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AMERICA IS NO LONGER A REPUBLIC OR A  DEMOCRACY EmptySun 29 Aug 2021, 22:15 by Jude

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AMERICA IS NO LONGER A REPUBLIC OR A DEMOCRACY

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AMERICA IS NO LONGER A REPUBLIC OR A  DEMOCRACY Empty AMERICA IS NO LONGER A REPUBLIC OR A DEMOCRACY

Post  Guest Thu 26 Mar 2015, 12:43


America Is No Longer a Republic or a Democracy

March 24, 2015 | Author Bill Bonner

House of the Rising Stock Market

Last week was bad for the dollar, but good for US stocks. On Friday, the greenback capped its worst five days of trading in four years. The Dow rose another 168 points – or nearly 1%.

This took place after Madame Yellen, proprietress of the House of the Rising Stock Market, said she would neither be patient nor impatient about raising rates.

Investors drew the obvious conclusion: She has no idea what she is doing. Until she finds a clue, or is startled out of her paralysis by events, it is business as usual.

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The piano player will keep his head down. The bartender will keep the liquor flowing. The cardsharps will keep pulling aces out of their sleeves. And the girls upstairs will continue plying their trade.

A Profound Transformation

This is hardly what you’d expect from a respectable central bank. Then again, so much has changed over the last half-century. Although there are an infinite number of plots and subplots, only very few are worth following.

The world of today is not the same world it was half a century ago. We have a new kind of money. We have a new economy. And we have a new kind of government. All have been transformed… in ways that few people have noticed and fewer still have understood.

Our job is to try to understand that story. Not in its entirety (that would be impossible)… but in its most gaudy outline and most sensational details. We’ve already spent much of our time, and much of yours, trying to figure out how our monetary system changed after Nixon ended the gold-backed currency standard in 1971.

In the next few days, we will look at how this new money changed the economy… and how it (along with other things) transformed our government too. As you’ll discover, this last transformation is the most salacious of all.



SPX-with-YellenValuations might be a little on the high side, but what can you do? After all, no bubble is in evidence anywhere, and if there is one, it’s not the Fed’s fault. Moreover, it will be macro-prudentially held in check (this means they will try to make sure prices don’t fall) – click to enlarge.


Neither Republic nor Democracy

“Government can have no more than two legitimate purposes,” wrote the 18th-century English political philosopher William Godwin, “the suppression of injustice against individuals within the community and the common defense against external invasion.”

But the US system of government – nourished by the almost unlimited credit that its money gives it – has swelled to a shape that would have been grotesque and unrecognizable to Godwin. To those who still maintain some romantic attachment to the ideals of the American Revolution, it is merely repulsive.

Did you realize that we no longer have a political system that can properly be called a republic or a democracy? Did you realize that voting is a waste of time because the system is rigged to favor powerful elite groups?

One of them – what President Eisenhower called the “military-industrial complex” – steals trillions of dollars from the rest of us. It also creates enemies the same way the Fed creates money… out of nothing. This keeps the US in a constant state of alarm… whacking one phony enemy after another to no apparent benefit, except to the elite who are paid to do it.

Another of these elite groups was on display, prominent in the gallery, when Israeli prime minister Benjamin Netanyahu gave his controversial speech on Capitol Hill last week. Billionaire casino magnate Sheldon Adelson, CEO of the Las Vegas Sands Corporation, paid good money for that speech, just days before the presidential election in Israel.

And it paid off: Netanyahu was reelected in a landslide. In politics today, money makes the nag run. Adelman has so much of it, practically every jackass in Congress feels his spurs or fears his lash.



sheldon-adelson-money-gets-anti-gambling-bill-to-congressThe US Congress has undoubtedly been bought and paid for by Sheldon Adelson. He is the quintessential crony “capitalist”, as for instance shown by this story of how he managed to destroy his online gambling competition in the US by exerting his political influence.

Image via lockerdome.com


Off to the Races

But that is a long story. And we don’t want to get distracted. Today, let’s just look at the economy…

At the risk of repeating ourselves, we note that the post-1971 money was credit-based, not gold-based. The supply of gold is limited. The supply of credit is not. Most important, gold-backed money is impossible for politicians to create. Credit is not.

As soon as the new money found its legs, it was off to the races. The supply of credit in America expanded 50 times in about 50 years. And it knew where to go, too.

Although income gains between 1930 and 1970 were broadly shared among all the people of the US, the new money found its way more and more to the people who controlled it: the political class and its cronies.

Americans substituted expanding credit for flat earnings. This allowed them to buy more and more stuff they couldn’t afford. Global trade boomed. Chinese factories filled up with bumpkins. All was, apparently, well.

Then in 2007, US consumers reached what Ronald Reagan’s budget adviser David Stockman calls “peak debt.” It became obvious that Americans couldn’t pay for all that expensive real estate they had bought. Housing collapsed, along with mortgage-backed financial instruments.

Central banks responded with more credit. But US consumers have not been able to join the party. Global trade has been sluggish. And China has slumped. In fact, it may be nearing a recession and/or credit crisis.

Meanwhile, interest rates on government bonds fell – in some places into negative territory – as the new money looked for a safe home. Governments borrow to reward favored industries, fund its pet projects and buy votes to keep the plain people in line.

Businesses borrow too – enriching management and shareholders (more or less in that order). Malinvestment, scams, boondoggles and giveaways follow – just what you’d expect. They spend it like they stole it, in other words. At Madame Yellen’s place. More to come…



Crony-Capitalism-PyramidThe crony socialism/velvet glove fascism pyramid. Note the remark about the corporatist elite: “Those benefiting from business-government collusion in order to eliminate competition and gain private advantage through state violence and force; often confused with capitalism” (this is why we have become reluctant to call it crony capitalism. We don’t want to let them rob us of a perfectly good term and get away with perverting it. Ultimately this linguistic confusion is a danger to us all, as the electoral successes of far-left socialist and fascist fringe parties in Europe show all too clearly) – click to enlarge.



Chart by: BigCharts, crony fascism pyramid by Bastiatinstitute.org



The above article is taken from the Diary of a Rogue Economist originally written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.




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