we could lower the cost of living so much that the poor don’t realize that they’re poor. To some extent, we’ve already done that. But the effects are too uneven: startphones and computers are super cheap, but houses and health care are practically unaffordable.

Which brings us to serfdom.

Let’s go back in time a couple thousand years. Before the days of the empire, the Roman dream was that every family would have their own plot of land, making them independently wealthy, and the head of every family would take up arms in defense of his country whenever called upon by the state. This was not all that different from the Jeffersonian ideal of the yeoman farmer.

Then the Punic wars happened, which, for the Mediterranean world, was basically the ancient WWI and WWII. As Rome became a major world power, the military-industrial complex made a few select elites fabulously wealthy, who kept the masses pacified with welfare handouts.

But the endless cycle of foreign wars came at a heavy cost. Decades of budget deficits and an unsustainable national debt forced the Romans to debase their currency, which completely collapsed. Trade halted, the middle class lost everything, and the 1% became fantastically wealthy, buying up all the real estate and forcing everyone else out. The Roman dream was dead, replaced by a form of bondage called serfdom.

Serfdom came in a number of different flavors:

  • Slaves, who had always existed in the Roman world and continued for some time in the Medieval. Landlords got tax benefits for holding slaves.
  • Villeins, who were bound to the land and worked for the landlords. In exchange, they enjoyed protection and tax relief. Theoretically.
  • Coloni, or sharecroppers, who leased land in exchange for labor and a portion of their harvest. They were eventually taxed out of existence.
  • Freemen, who technically weren’t serfs, but were only a raid or a bad harvest away from becoming one. They were basically renters.

The corvée was a tax, paid in labor, that non-landowners owed by law. Basically, for every XX days out of the year, you worked for the state. It continued even after the abolition of serfdom, until the revolutions of 1848. My Czech ancestors paid the corvée, which is probably one of the reasons they and their children emmigrated to the United States.

But wait—we pay the corvée too! It’s called the federal income tax: for XX days out of the year, you work for the state. The taxes are even higher if you’re self-employed or a small business owner.

Except… not everyone pays the income tax. In fact, nearly half of Americans pay no income tax. Why? Because the politicans know that they can use the welfare system to buy votes. If you’re on welfare, who are you going to vote for: the guy who plans to cut your handouts, or the guy who says that the wealthy should pay their “fair share”?

And sitting at the top of it all are the central bankers.

The medieval serfs were bound to the land and worked for the landlords. In contrast, modern debt-serfs are bound to their debt—national debt, student loan debt, mortgages, consumer debt—and work for the banks.

So I ask again: can politics solve this problem? Can we find a political solution to our national debt?

Unfortunately, there is only one political solution: default on the debt. If we default on entitlements like social security, there would be chaos, riots, and anarchy… and we still wouldn’t pay down hardly any of the debt. If we defaulted on our treasury bonds, it would send a ripple of financial panics across the world, destabilizing the flashpoints in Europe and Asia before returning to our shores. Stocks, mutual funds, and pensions would all be wiped out. Almost the entire savings of the Baby Boomer generation, gone.

But there is another option, though it’s hardly a “solution”: kick the can a little further down the road. Print the money, devalue the debt, and inflate the currency to oblivion.

This is the path we’ve been on since 1913. This is the reason why our dollars buy a little less each year. And this is the reason why we, as a nation, are backsliding into serfdom.

We’ve seen this happen before. Rome fell because of it. Europe came under the yoke of serfdom as a result of it. Our ancestors fled to this country to escape it. And now, we are repeating it.

This isn’t a political problem: it’s a math problem. The numbers just do not add up. The next financial crisis could very well be the “extinction level event” that puts the final nail in the coffin of the US dollar, throws the world into a global war, and sends the United States into its greatest existential crisis since the Civil War. The Republicans don’t have the solution, and neither do the Democrats, because the problem is not political.

This is what the end of politics in America looks like. We’re watching it happen in real-time. Our politicians have become the clowns in the bread-and-circuses routine. Meanwhile, the central bankers are shackling us in chains with every dollar that passes through their hands.

What are you going to do about it?

A fascinating journey of discovery

I had a really fascinating experience last year that has turned into something of a journey of discovery. It’s still ongoing, and I’m sure it will affect my writing in years to come.

It started with family history. Long time readers of this blog will know that I’ve been interested in family history for some time. My sister is a professional genealogist who specializes in Czech records (she keeps a blog here), and I got started by helping her.

In the United States, the census records are only useful to about 1850. Before that, you have to get into land records, probates and wills, and local courthouse type stuff to really go anywhere. But in the Czech lands, the Catholic Church has kept meticulous parish records going back to the 15th and 16th centuries. They’re handwritten in old German and totally unindexed, but the books are all digitized and available online.

As I worked on this research with my sister, I started to wonder: how far back can we push these lines? What are the limits?

The Czech lands were part of the Holy Roman Empire, under the Austrian Habsbugs. In the 15th century, the Hussite Wars shook things up quite a bit, and that’s about as far back as the Catholic parish records go. But the noble genealogies were very well kept, and go back quite a bit further. If one of your lines connects to the nobility (which is very possible, given how many bastard children were running around), you can push back really far.

