We’re twenty percent into the 21st century and it hasn’t been a great start. From Bill Bonner at rogueeconomics.com:
Week 26 of the Quarantine
In this bright future, you can’t forget your past.
– Bob Marley
SAN MARTIN, ARGENTINA – What a colossal flop!
We’re talking about the 21st century. A failure in almost every way.
We now have 30 million people on unemployment – nearly 20% of the labor force.
We have a budget deficit of nearly 20% of GDP.
And, despite already spending $2 for every $1 they collect in taxes, the feds are planning to spend more.
We have phony “conservatives” waving the flag… and real radicals trying to tear it down. On both sides are more and more loonies, locked and loaded…
Even many of our own dear readers are ready to go to war with each other. This is from yesterday’s mailbag:
Hey Dude, we are at WAR! Trump leads the Win-the-War Party! The Neo Repubs are the “What? Me, worry?” Party. And you are like the pet dog nipping at the heels of the soldiers marching past!
No matter the cost, we must win the war against socialism and the Ds. There is time enough to purify ourselves after we win! If we lose, it will be a “thousand years” before our experiment is tried again… Meanwhile it is your obligation to support those who are fighting, regardless of technique and strategy… TRUMP!
It is hard to figure out how an administration that declares a moratorium on rent collection, stifles free trade, and runs a deficit of 20% of GDP could save us from socialism… But in this great 21st-century future, wonders never cease.
This week, in this “new normal,” we’ve been trying to remember what the “old normal” was like. And was it really better? Or is it just us?
We recalled what it must have been like when we were born. Of course, it was a very different world back then.
But don’t the same principles… the same gravity… and the same Constitution still apply? Grace, charm, wit, and civility… or boorishness, blockheadedness, and cruelty – aren’t the choices still the same?
By our reckoning, life in America seemed more or less civilized until the end of the 20th century. Then, several nasty themes took center stage:
The hubris of people who thought they were “exceptional,” beyond good and evil… and not subject to the same rules as others…
…the degeneration of an empire – spending too much… throwing its weight around… depending too much on its military…
…the disappearance of true “conservatives”…
…the inevitable failure of a fake (paper) money system; none ever survived a full credit cycle…
…the disappointment of technology. Back in the 1960s, we imagined the 21st century as a marvel of freedom, flying cars, and Jetson-like machines. Instead, we are cowed by a virus… and held prisoners by iPhones and Zoom calls… with falling GDP growth rates to boot…
…and the corruption of democracy into demagoguery, with its bread and circuses… its mobs and messiahs… its clowns and carnival barkers…
The 21st century? What a bummer!
Good Old Days
But let’s try to remember what it was like in the late 1990s, before the new century began.
The economy was strong… so strong that the government’s tax receipts more than kept up with the Clinton team’s boondoggles.
The national debt was actually going down. This was partly because the Tea Party Republicans were still conservative… and able to block spending.
The U.S. had troops all over the world. But there was only one important and shameful engagement that we recall – in Kosovo.
There were impeachment proceedings against Mr. Clinton and bitter partisan battles in Washington. But we don’t remember the public with knives at each other’s throats.
Then came the year 2000… and everything seemed to head down.
First, the dot-com bubble blew up… and the Nasdaq collapsed. There was nothing particularly unusual or sinister about it. That’s the way markets work. They correct mistakes.
But the future was casting a long shadow… the new technology would disappoint us… and the feds would make a bad situation worse.
The Federal Reserve had already gotten into the bad habit of backstopping Wall Street. It cut its key rate from 6.5% down to 1%. This led to the next bubble in mortgage finance/real estate… which blew up eight years later.
Meanwhile, the Bush administration made one of the biggest blunders in U.S. history. Outraged over 9/11, it declared war against a military tactic – terror. (Why not? The feds were already “at war” with poverty, drugs, and cancer.)
And then, it attacked a country that had nothing to do with 9/11 – Iraq. The bills from that disaster are still coming in. Brown University released the latest figures last week. Business Insider reports:
At least 37 million people have been displaced by America’s “global war on terror,” according to a new report from Brown University’s Cost of War project.
The number of displaced people could be as high as 59 million, the report states.
Displacement has caused “incalculable harm to individuals, families, towns, cities, regions, and entire countries physically, socially, emotionally, and economically,” the report states.
The federal government’s price tag for the war on terror is over $6.4 trillion, and it killed over 800,000 people in direct war violence.
Then, in the financial crisis of 2008/2009, the feds went into panic mode again. This time, they mounted the most expensive Wall Street rescue ever – with $3.6 trillion created by the Federal Reserve and pumped into asset prices.
Stock prices rebounded, and soon went back into bubble territory. But the economy limped along through the weakest recovery ever.
This produced a huge gap between the financialized Wall Street fantasy and the real economy of Main Street.
And it caused a growing divide – inequality – between the top 10% of the population, which owns nearly 90% of financial assets, and the bottom 90%, which depends on Main Street employment for its money.
The Fed claimed this extraordinary exercise in money-printing and meddling was just temporary… and that it would bring things back to “normal” as soon as the crisis was over.
But the crisis never ended.
Even before the coronavirus pandemic hit this year, the Fed had the presses running hot in its “Repo Madness” program – in effect, it printed the money needed to fund the Trump administration’s deficits.
Which brings us up to this year – to two even bigger mistakes… bigger deficits… more money-printing… more meddling… more debt…
…and more disaster ahead.