Gold and the Demise of the American Dream 24 comments
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“O Gold! I still prefer thee unto paper,
Which makes bank credit like a bank of vapour.”
This quote is lifted from a poem by Lord Byron penned in 1822. Isn’t it remarkable that a verse from nearly two centuries ago can remain so salient through time, and yet we are bound to repeat the mistakes time and again against which it warns?
Lord Byron was described by her contemporary Lady Caroline Lamb as “mad, bad and dangerous to know.” Even then, writers of vision were marginalized as crackpots and freaks.
In 1972, Richard Nixon sealed the fate of the U.S. economy when he de-coupled the value of the U.S. dollar from gold. Since 1946, the Bretton Woods system decreed that the United States Treasury would buy gold at the fixed price of $35 an ounce.
This system enforced a fiscal discipline on federal reserve banks around the world because they couldn’t just print currency that wasn’t represented by the same amount in gold holdings by the printer of currency. But actually they could manipulate their own currencies to some degree through the control of both currency flows out of their country and the exchange rate at which the currency could be traded for gold.
Throughout the ensuing period of unprecedented global growth amid economic stability that characterized G8 countries, there arrived in the collective American consciousness a concept known as the “American Dream”.
A product largely of advertising agencies, the American Dream was theoretically simple and accessible to all Americans who were willing to work hard.
A car, a house, a job and a family.
That’s was all we were ever supposed to need to achieve the American Dream.
But now, somehow, that’s no longer the American Dream. That’s what poor people have. That’s the starting point for what is widely considered the bottom of the food chain.
ONE house? Come on. Anybody who doesn’t have a cottage on a lake or a cabin in the woods, or more significantly, a house in the Hamptons or Nantucket or Captiva. Or, moving up the food chain, a villa in St. Thomas or on St. Barts.
Two cars at least. A boat, or, better, a yacht. A plane….maybe a jet.
The American Dream is no longer so simple. The real winners in this life are those with millions to spend, who cavort around the planet as if it were their private playground. Those for whom the idea of a carbon footprint is something you can just buy your way out of, thanks to the delusion of carbon credits and their futile attempt at diminishing greenhouse gases.
Dot com millionaires, Wall Street wizards, Hollywood starlets, pop music stars….now that’s the American Dream.
But its starting to unravel at both ends, and that is the sign of civilization past its peak and in serious decline.
Let's objectively administer a pap test in search of our own malignant evidence. If we start with the demise of the gold standard in 1972, it isn’t difficult to extrapolate a deterioration in the values of business in America coincident with the removal of fiscal discipline embodied by the gold standard.
Now, we have millions of Americans in debt, losing their homes, their jobs, the credit cards and ratings. The entire manufacturing sector exported to China. The national currency in free-fall. A desperate congress opening up coastlines and other protected natural resource treasure chests to exploration to offset the soaring cost of energy.
What is happening to us? How did we arrive at this confounded juncture? What can we do to reverse the situation?
The underlying cause of our mutual conundrum is one of corrupted values. Americans prey on each other now using despicable tactics that result in a cycle of boom and bust for divergent segments of society. The problem now is that the boom accrues to a dwindling minority, while the bust is suffered by a far greater ratio.
Christian teachings seem to be employed as just another tool in the arsenal of marketing and “perception management” practitioners, as does scientific study. Statistical analysis can easily be skewed to deliver biased results, as do opinion polls….all elements of business and society that we rely on to some degree. And forget the news...I’m not going to brand myself a sensationalist conspiracy theorist here today.
Looking backward, its difficult to intuit the absolute moment when these deviant devices of competition became so culturally embedded, but it has its roots in the industrial revolution.
The mechanization of effort diminished the requirement for cooperation within communities, and depending on the level of one’s mastery over mechanical energy, the opportunity emerged for clever individuals to acquire substantial wealth through the application of mechanical energy to the production of products. Furthermore, the harnessing of mechanical energy allowed these alpha achievers to execute their plans privately, while masking the nefarious elements of their output behind the “corporation”, which was a byproduct of the industrialization of mankind.
Prior to that, clever alpha achievers were reliant on the cooperation of members of their community to achieve commercially viable output levels, and so the agrarian economics which dominated human society until the 18th century enforced the predominance of cooperation at the community level, and competition occupied a far smaller segment of society.
With mechanization of effort, and now, with the mechanization of logical processes through the advent of computers, individuals are capable of competing on an international scale through the mastery of mechanized effort combined with automated thought processing. The result is far more powerful individual competitors, diminished reliance on cooperation, and complete anonymity to perpetrate schemes with destructive outcomes on its victims.
Now we have multinational corporations, who regularly harvest the most agile minds from our educational facilities, to formulate products and sales strategies optimized to program the consumer into buying into whatever it is that can be sold.
The rapaciousness of the entrepreneur at the top of the food chain back in the days where he was reliant on the cooperative contributions of his fellow citizens was kept largely in check by the visibility his enterprise afforded his community. The bigger the business, the more local participants, the more widespread the information about the day to day goings on.
The prevalence of Christian values and moral fortitude in agrarian times was certainly a factor in the integrity that largely marked the business dealings of citizens among each other then too.
