When the Whole System Goes out of Whack
BALTIMORE, MARYLAND – Little noticed in the Western media, last month, Russian president Vladimir Putin made an important speech in which he explained what was wrong with us:
“Never interrupt your enemy when he is making a mistake,” said Napoléon. But while Putin might enjoy watching us err… he continued with his helpful analysis:
Win-Lose All the Way
We write today with no more knowledge of the proper relationship between the sexes than anyone else. But “abandoning the usual understanding” is at the heart of the West’s financial problem.
And it’s something Russians can readily grasp, if not Americans. For seven decades, the Soviet Union required its citizens to do bizarre and unwelcome things.
Their whole economy, from top to bottom, was controlled by the Soviet elite. Ordinary families, meanwhile, often two or three of them crammed together, lived in drab apartments, sharing a single bathroom.
They wore drab clothes. They called each other “comrade.” They stood in line to shop at stores with empty shelves. They waited years to buy a poor-quality car.
They did what they were told, in other words… no matter how stupid it was.
One of the most remarkable features of the Soviet experiment was that it almost eliminated the politesse of a civilized society. The usual understandings, between merchant and customer, client and service provider, employer and employee… had been erased.
It was win-lose all the way… and the losers saw no reason to smile about it.
Been there; done that, said Putin:
Out of Whack
Here at the Diary, our beat is money. There, we see most clearly how abandoning the “usual understandings” is undermining growth and prosperity.
That is, usually, you know who you can count on… and who you can’t. Your grocery stores will usually keep their shelves stocked… and your gas stations will keep the pumps operating.
You expect your reporters to give you the news straight… and your politicians to be crooked.
But when the most basic and important features of a free economy are skewed – such as the Federal Reserve’s artificially low interest rates – the whole system goes out of whack.
Some people get wealth they don’t deserve. Others are deprived of it. People stop smiling and go for each other’s throats.
For 18 decades (with a short interruption during the War Between the States), Americans could depend on the dollar. It was connected, by law, to gold.
That’s why prices at the end of the 19th century were about where they were when the century began; a person whose great-grandfather saved a dollar in 1800 could enjoy the full measure of it right up until the Federal Reserve was created in 1913.
Since then, the dollar has lost about 98% of its purchasing power. And today, it is losing its value faster than at any time in the last 12 years.
Where the Money Goes
But where is the “value” going? Where does it go when it “goes away”?
It goes to the deciders!
As we reported last month, the upper 10% own 89% of all publicly traded stocks.
So when the Wilshire 5000, the broadest measure of the stock market, went from $22 trillion in March 2020, to $47 trillion last week, the elite gained approximately $22 trillion… in just 18 months.
Most of that money will probably go back whence it came in the next crisis. But today, it stands like a red star on the Soviet flag… a symbol of corruption and incompetence on a vast scale.
But money isn’t everything. Here’s Edward Luce of the Financial Times:
Yes, Dear Reader, it’s those “limits” I told you about last week… those habits and “usual understandings” – not laws – that protect us.
And yet, they seem to be losing as much value as the dollar. Again, Putin is on the case:
For the Bolsheviks, there was no more important question than economic class – proletariat or bourgeoisie? Bolshevik… or counter-revolutionary?
If you fell on the wrong side of that either-or, you were doomed. And great Russian writers, such as Boris Pasternak and Aleksandr Solzhenitsyn – either because they were critics of the Soviet Union or backward-looking romantics – were silenced.
Now, it is America that has its rabid mobs, book banners, and dogmatic world improvers.
It has its Great Dividers, too – vaccinations, climate change, historic monuments… black or white, gay or straight, male or female, Republican or Democrat.
“Abandoning the usual understanding,” it still puts one foot in front of the other. Where it is going, we don’t know.
But we don’t think we’re going to like it.
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