Weekend Highlight: Imperial Stretch Marks
It was a busy week here in The Daily Reckoning’s HQ, where we were implementing a wide variety of new features on the website. We’re now publishing about five posts a day on our website in addition to the two daily articles we run in the e-letter. So, if you haven’t already, make sure to check out all the new content on our site.
Or, perhaps the easiest way to follow our new posts is through Twitter, where we can keep you informed – throughout the day and at no cost to you – when new thoughts are posted online…so please, follow us here.
In addition to our regular features from characters you’ll recognize like the Mogambo Guru and Chuck Butler, two of our principal new content partners include Addison Wiggin’s The 5 Min. Forecast and Eric Fry’s Rude Awakening. They publish tremendously insightful content usually only available to subscribers to Agora Financial’s paid publications, but that we’re now making available to readers of The Daily Reckoning.
With all of the new content we’re publishing it’s become more difficult than we expected to pick a Highlight of the Week. Even so Bill Bonner hit a note that rang especially true in discussing the challenges that face the overstretched American empire.
Here is a brief passage so you can understand its selection…
Yes, Dear Reader, the ‘great man’ always seems to come along when you need him. Longtime Daily Reckoning readers will recall our theory:
After the Berlin Wall came down… America had no enemies worthy of the name. She had a monopoly franchise on the world’s money – the dollar was the undisputed queen of the planet’s reserves. And she had a monopoly on military power too – the undisputed king of the hill, with a Pentagon budget nearly as large as all other nations’ military spending put together.
But nature abhors a vacuum and detests a monopoly. Lacking a suitable challenger, America had to become her own worst enemy. Lacking a rival who could destroy her, she had to destroy herself.
And so, when Americans went to the polls in November of 2000, they elected a president who was up to the job: George W. Bush. Eight years later, the Clinton surpluses had turned into the biggest deficits ever…an immense bubble had impoverished the middle class…and the country was engaged in two unwinnable, unnecessary, and hugely expensive wars.
But it’s not over. The millstones of history may grind slowly…but they grind exceedingly fine… The American empire is clearly overstretched and over-indebted. If it is to save itself, it should scale back immediately…cutting the Pentagon budget in half, for example, and eliminating all unnecessary expenses (which is most of them). Instead of spending $3 trillion, it should spend…say…$1 trillion, and run a surplus.
What about the depression, you might be wondering. Isn’t this the time to increase government spending, rather than decrease it? Ah…if you are even asking the question, you are the victim of a dead economist. Keynes’ theory was that the state should run contra-cyclical surpluses and deficits – to offset the ups and downs of the business cycle. But that is too soggy a bog for us to trod in today. Instead, we will skirt it with another of our dicta:
People come to believe what they must believe when they must believe it.
When an empire is new and fresh and growing…people believe in saving, hard work, and small frugality.
When an empire is old and decaying…they think the government should spend “whatever it takes” to take care of them. This attitude helps destroy the empire…thus making room for the next one…
So, if you missed this article…or now realize that you’d like to read it again…you can find it on the website here.