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In reading and listening to commentary on possible cuts to the Federal budget, I have noticed that the Department of Defense usually is treated as sacrosanct. It is lumped in with Social Security and Medicare as a permanent, untouchable feature of the District of Columbia.
I believe that the restoration of fiscal sanity requires massive cuts to the defense budget. This can be accomplished while actually boosting national security. There is no reason, other than protecting sinecures and pork, to desist from wielding the scalpel. Bloat and waste are off the charts. The nominal defense budget is approaching the trillion dollar mark. It goes well beyond that point when you factor in dark ops, foreign military aid, and the numerous defense-related functions that are domiciled in other parts of the government. A prime example is the Department of Energy, which has responsibility for the nuclear arsenal as well as the national “laboratories.” We all know about the obscenely expensive weapons systems that don’t work, and have heard the legendary stories of hundred-dollar hammers and such. Is there no way to fix this? Should be a top priority for the incoming Secretary of Defense. He might also be interested in the battalions of consultants who do nothing but consult, and in the research institutes that research how to make PowerPoint slides. The trough that feeds these hogs is virtually bottomless. One beneficial move would be to restore the name of the DoD to the Department of War, as it was called prior to 1947. Let’s be frank about the purpose of this organization: killing people and blowing things up. Everything else is extraneous. If some project or personnel are not directly involved in this mission, they can be cut. This is one area that I believe will be at least partially addressed by the new administration, as DEI, gender madness, and other such pursuits are dismantled, saving money while improving the military’s warfighting capability. Of all the 800-pound gorillas wandering around the room, the hardest to tackle may very well be the role and presence of the U.S. military in the international arena. Does the defense of the United States really necessitate hundreds of bases and installations in scores of countries? Even if it did, the Federal government is bankrupt; an orderly drawdown is certainly preferable to the sudden impact of foreclosure. Putting an end to harebrained interventions such as the wars in Afghanistan and Ukraine will of course save substantial sums of money. Why expand NATO onto Russia’s doorstep? Come to think of it, NATO itself can be terminated; it has far outlived its original purpose. And on the other side of the world, do we need to constantly antagonize China by “patrolling” their backyard? And then stop the meddling in the Middle East. There is no longer any need to maintain the fiction of the Petrodollar system—it’s dead as a doornail. Let Saudi Arabia and Israel handle regional security. We can sell them weapons, and give them a free hand to manage the lunatics in their midst. Instead of "peace in the Middle East," try to forge arrangements that are sustainable. Here’s a novel idea: use the military to defend the homeland. Bring our boys home, as the Left used to say before they became warmongers. If you want to beef up America’s strategic position beyond its borders, concentrate on the Western hemisphere. While we thump our chests over Taiwan, China is quietly expanding its influence in Latin America. Yes, take back the Panama Canal, as Mr. Trump has promised. It’s time to revive the Monroe Doctrine. That would be the kind of imperialism I could get behind. Forge alliances with Milei in Argentina, and other like-minded governments. Meanwhile, I hear the cha-ching of the cash register in the background, as the savings pile up to the ceiling.
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In my post of 12/27/24, I reviewed the work of the great Friedrich Hayek. Now I would like to use that discussion as a springboard to further examine the ongoing collapse of the Western economic and financial system.