But past the 8th century, things start to get sketchy. Most of the nobility in Europe are descended from the barbarian tribes who invaded the Roman Empire: the Goths, the Franks, the Vandals, etc. Same thing with the Slavs and the Byzantine Empire, though the Byzantines held out much better than the Western Roman Empire (it was the Turks, not the barbarians, who eventually did them in).

The trouble is that when these barbarians took over, they tried to establish their legitimacy by fabricating genealogies. Plenty of royal European lines go back all the way to Adam and Eve, but how reliable is that really? As rulers of Christian lands, of course they would try to connect themselves to famous characters from the Bible.

The Dark Ages might not be as dark as we think they are, but in terms of records and record-keeping, they certainly are. The largest and most civilized empire in the world had just collapsed, with barbarians running amok in the countryside and the Persians threatening the last vestiges of the empire in the east. Very few historians have documented this era, and it was a huge dark spot in my own understanding of the world.

So I set out to study it. I scoured Wikipedia, subscribed to the Western Civ podcast, and listened to the entire History of Rome by Mike Duncan (excellent podcast, by the way). The Roman Empire had dominated Europe right up to the early middle ages, and I wanted to learn why it had fallen.

That led to a journey of discovery all in itself. Roman history is a fascinating subject in its own right, and the four or five centuries from the Punic Wars through the reign of Marcus Aurelius are very well documented. Rome faced a lot of challenges, and even a few existential threats, but for more than a thousand years they dominated the known world.

So why did they fall?

The more I studied about the Romans, the heavier this question weighed on me. I learned about Diocletian and the Tetrarchy, the crisis of the third century, and Constantine the Great—a period of Roman history that was much less familiar to me. And then things started to click.

My Czech ancestors were serfs. They emmigrated to Texas shortly after the last vestiges of serfdom were abolished in 1848. Under serfdom, they were little better than slaves. The land they lived and worked on was owned by the Hukvaldy Estate, and they were bound to it by feudal law.

When Diocletian became Augustus, the Roman Empire was reeling from half a dozen existential crises, including an economic collapse. The money was so worthless, most of the empire had resorted to a barter economy. Diocletian established a system of exchange where people could pay their taxes with trade goods rather than money. However, the only way for that system to work was 1) for everyone to take the profession of their parents, and 2) for no one to move without Imperial permission. Otherwise, you might have too many pig farmers in one province and not enough blacksmiths in another.

In other words, the system of feudal serfdom that my ancestors labored under had its roots in the reforms of Diocletian. But it went much deeper than just one man. Diocletian reforms were necessary because the Roman economy had collapsed, and the economy had collapsed because for more than a hundred years, the Empire had been in massive debt, and had serviced its debts by devaluing its currency.

Sound familiar?

The Roman Empire fell because of deficit spending, government debt, and currency devaluation over the course of several generations. In 1913, the United States established the Federal Reserve, beginning our own process of currency devaluation. Our national debt has doubled every eight years since 2000, when the stock market peaked as measured in gold. Right now, our debt-to-GDP is 104%. One hundred four percent.

And that’s just our sovereign debt. Our household debt is north of $12 trillion, or another 73% of our GDP. The largest portion of that is student loans, which cannot be resolved through bankruptcy.

Seven out of ten Americans have less than $1,000 in savings.

Half of Americans would have to beg, borrow, or steal if slapped with an unexpected $400 expense.

Twenty percent of American households do not have a single person that is working.

Fully one-third of America is in debt collections, meaning that they have an unpaid debt more than 180 days past due.

Is it any wonder that the middle class is shrinking? We’re following the same path that Rome followed, except where they merely walked, we’re running headlong. With our modern communications, the pace of life is so fast that I suspect we’re completing the cycle in a fraction of the time.

And then you realize that what passes for money these days isn’t “money” at all, but government paper backed by government debt. What happens when we default? What happens when the credit markets freeze up and contagion spreads across the global economy? What happens when you wake up one morning, only to find that all the ATMs are down, the banks are all closed, and everyone’s accounts are all frozen?

So what started as an interest in family history took me down a rabbit hole where I learned all about how Rome fell, and how we’re following in the footsteps of Rome. It led to a keen interest in monetary policy and our global monetary system. It also gave me a new hobby: coin hunting.

The Romans devalued their currency by melting down the old gold and silver coins, and minting new ones mixed with copper. Over time, the melt value of the coins went down, and that’s exactly what’s happening to our US currency now.

Before 1965, dimes and quarters were made from 90% silver. After, they were made from copper with a thin nickel coating. Nickels have always been made from a 75/25 copper-nickel alloy, however, and pennies were all 95% copper until 1982. Right now, the melt value of a US penny is actually 1.8¢. At the height of the “jobless recovery” it was closer to 4¢.

Now, it’s illegal to melt down pennies because they are currently legal tender. However, as the currency continues to inflate, the penny will become even more worthless, eventually reaching the point where it doesn’t make sense to make anymore. Right now, the material cost alone of each zinc penny is 70% of the face value. Canada has already discontinued minting pennies, and we aren’t far behind.

