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The world is swiftly moving to the dangerous
place where nations won’t be able to do business with each other
because they don’t trust the institutions that control wealth, which
includes central banks, commercial banks, and governments. It will happen
when the purveyors of international commodities, oil especially, refuse to
accept the letters of credit issued by untrustworthy intermediaries. And when
that dark moment arrives, nations will throw tantrums. The USA may be the
loudest baby in the playpen.
The USA is veering into a
psychological space not unlike the wilderness-of-mind that Germany found
itself in back in the early 20th century: the deep woods of
paranoia where our own failures will be projected onto the motives of others
who mean to do us harm. Of course, even paranoiacs have enemies. There are
quite a few others who would like to harm the USA, at least to bamboozle and
paralyze us, to push back against our influence on their culture and
economies. But the tendency here will be to magnify the supposed insults
while ignoring our own suicidal behavior.
Historians will remark that
it was a beautiful August with bright days and cool nights for sleeping, and
the Hamptons were ablaze with self-satisfied egos, and that nobody was paying
attention to all the mischief that was set in motion the previous spring, not
to mention the many seasons of bad behavior that preceded it. And when they
returned from vacation, lo, the world was in crisis. What a surprise.
The USA cannot come to
terms with the salient facts staring us in the face: that we can’t run
things as we’ve set them up to run. We refuse to take the obvious
actions to set things up differently. Instead, we’ve tried to offset
the accelerating losses of running our unrunable
stuff with accounting fraud, aimed at pretending that everything still works.
But the accounting fraud has only accelerated the gathering disorder in the
banking system. That disorder has infected our currency and the infection is
spreading to all currencies. What a surprise that the first pandemic to
strike an overstressed global immune system was not bird flu after all, but a
sickness of money.
Near the center of that
money sickness was the blitzkrieg against gold and silver in the spring, when
arrant serial selling dumps were executed against the money metals to
un-money them. The net result was only that a lot of that ancient money
flowed from the places pretending it was valueless to the places that never
adopted that pretense. At stake in that rather massive movement was the
supposed value of the other stuff that pretended to hold value, namely
sovereign bonds, and especially the treasury paper issued by the USA. After
all, US Treasury bonds and notes were, in the eyes of bankers, the functional
equivalent of cash-in-hand. Alas, the world was starting to choke on it
— not least the US central bank itself, which had been gorging at the
monthly auction buffet for years and was now stuffed to the gills. In fact,
it had grown too fat to even leave the room where the buffet had been set up.
Anyway
you look at it, there is no escape from the looming
crisis of confidence. The “primary dealer” banks and commodity
exchanges behind the spring gold smash are out of tricks and out of gold to
play tricks with. Their partner, the US Government has two tricks left:
confiscation of gold in private hands a la Franklin Roosevelt’s ploy of
1933, or punitive taxes on private sales of gold. What worked in 1933 might
not go over so well now, in a land full of preppers
armed to the teeth and long-simmered in gall. It brings to mind the
bumper-sticker about prying things from people’s cold dead hands. As
for the tax gambit, I venture to say that many holders of gold hold it in
expectation that there may shortly be no effective government left to depend
on to do the wrong thing. Meanwhile, over in the land of paper wealth,
the interest rate on the 10-year US Treasury bond clicks up a basis-point
here, a basis-point there, like a remorselessly rising sea level. It
won’t take many more clicks to put, for instance, the Federal Reserve
Bank of New York under water.
I felt sorry for President
Obama, going about the country trying to appear historically heroic without
doing a damn thing, really, to face down to the monsters in our own midst.
But then one hears the rumor of Larry Summers’ imminent appointment to
chair the Fed, and it is no longer possible to feel sorry for Obama, but
rather to feel sorry for the nation laboring under such a conclave of
would-be wizards.
I just don’t see how
the world financial system doesn’t blow up this fall,
when the digested remains of the last miso-glazed oyster tidbit passes
through the cloacal fundament of the prettiest girl
in Sag Harbor. When it does blow, at least the NSA will have its prepared
“to-do” list, and then perhaps all the unemployed can be enlisted
at $8 an hour to harass the rest of the people trying to go about their daily
lives. The roar you hear in the distance this September will be the sound of
banks crashing, followed by the silence of business-as-usual grinding to a
halt. After that, the crackle of gunfire.
My new book will make you laugh. Git one! Click
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