Hayek helps us to see economic life for what is is: the “extended order of human cooperation,” as he calls it. This is society’s vast network of ideas, contacts, and exchange; an endless web of human interaction. This order is infinitely complex, and in a constant state of flux; as such, it lies beyond the ability of any single authority to direct it. The extended order has evolved into its current form. Hayek points to the pioneering vision of Adam Smith, who realized that a type of evolution is the driving force behind the genesis and development of economic and other institutions. (Hayek remarked that Smith and similar thinkers were Darwinian before Darwin, and may have influenced the latter.) Think of law, language, and money: none were the result of a unified, conscious plan. Rather, they evolved in a spontaneous, self-ordering process, in a series of adaptations, producing a workable framework in which people could function. The upshot is that economic structures cannot be planned. Interference with the extended order is doomed to failure, and if pushed far enough, will lead to death and destruction. The case of the Soviet Union is obvious enough. But the same principle applies to our current predicament. Consider the extent of the disease: the colossal edifice of central planning in the West, guided by Keynesian economic theory, is sufficient all by itself to guarantee disaster. It has resulted in an activist Federal Reserve, unbacked fiat currency, rampaging inflation, out-of-control debt, asset bubbles galore, and a rapacious government that now accounts for fully half of what passes for an economy. Add to this the other poisons administered to the extended order, such as DEI and the Green-Industrial Complex, to name two of the worst offenders. None of these monstrosities would exist without coercive government interference. Needless to say, they demonstrate a complete disregard, and even contempt, of economic reality. We can point to additional distortions that result from economic illiteracy. One of them is the absurd notion of a “consumer-based economy.” Consumption is a result of wealth creation, not its cause. The people parroting this inversion of reality confuse the fruit of the tree with the tree itself. And our tree is dying, and will continue to wither as long as we concentrate our efforts on simply eating the fruit. Related to the consumer-based nonsense is the notion that China is dependent on the American consumer, and therefore we can punish them by restricting access to our enormous market. This could make sense only if we were exchanging something of value for the imported consumables. If we were paying in gold, or oil, or even manufactured goods of our own, the dependency story might be plausible. However, we “pay” for the goods with depreciating dollars that are conjured up on the keyboards of the government, the Fed, and the banks. And this means expansion of debt, which, ironically, was until recently being funded by the likes of China. They stopped buying Treasuries, but we can always compensate by creating more dollars, inflation be damned. So let me get this straight. We will punish China (and other BRICS countries) by threatening to stop consuming their goods while giving them nothing of value in return. How on earth will they survive? Real-world, Hayekian economics teaches us that wealth is created by production of tangible goods (instead of financial products), savings (instead of consumption), and the use of sound money (instead of unbacked fiat currency). All of which is coordinated by means of true price discovery and other market mechanisms—not by the declarations and schemes of bureaucrats and clueless academics. What is the proper role of government? Mainly to get out of the way. Stop interfering in the extended order. Instead, grease the wheels; facilitate commerce rather than hindering it. Safeguard property rights. Enforce contracts. Prevent crime and fraud. Build and maintain infrastructure. Humanity is not a proper subject for rational central planning. The aggregate of all human action, beliefs, and behavioral patterns is unknowable. These facts, as Hayek laments, run against the grain of mainstream economic thinking. It is time for a new paradigm. The improvement-of-mankind fanatics consider man to be an input to their calculations, in the same way as one might treat a chicken, a plant, or a steel beam. In other words, in their view, man is a part of the natural world: understandable, predictable, malleable. With the correct laws in place, and the correct government subsidies, he can be forced to live in perfect harmony with nature. This is a false and dangerous assertion. Man can never be integrated into the remainder of nature. He is condemned to stand outside it, to be an observer and an actor with his own unique agenda. This means that answers to the riddles of our existence will not be found in interventionism and central planning, which pretend that society can be harmonized, as if man really were a chicken or a plant. Many in the U.S. are hopeful that the incoming administration can solve the problem of inflation. This scourge continues to cause heartache for the population, particularly individuals and families with low income and without assets.
As with so many other issues, the first step in any serious campaign to resolve the dilemma is to correctly identify the problem, without political propaganda and other extraneous inputs. Our rulers can begin by admitting the extent of the damage. Government statistics on price increases (and unemployment) are nothing less than fraudulent. Anyone with two brain cells to rub together knows that prices are not rising by three percent annually, or whatever similar ridiculous figure is being proffered by the sorcerers in Washington. Moreover, in addition to nominal price, there are other manifestations of decreasing purchasing power that need to be included in the equation. One of these is shrinkflation, the shrinking of quantity for a given item. We have all done the supermarket double-take when encountering, say, a bar of chocolate that is suddenly smaller than it had always been. The price, of course, remains the same or rises. A related phenomenon is crapflation. This means reduction of quality for a given item. One day, out of the blue, you receive a shoddier product, or inferior ingredients, but, once again, at the same or higher price. It’s just another way to hide the erosion of purchasing power. So what exactly is this “inflation”? It is not, as our Leftist friends would have us believe, a cabal of cigar-smoking capitalists in the back room of Kroger headquarters, rubbing their hands together and guffawing as they greedily jack up the price of milk. Rather, consider the word itself. Something has been inflated; think of tire pressure. And that something is the money supply. This used to be common knowledge. My 1991 Webster’s Dictionary defines inflation as “an increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level.” Today, Webster’s still conveys the general idea, but with some obfuscation: “A continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services” [emphasis mine; also note the flipping of the order, and the absence of the word “substantial”]. The American Heritage dictionary just buries its head in the sand: “A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money.” Going