‘I was not sympathetic to the assumption that criminals had radically different motivations from everyone else.’
Economist Gary Becker
The Washington Post did quick review of the fiscal year just finished:
‘The federal budget deficit swelled to $1.8 trillion in the fiscal year that ended in September, an enormous sum that significantly increases the national debt as Washington barrels toward a potential 2025 showdown over spending and taxes.
‘The Congressional Budget Office warned in a Tuesday report that interest payments on the debt reached $950 billion, larger than the Pentagon budget.
‘As of Friday, the United States had accumulated a public debt of $35.7 trillion. The CBO projected in June that the debt would exceed $50 trillion by the end of this decade. The nation’s debt compared with the size of the overall economy, a key metric of fiscal stability, is projected to exceed its all-time high of 106 percent by 2027.
‘“A [nearly] $2 trillion deficit is bad news during a recession and war, but completely unprecedented during peace and prosperity,” said Brian Riedl, a senior fellow at the conservative-leaning Manhattan Institute. “The danger is the deficit will only get bigger over the next decade due to retiring baby boomers and interest on the debt.”’
Runaway spending is easy to fix. You ‘just say no.’ Likewise, the Biden bunch could stop the killing in the Ukraine and in the Middle East with a single phone call. And yet… the two things most likely to bring the US empire to its knees — war and inflation — continue unchecked.
And neither candidate for the nation’s highest office has offered any hint of understanding the problem, let alone doing anything about it. To the contrary, each aims to make it worse with some combination of tax cuts and spending increases.
What to make of it? What we make of it is that cynicism is under-rated. No one can properly understand how our financial system works — or invest wisely — without a full tank of cynicism to keep him going.
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| Source: Congressional Budget Office, Monthly Budget Review, September 2024 |
In the broadest and simplest analysis…a nation should seek peace and prosperity. Then, citizens are able to pursue happiness however they choose. But to have peace and prosperity, the feds have to eschew war and inflation. Instead, America’s elites — the people who control the government — are choosing bombs, boondoggles and BS on a scale never before seen in the history of man.
‘When push comes to shove’, says the un-cynical citizen, ‘our leaders will do the right thing’. He presumes the elites are like the rest of us…but perhaps with more public spirit; and they are supposed to be more ready to serve the common good.
That’s where cynicism comes in handy. The feds (and the elites who control them) are presumed to work on behalf of the American people. Even if they have their own fish to fry, they are still meant to share the same interest in peace and prosperity.
‘Alas, they do not. As a society becomes older, larger, and more complex the gap between the elites and the people grows wider. The rich live in different parts of the country… they drink espressos and cappuccinos, rather than Maxwell House… they shop at Walmart rather than Dollar Store and buy their food at Erewhon or Whole Foods, rather than Aldi or Food Lion.’
We’ve seen how ultra-low-interest rate policies — favoured by both Trump and Harris — benefit elite asset owners, but penalise everyone else. Wall Street gets richer. Main Street gets poorer. Over the last 30 years, the wealthy have watched their stocks go up 1,000%. Yesterday alone, they rose 10% above their 1994 base.
Meanwhile, consumer prices go up too. Higher consumer prices reduce the wealth of the average citizen; they don’t increase it. And consumer price inflation is not just a flukey artifact of the Covid lockdown… nor was it caused by the Biden Administration’s ‘Inflation Reduction Act.’ Instead, it is a longstanding result of federal policies that have cut the purchasing power of the dollar in half over the last 30 years.
David Stockman:
‘The top 1% of households have picked up an average of nearly $33 million each of net worth gains over the last 35 years, while the bottom 66 million households have experienced an average increase of just $47,000…’
How could politicians, economists, opinion leaders — the elite of the elite, who pretend to be looking out for the common man — pull off such a gigantic fraud? How could they now be allowing the US to drift towards unwinnable wars and financial chaos? What are their motivations?
A little more cynicism is needed…
Stay tuned.
Regards,
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Bill Bonner,
For Fat Tail Daily