Since the industrial revolution, statistics demonstrate that the rise of atheism and proliferation of ambivalence towards all religions is a matter of fact.
This is not to imply that the absence of integrity characteristic of today’s multi-national corporations is a result of religious ambivalence or atheism. On the contrary, the Christian or Muslim or Jewish or Hindu or Baptist banner waved over any for profit entity is cause for trepidation. The point is that the integrity of business conduct that widespread religious adherence promoted is now substantially absent.
So it is safe to conclude that a byproduct of industrialization is the erosion of integrity among participants in the global economy. Combine the diminished morality with the exponentially growing ability to harness mechanized effort and computerized networks, and then add the all consuming desire for the Hollywood high life generated by the non-stop barrage of television, radio, and internet –delivered, and its pretty easy to see how we’ve come to this impasse.
The question now becomes, How do we repair ourselves?
First step in this process is the recognition that we have been operating in a corrupt political environment for quite some time. The fact of the matter is that U.S. presidential cabinet members regularly move into the private sector occupying board and management positions with entities like Haliburton (HAL), Kellogg (K), Brown and Root, Lockheed Martin (LMT), Fannie Mae (FNM) and Freddie Mac (FRE). The incestuous relationships fostered by the government being the farm team for private sector business and vice versa (in the case of Hank Paulson who is ex-Goldman Sachs (GS)) undermine the possibility of any true objectivity when it comes to matters of policy and governance.
How else could it become legal for creditors to deploy predatory marketing schemes designed to capitalize on the vulnerability of a nation of poor who have been literally brainwashed into wanting everything they see on T.V.?
So in the absence of leadership, the changes that extricate the individual from a lifetime of debt repayment must be self-originated.
There are two strategies that need to be embraced by the individual seeking to regain some autonomy in their life from the banks and credit companies that might now be calling twenty times a day.
The first one is advised for individuals who find themselves in the situation of holding a mortgage whose principal now exceeds the value of their house, or whose assets are moving rapidly towards repossession to satisfy debt.
Declare bankruptcy, and so with a clear conscience. The only retaliation for the complete immersion in marketing and sales propaganda against the system that generated it is the declaration of bankruptcy.
This essentially will get you back to a zero balance net worth much sooner than riding your way through all of the foreclosure and repossession processes, and will ultimately provide peace from the onslaught sooner as well.
But absent a firm commitment to the second strategy, you’re likely going to repeat the steps that led to the requirement for strategy number 1. And that second strategy has to do with discipline – self-discipline, more specifically. And this is the most important strategy.
When somebody mails you a “pre-approved credit card” or a “guaranteed lowest rate mortgage” or offers you anything that gives you credit, politely smile and say “no thanks”.
To close with another poignant quote from the antithesis of America Dreaming, Vladimir Lenin, “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation”.
And I’ll bet you thought you were living in a democracy.
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This article has 24 comments:
thefitzman.blogspot.co...
A secondary factor is the financial mismanagement of the country's finances by the Bush administration, who has doubled the country's fiscal debt in the last 8 years. This has led to a 50% drop in the country's currency, leading to yet higher oil prices and inflation close to 10%. Thus, the standard of living for the middle-class is quickly being eroded - not to mention the wealth of anyone investing in the S&P500, which has done nothing since Bush was elected and is bigtime negative if one takes into account the falling dollar and inflation. I dont even want to get into how the "Christian" right has corrupted our government even when our Constitutional framers made it clear that separation of church and state was a primary goal.
The only way the US can get itself out of its economic black hole is:
1) adopt an energy policy (see above link)
2) adopt fiscal responsibility and strengthen the US dollar
both of these points will take political leadership and require the American people to make some sacrfices. I don't see either happening because we have become a weak country with weak leaders, and we neglect science and strategy in favor of Rush Limbaugh and Larry Kudlow.
What most people mean when they say "energy policy" is of course MORE DRILLING FOR OIL especially on public lands and often with taxpayer assistance. But why? Americans don't pay more for oil and gas than citizens of other nations; there is a strong global market for oil and at least a partially integrated market for gas. Why is an "energy policy" so important for the US and not for, say, New Zealand?
The answer comes back to the author's original interpretation of "the American Dream" - a house, a car, a job, a family. Especially the first two. Too many Americans have made the economically unsustainable choice to live well away from centres of commerce in individual homes on large lots they do not put to any constructive use, and to transport themselves nearly everywhere using highly inefficient private automobiles. They have the right to make those choices, provided that they are willing and able to bear the costs. They are not. So instead of correcting their errors, what do they do? Bleat about an "energy policy", of course. It's the American way, after all: rather than fix your own problems, demand that the government bail you out. That bailout can take one of two forms: taxation (extract more money from the far more efficient and productive city dwellers!, they demand, or perhaps destroy public lands for the benefit of those who made bad choices!, they imply) or inflation (borrow more dollars from the Chinese!, they cry). Lenin was, of course, correct. But those efficient city dwellers these parasites are hoping to drain tend to be the mobile sort; expect to see more and more of us moving our capital out of dollars and out of the country, and in time following them with our productivity and tax revenues. In the end America will be nothing but a nation of depleted oilfields, devastated land, and smoggy suburbs. That's your "energy policy". I hope you like it.