further up the causal chain, the expansion of the money supply is primarily the result of “money printing” by means of an inscrutable process involving the Federal Reserve, the Treasury, and the banks. Much of this takes place to either fund the obscene Federal deficits or to goose the stock and housing markets. Incidentally, the money supply has approximately doubled in the last ten years, with the magic printing press conjuring around eleven trillion dollars into existence. Yes, that’s trillion with a “t.” Increasing prices can never be reversed until this monetary hocus-pocus is ended. Here we have the crux of the matter. Compared to this, every other factor is minor. If they double the quantity of something, what do they expect will happen to its price? That’s right, it will be cut in half. Would any sane and honest person deny that the purchasing power of the dollar has been cut in half since 2015? But yes, there are some other factors contributing to price increases, usually due to government overreach. One obvious instance is government regulation. Automobiles, for example, are far more expensive than need be, due to the onerous safety, emission, and mileage requirements that are now out of control. Then there are the downstream effects of government subsidies and other market interventions, which create artificial demand and speculation, which drives up prices. Suppressing the interest rate has led to the perversely-valued real estate market, as well as a host of other bubbles and malinvestment across the economy. Another case of market intervention is government-backed student loans. Allowed to feed at this bottomless government trough, colleges and universities can keep hiking tuition; after all, the money is always there. Incentives for competition and efficiency have effectively been destroyed. (And the Leftist propaganda machine has its ideological hatchery fully funded.) Another factor is crime. In addition to successful shoplifiting, prevention of such is a significant expense that is passed on to the consumer. Viewing the security personnel at my local Walmart, one would think they are guarding a top-secret military installation. Let us not forget the spreading plague of idiocy and incompetence. This leads to defective products, lousy repairs, wasted time, and other ill effects that in the end, all cost money. The deteriorating quality of the population also makes neighborhoods, or even entire cities, unlivable. This shrinks the available decent living space, driving up demand for housing and amenities in the zones with "good schools." In summary, I hope the incoming Trump Administration has the stomach to tell it like it is. Otherwise, the world of monetary make-believe will continue on its merry way. Among the many problems staring our society in the face is the imminent meltdown of the financial and monetary system. There are numerous facets: uncontrolled government spending and intervention; a looming sovereign debt crisis; the enormous, Byzantine derivatives complex; the insolvent banking system; the growing power of the BRICS countries; and on and on. Putting all the pieces together is a daunting task.
Standing ready to assist us in this labor are the great thinkers of the field. Among these must be counted the incomparable Friedrich August von Hayek (1899-1992). He is best known as one of the founding fathers of the Austrian school of economics, and the outspoken nemesis of John Maynard Keynes. Hayek demonstrates conclusively how Keynesian economics—that web of misconceptions and mythology in which the West is now trapped—is dysfunctional and guaranteed to fail. But Hayek goes far beyond this level of analysis. He goes deeper, burrowing into every rabbit hole of socialism and interventionism to expose the ideological and spiritual foundations of this perennial challenge, not merely to the financial and monetary system, but to civilization in its entirety. I am reprinting below a post that I wrote about him in 2007, on the original AWOL Civilization blog. * * * The Extended Order of Human Cooperation No blog on the deterioration of Western culture would be complete without a tribute to Friedrich August von Hayek (1899-1992), the great Austrian-born economist and philosopher. When one considers the breadth of his work and the acuity of his analysis, he may very well be the preeminent sociopolitical thinker of the 20th century. No one has been such an outspoken advocate for liberty, or such a devastating foe of all forms of socialism—what Hayek often calls "collectivism." In The Counter-Revolution of Science (1952), he deconstructs the illusions of the early socialist thinkers, notably the false doctrine of “scientism," the misapplication of scientific methodology to social phenomena, particularly history. History, Hayek explains, is not a real thing, subject to the methods of the natural sciences. If we are to undertake a study of zebras, we need not hesitate to employ these methods. We see before us a type of animal that is clearly distinguished from other species. There can be little doubt that a zebra is a zebra. Our subjects behave in accordance with the characteristics of their kind. They cannot change themselves, and there is no emotional or intellectual bond between researcher and subject. All this is completely different when it comes to human history. Our subjects do not behave in a predictable fashion, and they can remake themselves. There are many bonds (and enmity) between researcher and subject. But most importantly, the creation of history is itself a subjective act. The actors are implementing what they believe to be “their" history of the moment; moreover, each individual has a different perception of his own behavior, his neighbor’s behavior, and indeed everything else occurring in the world. To say that this phenomenon is subject to laws in the same sense as natural laws is a serious error. In The Road to Serfdom, written during World War II, Hayek demonstrates that Communism and Nazism are two sides of the same collectivist coin. He traces the careers of the National Socialist (Nazi) leadership, showing that they were socialist in every sense of the word. In fact, many were prominent “left-wing" socialists or communists who embraced the swastika as Hitler rose to power. Hayek thereby dismisses the influential myth that the Nazis were some sort of ultra-conservative movement. In The Constitution of Liberty (1960), perhaps his magnum opus, Hayek lays out a philosophical blueprint for a 20th-century society based on liberty. This book is the modern heir to the ideas of Locke and Adam Smith. The Fatal Conceit (1988) is a general critique of socialism, in which Hayek shows that “rational" planning is doomed to failure. The very first paragraph sums up much of his thinking: “This book argues that civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread…” When I read Hayek, I am always struck by his vast command of history, culture, philosophy, and economics, as well as by his matter-of-fact tone. His attitude is distinctly non-ideological; he is never the advocate of a party or “program.” Hayek warned us about flirtation with the wily seductress that is collectivism. Will we take heed? Bitcoin is again capturing headlines, due to its recent dramatic surge in price, and to the notable personalities and institutions that have hitched their wagon to the crypto train.