I started dabbling in copper hoarding. But as I went through lots of pennies, I started coming across some really old ones. Which got me to wondering if maybe the numismatic value of some of these coins eventually might be more than their melt value. After all, when everyone’s melted down their copper pennies, a complete collection of Lincoln cents is going to be something special.

So I started building a collection of Lincoln cents. Then I got into state quarters, first as a cool Christmas gift for one of my nephews, then for myself. Then I got into Jefferson nickels, and started finding silver.

Right now, I have a complete set of Lincoln Memorial cents. They’re all from circulation, and some of them are pretty beat up, but there are a few really nice ones in there too. My wheat cents collection is much less complete, but the coolest piece is a 1909 VDB in very fine condition, with all the wheat berries still showing. That’s a $10-$15 penny that I found in a normal coin roll.

It’s a fun hobby, and it comes around full circle to what got me started down this rabbit hole in the first place. Each one of these coins is a small piece of history. That 1909 VDB is more than a hundred years old. I’ve got coins that my parents and grandparents would have used, and a penny for every year of my father’s and mother’s lives. With a bit of luck and a lot of patience, I’ll be able to find a penny for every year of my grandparents’ lives as well.

So yeah, it’s been a fascinating journey of discovery, and it’s still ongoing too. I just got started with Roosevelt dimes, and I’m catching up on Mike Duncan’s Revolutions podcast, which is just as interesting as his History of Rome. Turns out that the French Revolution also happened because of deficit spending and a runaway government debt. Surprise, surprise.

Life is a giant rabbit hole when you’re curious about everything!

Lights Out by Ted Koppel

About a year ago, while doing research for prepper-type stuff, I came across this interview of Ted Koppel, discussing his book Lights Out.

It piqued my interest, especially since Ted Koppel is not the kind of person I’d peg as much of a prepper/survivalist. The part about the Mormons sounded interesting too, so I reserved the book from my local library and checked it out.

I was not disappointed.

Lights Out is a fascinating examination of the possibility and ramifications of an attack on the US power grid, written by a veteran journalist with dozens of high-level connections across both the government and the private sector. It starts with a tour of the system’s vulnerabilities, quickly moves on to the government’s contingency plan (or lack thereof), then assesses the general preparedness of the rest of the country and what we could expect to happen if the power grid went down. Ted Koppel makes a compelling case that:

The infrastructure of the power grid is highly dependent on the internet.

This dependence has created a series of vulnerabilities that could destroy large portions of this infrastructure.

The private sector has failed to reliably safeguard against these vulnerabilities, mainly because the companies at the failure points have little incentive to develop the safeguards.

State and Federal agencies cannot impose sufficient safeguards because of lobbying efforts and privacy concerns.

Because most of the infrastructure is generations old and not standardized, it would take months or even years to replace key components in the event of a successful attack.

The Russians and the Chinese already have the capability to bring down our power grid, and with the proper expertise it is fully within the capability of rogue states like Iran or North Korea, or non-state actors like ISIS, to do so as well.

The Federal government fully expects an attack on our power grid in the mid to near future, but the various agencies do not have a clear plan for how to deal with such a contingency.

The general US populace is woefully unprepared for such an attack, except for certain communities such as the Mormons. They would not be able to provide for everyone, however, and would probably use force to defend themselves in the event of a collapse.

The only way our society could survive an attack is if everyone who can afford it would store three to six months of food, water, and emergency supplies. Otherwise, if the power grid went down, a collapse would be swift and catastrophic.

Freaky stuff. What was really freaky was the way that people who should have been taking more responsibility, such as the CEOs of major power companies or the directors of Federal agencies such as the DOD or DHS, all seemed content to pass the buck and give Ted Koppel the run-around. He described in detail some of his interviews, and the way in which various officials passed him off to one another like a hot potato.

And then he got to the Mormons.

I have to say, the chapters about the Mormons were some of the more fascinating parts of the book. Ted Koppel only expected to get a phone interview, but instead, Elder Henry B. Eyring flew him out to Utah and gave him a personal tour, including the welfare farms, the distribution centers, the canneries and home storage centers—they even found a local Utah family to cook him a food storage dinner! The gold-ticket treatment definitely impressed him, and that shines through in the book.

Of all the books about Mormons written by non-Mormons, I have to say that Lights Out gives one of the fairest treatments I’ve ever seen. Ted Koppel touches only lightly on church history and doctrine, but he makes it clear how these things tie into our emphasis on self-sufficiency and preparedness. While his impressions are quite favorable, he doesn’t shy away from asking the difficult questions, such as whether we would take up arms to defend our supplies if roving hordes threatened to take them from us by force. As he points out, there’s a great deal of constructive ambiguity from our leaders on that point.

If you’re as interested in potential doomsday scenarios as I am, or in emergency preparedness and self-sufficiency, this is a great book. It raises some frightening concerns without being too alarmist or devolving into sensationalism. For those who are concerned about this sort of thing but don’t have much experience with preppers or prepper culture, the book offers a fascinating look at this growing subculture and the motivations that drive it. Definitely worth a read!