We arrived in Buenos Aires this morning. Population: three million. Temperature: about 75 degrees Fahrenheit. Inflation rate: 99%/yr.
How can you live well when prices double every 12 months? We’re going to find out.
Meanwhile, we’re working our way through recent headlines, trying to see where we might be headed. We believe they point to a ‘cluster’ of catastrophes…financial, economic, political, and social.
The money disaster is obvious. Americans owe too much money, in debts contracted at very low interest rates. As rates rise — which they must, both in response to and opposition to inflation — trillions of dollars’ worth of debt will have to be written off or inflated away.
The other disasters are less obvious. It’s one of those that we look at today.
Empires don’t act like normal countries. They are the alpha male of nations. Or, as Madeleine Albright put it, they are the ‘indispensable nation’. Like the lead dog on a sled team, they dominate other dogs — by force — and fight off rivals. But as they age, they become vulnerable. It is just a matter of time before the pack turns on them.
Empires age too. They ‘over-stretch’. They get involved in too many battles…and spend too much money. Then, war and inflation, like age and infirmity, do their work…
As reported the other day, the best recent advice on the war in the Ukraine came from an unlikely source: Mr Donald Trump. It was he who proposed (before the Deep State insiders got him back on the leash) that the US leave NATO…and it was he who just followed up by suggesting that we should say ‘no’ to requests for more military aid to the Ukraine.
Alas, Mr Trump is as unreliable to his friends as to his enemies. Now, he claims he saved NATO:
‘“I hope everyone is able to remember that it was me, as President of the United States, that got delinquent NATO members to start paying their dues, which amounted to hundreds of billions of dollars,” Trump wrote in a statement released Monday. “There would be no NATO if I didn’t act strongly and swiftly.”’
So let’s leave Mr Trump and turn to more constant sources. George Washington in his 1796 farewell address warned against ‘foreign entanglements’:
‘Against the insidious wiles of foreign influence… the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government.’
Words of warning
But an empire needs to act like an empire. After conquering its own southern states, it took on Spain…Germany…Japan…and then the Soviet Union…and then…and then…in his farewell address in 1961, Dwight Eisenhower warned against where this would lead:
‘…we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
‘We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.’
Taking their wealth and liberties for granted, Americans fell asleep…and the Deep State (along with the entire class of elite…which Antonio Gramsci called the ‘hegemon’) grew. Now it’s unstoppable.
Meanwhile, since the time of Peter the Great in the 17th century, Russia has periodically tried to join the family of European nations. By most accounts, this is what Vladimir Putin desired as well.
Know thy enemy’s enemy
But the hegemon had other ideas. The US/EU/NATO party was already underway in Europe, and the Russians weren’t invited. Instead of leaving NATO, the US strengthened it. And when war broke out, NATO formed up on the side of Ukraine (though Ukraine was not a treaty member). This left Russia to seek allies elsewhere. It’s finding them, in Africa…and in Latin America. Most ominously, it is creating a potent new coalition…with the natural resources of Russia and Iran, the human resources of India, and the financial and technical resources of China. They’re already sharing energy and raw materials, a rival currency and a new financial clearing system.
What will the future bring? We’ve read no more of tomorrow’s headlines than you have. But it looks like the US’s wars and sanctions may be breeding the next lead dog. Empires have to die somehow. Inflation and war are time-tested ways to kill them.
For The Daily Reckoning Australia