"If you want to debase a country's morals, debase its currency"
Corruption born of the greed of sociopaths, for sure, is bringing (has brought) us down.
I love Christian values, Buddhist values, Siekh values, Jewish values, (true) Moslem values, Hindu values--and all the rest. Let's call them spiritual values--they all derive the same Reality.
The author makes a point - a valid one, IMO - with which the vast majority will disagree - that our 'troubles' started with the vaunted industrial revolution (most would say 'progress' started there - but progress toward what?). Yet, the acceleration of this revolution was made possible only via access to energy-dense fossil fuels - coal, then oil. Which brings us back to bearfund's salient points.
The American public, conditioned into mindlessness across generations by TV and other powerful cultural factors as the author notes, is, has been and will continue to be in denial about the costs of their choices to the point of refusing to accept the consequences of continuing to make these choices. Whether these choices involve electing venal leaders whose only goal is to enrich and empower themselves at the citizens' expense, or chasing after ever more of a fiat currency which is constantly diminishing in value (and has, not just these last few years, but ever since 1913 when the counterfeiting outfit that is the Federal Reserve - the originator of inflation - came into existence), or chasing after an American Dream which is growing daily less sustainable as bearfund argues, I see no evidence whatsoever - aside from a few voices in the wilderness - that this will change. America is far too deep in too many holes and far too deep in denial about the realities of the world to stop digging and start choosing wisely. It's far too late for that.
1) Philanthopist investors offer money with no strings attached whatsoever to the DNC or RNC. Both of these parties are now a Cerebus, two ugly heads with the same distorted body.
2) Entrepenuars and innovators near broke and starving work there behinds off for a few years to execute the money. The older and responsible philanthropists enforce discipline, accountability in other words manage the money so some young hotshots don't get any funny ideas about multiple sets of books.
3) Money is invested into technology to connect and reach other activists. The technology also screens appropriate activists. The masses are educated. The activists raise additional money for multiple Independent candidates. Expect stiff resistence from government at this point and counter attack of money and lawyers. The Internet is the best medium for one reason: It is impossible to block. The Russians and Chinese attempted this. They failed. Since much of the phone communications are on peer to peer networks, this is what makes it impossible to block without destroying the entire communications of a nation. The Internet is extraordinarily difficult to censor and when it is tampered with, others either change the content back to original or the code is hacked and original content inserted. Not saying I am an advocate of such practice of hacking, just noting what Chinese and Russian youths did when there Free Speech using this medium was attempted to be crushed. I do hope some forms of white resistance will not become necessary. Rescinding of Free Speech rights by a government is tyranny, just to state my position. No difference between throwing books into a fire or attempting to thwart information packets across copper or fiber.
4) The technology streamlines the ideas of the collective into actionable plans while educating. Several distinct groups from concerned Americans to investors collaberate and polish the plans.
5) Independent candidates are rigorously screened and scrutinized by the collective prior for the ability to run for office. No RNC or DNC 'special' sponsors allowed. Candidates whom feel working 9 months a year and making $130k serving the nation will apply. A contract is signed by candidate to a two term limit. President's by default of course can only serve two terms anyways, so speaking of Congress and Senate. Those whom break the contract face the collective. And if you think a 30 year Senator is a good thing, study Rome. The Founder advocated term limits and founded much of our government from the successful periods of this empire. Coincidentally, it was the most successful with 2 year Senate terms. Shocked?
Keep an eye out for Raging Debate.com in the next few days. I do not wish to shamelessly plug it further, would prefer to pay ad rates to founders of Seeking Alpha or filter all participation requests to these people whom put up there own dime to allow us all to connect at this level and get incredible, timely information. You people whom run Seeking Alpha are true visionaries and have my grattitude. Let's kick it up one notch gentlement. Hey, who says us all of us TechnoPlutocrats from the Dot Com era are jerks. Some of us were taught Judeo Christian values. I have no problem with homosexuals, metrosexuals, dog lovers, moon worshipers, illegals whom were lucky enough to make it across the border and will shut the hell up and learn English while relying on benevolence of Americans not forced entitelments, tree huggers. But don't expect this collective force to pander to your bullshit. We are not going to make many friends of the 1,000 or so people whom now run Amerika but we will not go out hunting for enemies either. Long post, but many are looking for solutions, not simply great analysis of how we got here.
We have now turned a new page in America. Do not trust anyone that wants to make you a loan, sell you a house, invest in Stocks and beware of the "Christian Right" !
And the posters on this article. The usual lot of you, bearfund, GMiki, iThinkBig, and the rest are WONDERFUL! I ask myself why don't we have visionaries like you running this country????
God bless you all...and KEEP buying GOLD and SILVER...and taking POSSESSION of same!
englishhistory.net/byr...
I guess that's one disadvantage of living in a free country.
Do believe Nixon decoupled (no hyphen, please) the dollar from SILVER, not gold. FDR did the gold thing in 1933. I guess I should read the rest of the article, maybe.
We have fouond we are experiencing the same type of problems in the UK