Juan Hipolito del Sagrado Corazon de Jesus Yrigoyen.
With a name like that, it was obvious that he was destined for a fancy business card. And in the early 20th century, he became president of the Argentine republic. But he — no more than Franklin Delano Roosevelt nor Donald John Trump — did not create the tide that made him famous. He just swam in it.
As we’ve seen, events are not simply random reactions to the news…day by day. Instead, they are products of deep, unseen currents. Like old boots swept along the bottom of silent seas…they eventually wash up on a distant shore.
We’ve seen too that the problem with the democratic welfare/warfare state is that the more resources it gets… the more power it has… the more corrupt and parasitic its ruling elites become… and the more difficult it is to bring it under control.
Each new program… each new dollar spent… adds more people who want to make sure the spending continues.
This process continues until something bad happens…either something unexpected (like the Plague)…or something entirely predictable, such as bankruptcy.
We saw yesterday what happened in Argentina.
After a wild and wonderful ride in the late 19th century, with a Primary Political Trend moving towards free markets and prosperity, Argentina had become one of the richest countries on earth. Then, like the US and European nations… it then came under the influence of a new trend — more interested in redistributing wealth, than creating it.
In England, David Lloyd George came to power. In France, it was Leon Blum. FDR in the US. Mussolini in Italy. All of them shared the same basic idea — to transfer wealth from those who earned it to those who did not.
This new Primary Political Trend expressed itself in different ways. Germany, Japan and Italy relied on war to take valuable resources from their neighbours. The rest stuck with larceny. Argentina, beginning with the leadership of Yrigoyen, was among the most brazen.
But as Maggie Thatcher observed, other people’s money runs out. And a year ago, Javier Milei levelled with the nation. ‘There is no money’, he told the voters. The inflation rate had risen to an implied 3,700%. Bad things were happening. Chaos and catastrophe — a la Venezuela — were close at hand. And in last year’s election, what Milei called the ‘casta politica’ was happy to have someone take the problem off their hands (and take the blame for what happened next).
Sooner or later, we presume the US will have to do the same. It will run out of money and be unable to continue. But not before it has fully exhausted its bag of tricks, feints, foolishness… and its credit.
Its dollar is still considered a ‘strong’ currency. It still collects more than $4 trillion in tax revenue… which it can use to pay off elites and soothe the voters. It has plenty of rich people who could be squeezed for cash…and plenty of loose ‘fat’ that could be easily cut from its budgets. It is not desperate; the ‘bad thing’ hasn’t happened, yet.
That’s why we believe the US is still on the downswing of the Primary Political Trend… still headed for more government, more debt, more inflation, and more war.
Italy, Germany and Japan had the ‘bad thing’ happen to them in WWII. They were convinced — by ‘Bomber’ Harris and the Enola Gay — to give up their warfare state enterprises.
After Korea, Dwight Eisenhower believed the US military should stand down too. He cut the ‘defence’ budget by nearly 30% and when Britain and France invited him to join in their attack on the Suez Canal, in 1956, he turned them down.
Eisenhower retired in 1961 — warning the nation against the ‘unwarranted influence’ of the ‘military/industrial complex’. But the MIC already had so much influence that it was quickly back on a roll. Dean Acheson, Secretary of State in the late ’40s and early ’50s, mongered the novel idea that the US was in a ‘cold’ war…and needed to be fully armed and ready.
The US firepower establishment also found that Europe — properly incentivised — would outsource its defence to the Pentagon, thereby increasing the latter’s market share. Thereupon, European and American democracies went their separate ways. Spared the burden of defence, Europe’s governments became welfare states, in effect, giant, compulsory insurance programs.
The US, meanwhile, could favour its firepower industry, becoming a warfare state. And then, as early as the 1960s, Lyndon Johnson and Hubert Humphrey were arguing that the US could be both — with guns and butter for everyone.
But in 2024, voters in France, Germany, and the US turned against their ruling cliques…and all the world’s major governments seem to be headed towards a debt crisis. Is a ‘bad thing’ coming their way too?
Regards,
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Bill Bonner,
For Fat Tail Daily
