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?