Who invented it, and why, are questions open to debate. What seems incontrovertible, however, is that Bitcoin is a massive speculative bubble, a latter-day tulip mania, a Ponzi scheme that requires ever-increasing infusions of new cash. This need is so great that the bagholder of last resort may very well be that endless fount of liquidity, the U.S. government itself. Witness the declarations of President-elect Donald Trump and others indicating the possibility of purchases by the Treasury. Moreover, it appears that enormous sums are already being channeled from Bitcoin into government bonds, via “Tether.” Does anyone still claim that Bitcoin is a form of money? In the heady early days, many naive Libertarian types succumbed to the hype, proudly announcing a “digital gold,” a ticket to financial freedom, beyond the control of rapacious governments and central banks. Although most of the major players currently are big-money types who cynically (and now openly) manipulate the suckers, one can still find die-hard coiners of the old school. In a recent debate, Peter Schiff went head-to-head with Robert Breedlove, a youngish defender of the faith. Schiff easily demonstrated that Bitcoin is in reality “nothing,” and has none of the key characteristics of true money. The one exchange between the two men that stuck in my mind was related to the notion that a good money must have value. Both debaters were in agreement on this point. Schiff, however, emphasized that the object used as money must have a value apart from and prior to its use as a monetary instrument. Naturally, gold fulfills this requirement (and all others); Bitcoin does not, because it has no existence, so you can’t do anything with it, other than buy and sell it. It has a price, but it has no value. The response of the crypto advocate: “value is subjective.” In other words, it has value because we say it does. No need for any practical application in the physical world—that’s dinosaur thinking. Subjective value, forsooth! Bitcoin is a widely-touted alternative to fiat currency. A delicious irony presents itself: Does this "subjective" business not sound suspiciously like the basis of the fiat dollar, indeed of all fiat currencies? Here, take this piece of paper with a number printed on it, backed by nothing, but don't worry, the government says it has value. Somewhat reminiscent of modern art, is it not? A silly person tapes a banana to the wall and calls it art. You say: Wait a minute, it doesn't fulfill any of the requirements of art. Ahh, my friend, don't you fret, it's all subjective. Come to think of it, there are countless examples of collapse along these lines, where reality and quality go out the window. Welcome to the modern world. Ersatz everywhere you look. I wonder just how far the level of intellect had to decay, in order to reach this cerebral wasteland devoid of logic and rational thought. How far did the decay need to progress before huge numbers of otherwise bright and educated people signed up for the digital utopia? They can already live most of their life on line: shopping, social interaction, entertainment, even the carnal pleasures. Why not have money exclusively on line as well? The digitization is already well advanced, so let’s push it just a bit further, and erase any remaining link with “meatspace.” Instead of Bitcoin, they should have named it Smartcoin. Everything else, from cars to refrigerators, is becoming smart; in other words, subject to endless complication and breakdown. The transition from crypto currency to central bank digital currency (CBDC) is obvious at this point. Put it in the basket with lockdowns, social media censorship, unrealized capital gains, elimination of cash, destruction of small business—all paving the way for the digital gulag. You say you want to deal with real people using real money? Hahahahaha….. |
Dystopian literatureWelcome to the blog! While you're here, check out the six dystopian novels by Gary Wolf. His latest is The Cubist Supremacy. 
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