Bernanke is No Hero

“They were hunters. They stayed here during the Ice Age, probably hunting reindeer,” said the archaeologist in charge of the site.

“But who were they?”

“They were Cro-Magnon…they were like us…human. They wore jewelry. They drew pictures. They cooked meat. And they used this cave over a period of 30,000 years…”

Yesterday afternoon, we drove up the valley to a limestone cave owned by friends. There, a group of 20 scientists, archeologists and volunteer workers are digging down through 30,000 years of history, about 20 feet worth of dirt, rock and sediment, 5 centimeters at a time.

We’ll come back to the pre-historic world in a minute. First, let’s catch up on what is going on in the world of finance, right now.

Yesterday, most of the news and commentaries concerned either the death of Edward Kennedy or the life of Ben Bernanke. We do not speak ill of dead, not here at The Daily Reckoning. So, we will speak ill of the living.

Long-time Daily Reckoning sufferers will recall why the nation chose George W. Bush to lead the country. Nature abhors a monopoly and detests a void. At the time, America had an almost complete monopoly on power. The Soviet Union had thrown in the towel. China had taken the capitalist road. The US empire had no rivals…and badly needed to be taken down a notch. But how? If a nation has no worthy competitors, how can it be beaten? The answer is obvious: it has to become it’s own worst enemy. George W. Bush was the man history needed…a man who would be putty in the hands of the neo-cons…a man who could be counted on to do the wrong thing…and put the nation on course for destruction.

Ossama bin Laden kindly sent a videotape explaining to him how to do it. The United States would have to spend its way to disaster, he said. The United States would have to undertake costly, futile wars…while actually expanding domestic spending too. GWB signed the single most expensive bill of all time – a health care measure – while simultaneously sinking the empire in its single most expensive war, one that would last longer and cost more than WWII.

But George W. Bush was just the beginning. Now, he’s back in Texas. And the empire is still in business. What can the Fates do to us now? Give us Obama and Bernanke! Obama continues the imperial wars. And, with Bernanke as his sidekick, the two of them now set out to destroy the empire’s finances. When they are finished, the dollar will no longer be the world’s reserve money. US Treasuries will no longer be the safest, surest credit in the world. And Americans will no longer be the planet’s richest people.

That is our prediction. Prove us wrong!

Readers may notice a disjoint between what they find here and what they find in the mainstream press. According to the papers, Ben Bernanke is a hero. He prevented a ‘Second Great Depression.’ Obama rewarded him by giving him another term. The recovery is a done deal.

But it is not so. The noise continues. But the story is the same. We are at the beginning of a long period of adjustment – a depression.

Neither oil, gold or the Dow made any real progress – neither up nor down – yesterday.

Freddie and Fannie are soaring…but the basic housing story remains the same. There is a record number of empty houses. With incomes falling, there is no reason to expect a rebound in prices.

The Post Office says it is cutting 30,000 jobs. USA Today says more and more people can’t pay their utility bills. And one out of three workers has only enough savings to last a week or less.

World trade is not recovering either. The Baltic Dry Index has fallen 45% since June. China is a bubble economy, based on credit, not genuine growth. And America’s stimulus programs – notably ‘Cash for Clunkers’ – have merely made things worse by drawing forward future spending and adding to US total debt while not creating any real economic progress.

In short, Ben Bernanke is no hero. And the economy is not recovering.

When we arrived at the cave a couple of archeologists were at work. They sat on cushions…wearing only socks on their feet. Then, using tiny trowels and small brushes, they loosened a teaspoon of dirt and swept it into a jar. The jar was then dumped into a bucket, which was taken down to the camp about 50 feet away. There, it was put through a strainer in order to filter out small objects – pieces of bone, shell, flint and anything else that might help them understand what went on here.

“This is a very exciting place to be,” the site manager continued. “We are finding the remains of humans…things that humans left behind 30,000 years ago.

“They didn’t live here. They only used this place, probably for a few weeks of the year, in their hunts. The age of sedentary humans – of towns and agriculture – was still thousands of years in the future. These people were hunter-gatherers. And this part of France probably resembled modern day Siberia. It was cold. The ground was permanently frozen. Herds of reindeer, bison, auroch (the forerunner of the cow), and horses roamed this area. That is what these hunters lived on. And they caught fish from the river. This cave is where they spent the night and worked…

“We’ve found hundreds of needles, for example, for sewing clothes. They wore skin clothes, much like people who live in the North of Siberia today. And they made their weapons here too…flaking and heating rocks in order to produce the arrowheads and knives they depended on.”

We were looking at a layer from about 17,000 years ago. The cave’s entrance has been sealed off, with a cage built around the digging site to keep out amateurs.

“This is no Indiana Jones treasure hunt,” the top archeologist explained. “This is a meticulous, scientific project that will take many years to complete. You don’t want to go too fast. We get thousands of objects out of each 5 centimeters. Each one must be given a chance to tell its story. It means sending it to experts all over the world – experts at dating…experts on extinct fauna…experts at pre-historic plants…climate experts…rock experts…ethnologists, biologists, and so forth.

“It’s like reading a book. But every time we dig down, we not only turn the page…we burn it. We can never recreate those objects in their original setting. We can never read that page again. So we have to make sure we understand what it was telling us.

“And each page tells us more about the people who stayed here…about what they ate…and how they lived…and what they were worried about. When they drew pictures of women, for example, they drew pictures of women who were pregnant. Maybe they just thought pregnant women were beautiful. But maybe they were worried about life itself…about their survival…

“Really, that is all men have ever worried about…getting enough to eat in order to survive…and reproducing, so the race survives. Every thing else is entertainment.”

Here at The Daily Reckoning, entertainment is what we do. Who among our dear readers needs to earn 15% on his money…rather than, say, 5%? Will anyone starve to death if his stocks don’t go up?

Will any of our readers fail to have children if he guesses wrong about the rally? What if it is a real bull market, rather than a bear market rally, as we have thought?

Ah, but there’s the hitch…is it really just idle entertainment?

Our tribe may be deathward marching, but we reach for the stars along the way. We want to be bigger, faster, richer, smarter, righter, funnier, stronger and richer. Why? To entertain ourselves? Yes…but it’s more than that. Every species seems to aim for dominion. For status. For improvement. Because each is in competition with each other. There is only so much grass…so many wild bananas…and so much game. So every species competes with others for resources. And every member of the species competes with every other member too.

It’s a dog-eat-dog world? Not exactly. But the dogs have to fight with the wolves and the hyenas…and the mountain lions and the panthers. They are all predators. And there’s only so much prey. A weak dog is a dead dog. And a weak pack is soon an evolutionary dead end.

Somehow the desire to reproduce is welded to the desire to reproduce many…and good specimens. Without this constant selection…this constant competition to produce more and better specimens…the whole tribe weakens and is eventually exterminated. At least, that’s the theory. So every male member of the tribe aims for as much reproduction as possible. Females on the other hand, aim for quality. They know they can only have a few offspring. So, they aim to produce the best offspring they can. How do they do that? By mating with the best, fittest, fastest, strongest, richest, highest status – most dominant – specimens they can find. In other words, the schmuck never gets a date.

So you see, dear reader, our interest in money is not just an entertainment. It’s about the survival of the human race!

Until tomorrow,

Bill Bonner
The Daily Reckoning

The Daily Reckoning