The System Isn’t Broken -- It’s Working All Too Well
Justice Litle, Editorial Director, Taipan Publishing Group
Friday, 29 October 2010
We tend to think of the system as "broken" these days -- but the real problem may be how well it's working. Prepare yourself, and don't be caught out by collapse...
Warning, rant ahead...
For some time now, America has been beset by a sense of brokenness. Washington is not working. Wall Street is not working. The housing market is not working. For a lack of jobs, Main Street is (literally) not working.
And yet, perhaps we have it backward. Perhaps the system really IS working. Perhaps it is working all too well.
Step back to the creation of the Federal Reserve in 1913. Why was the Fed created? The public reason: To avoid banking panics. The private reason: To aid and comfort wealthy financiers.
The simple reality is this: Power flows to the privileged like water flows downhill. This isn't an idealistic grudge statement. It's practically a law of human physics.
Since time immemorial, the "system" has been designed and maintained for the connected to efficiently extract gain from the unconnected. For those who worship free markets, this is the hidden downside. Truly free markets must be moral markets. Free markets without morals -- i.e. without checks and balances -- are playgrounds of ruthless social Darwinism. Nature, red in tooth and claw... wearing the cloak of political respectability and a Wall Street power tie.
To get your own and keep your own, you have to fight for it. We recognize this, at least implicitly, by paying lip service to the ideals of democracy and rule of law (our main defenses against Darwinism run amok).
But lip service is all it is, because we -- the collective American "we" -- aren't willing to truly fight. When it comes to saying "enough is enough" and standing up for what we believe in, we grumble a lot... and then we stay home.
We as Americans are, as the libertarian Doug Casey has called us, "a bunch of whipped dogs."
Pharaohs and Slaves
And so the system is "working" in the sense that the many have become hopeless slaves to the few. How so? Consider the origins of the word "mortgage." As you may have heard before, the term comes from le mort-gage, or engagement until death.
And that is what we have: A system in which the financial Pharaohs crack their whips on the backs of indentured debt slaves, toiling away deep in the bowels of the materialism pyramids, for all their natural adult lives.
To say the system is working "all too well," then, is to suggest that the financial oligarchs have so effectively tapped America's blood and treasure that, like a junkie's vein subject to too many needles, the whole structure is in danger of collapse.
Picture a society in which a small minority percent of the population lives off the sweat and toil of the rest. Most contribute productively to this society's function. They make things, create things, offer goods and services that add value for money. But a privileged few prosper by creating nothing... by taking with both hands, and leaving carnage and destruction in their wake.
Is this arrangement sustainable? That depends. If the cowed majority are reliably docile, and meanwhile kept happy and distracted (or otherwise elegantly suppressed), then yes -- such an arrangement can go on for quite a long time.
But what happens when the means of extraction become so effective that nothing is left? What happens when the legitimized process of highway robbery, previously hidden from view, becomes so plainly obvious that a deaf, dumb and blind man could hardly miss it?
Under such conditions, the ruthless extractors finally sow the seeds of their own downfall. They gorge too much and drink too deep -- thus either killing the beast of burden or prodding it into furious rebellion.
(On a side note, you can sign up for Taipan Daily if you want to read more of my investment commentary.)
Eye of the Hurricane
As I write these words, new storms are building. One might say we are passing through the eye of the hurricane.
A relative period of calm, mistakenly taken for "crisis over," is about to end. A new onslaught of full-force gales is about to hit with tremendous force.
Next week, the details of "Quantitative Easing," or "QE2," will finally be revealed to us. We will hear whether the hollow men intend to buy half a trillion dollars' worth of government securities, a cool trillion, or even more. This may well turn out to be a "buy the rumor, sell the news" event, given the incredible amount of hope and hype already stuffed into equities prices prior to Ben Bernanke's great reveal.
Then, too, there are the November elections. Americans across the land will trek to their respective polling booths and cast a vote for "change." Or more of the same.
Your humble editor will not be voting. I know this sounds like sacrilege to some. But I just can't bring myself to care... or to participate in a political system that has become so fraudulent it is little more than a parlor game.
Many years ago, on the cusp of a presidential election, a friend told me he did not see "a dime's worth of difference" between the two parties. I thought he was mad. No difference between Al Gore and George W. Bush (the candidates of the time)? Was he mad?
No, he was right. Republicans and Democrats are the same. Exactly the same.
You don't believe me? Look at Barack Obama. Then look at George Bush. They are the same president.
Of course, on the campaign trail and in public life, Obama and W. are as different as can be. The inarticulate Texan versus the brilliant community organizer. The old-school conservative versus the great liberal hope.
But get them in office? Might as well be the same guy. Barack W. Bush. George W. Obama.
Useless, ineffective war presidents both, owned lock, stock and barrel by the financial oligarchy and the military industrial complex.
Bush's waterloo was the economy and Iraq. Obama's waterloo will be the economy, Afghanistan, and possibly a confrontation with China. Compassionate conservatism? Code for "spend like LBJ." Healthcare reform? Just another riff on another extraction scheme -- one that will ultimately benefit the most connected players at the expense of the general public. Just like they all do. Obama and Bush: Exactly the same.
Blackmail and Rome
Things will get truly interesting when the banks come round to blackmail us again.
We are discovering now, via robo-gate and foreclosure-gate, that the banks' behavior in the great housing bubble -- engineered and cheered by the Fed -- was even more evil, and illegal, than first realized.
The foreclosure trouble is snowballing. It isn't going away as some hoped it would. With powerful investors fighting back, and disgusted judges standing up for homeowners stripped of due process, the banks find themselves staring down into another dark, subprime-like abyss.
And so, before long, if foreclosure-gate turns into a new black hole, we will surely hear the megabanks come round again, singing that same old tune: You have to save us (again) for the sake of the U.S. economy. You have to save us -- to forgive us our trespasses, and give us huge sums of money -- or the system will fail.
And the minions in Washington will do their masters' bidding, and the walls will crumble further, and we will move a step closer to the fate of Rome.
It is hard to shake the Rome image. Broken pillars and busted marble columns, collapsed like the last vestiges of rule of law. Looters and pillagers fighting for the spoils.
What do you do in a situation such as this? Do you organize? Do you form a movement to "take the power back?" How does one rally a nation of distracted, broken slaves?
This is why your editor places a consistent premium on virtues like self-reliance, self-sufficiency, and fighting the system for the sake of survival. When vandals come for what you have, passivity will not let you keep it.
One cannot always help one's neighbors... but one can help one's family. One cannot keep the nation from being pillaged... but one can fight back on a few square feet of ground. Fight! Don't let the bastards grind you down.
And maximize your odds of being there, health and wealth and personal pride intact, on the other side of the rubble when it all comes crashing down.
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