Gold and Pax Americana
"Whom the gods wish to destroy, they first make mad," goes the ancient saying. If this is true, then our leaders in Washington are headed straight for the cuckoo's nest. There is a virulent, hubristic madness consuming our political elites in this first decade of the 21st century. It manifests in the intrusiveness of the Nanny State, in the relentless debasement of our currency, in the manipulation of our markets, and in the outrageous taxes that sap the entrepreneurial vigor from our lives. But scariest of all, it manifests in the employment of unbridled power to remake the world's divergent cultures, religions, and systems into American democracy clones.
Power, our Federal Government has -- political, bureaucratic, police, military, monetary, and taxing power. It has had such power in excessive amounts for over a century now, and it has grown quite ruthless in wielding it in order to pursue its goals. Its primary goal is HEGEMONY over other regions and countries, as well as over American citizens themselves. This should not be surprising. This is what tyrannical governments have been doing for thousands of years. Since the days of the ancient Pharaohs, they have sought to control their neighbors as well as their own citizens, and they have justified their behavior by insisting that "peace and stability" were their aims. But power is their real aim. And sadly, individuals become ciphers in the process. This is what is unfolding once again, as it has countless times in the past. Study the annals of man from the Sumerian kings, to Alexander the Great, to Frederick Barbarossa, to Napoleon, Stalin and the modern despots, and the major leitmotif of the entire panorama is PURSUIT OF POWER by governments over individual citizens.
Beginning of the Madness
With the onset of the War on Terrorism, our Federal Government has now ratcheted up its drive for hegemony both domestically and worldwide. In September 2002, the Bush administration released its new National Security Strategy, which was a sweeping agenda to mount a retaliation against the terrorist threat from Islam. But it was also something else; it was the first implementation step for the vision of Pax Americana. This vision has its origin in the controversial 1992 Pentagon report by former under secretary of defense Paul Wolfowitz titled, "Defense Planning Guidance." In it, he called on America in the post Cold War era to alter its foreign policy aims from merely defense of our nation to actively pursue a reshaping of the world -- in short, get involved in nation building whenever and wherever it would appear to benefit us. Now that we are the only superpower in the world, we must seize the opportunity to bend as many nations as possible to our will, to our values, to our form of democracy. Only in this way, can we truly promote "peace and stability" for ourselves and our allies. Only in this way can America heed the call to national greatness that falls on the shoulders of singular superpowers.
The Wolfowitz doctrine has been refined and sophisticated during the past ten years by high level pundits of Washington such as Bill Kristol and Robert Kagan of the Project for a New American Century (PNAC). The refined version now has numerous aggressive foreign policy goals for America to pursue. Reduced to its fundamentals, this doctrine is meant to make America into an imperialistic power and to be proud of it. It is defined by Kristol and Kagan as "benevolent global hegemony." One of the most important of the PNAC goals is the imposition of democracy upon as many nations as possible -- especially nations of the Middle East -- through both stick and carrot methodologies. If a nation can be bribed into democracy, all well and good; but if it can't be bribed, then it is to be bludgeoned. Democracy has become our new god, the raison d'etre, the salvation of our lives. It is now the curative for all the world's ills from war, to poverty, to cultural primitiveness. Spread its healing principles to mankind, and we can build a heaven on earth. Such is the madness that now consumes our Federal Government.
"Washington today is trying to turn everyone into Americans," writes Richard Maybury in his July issue of Early Warning Report. "No one makes any secret of the fact that Washington sees Iraq as a test case for [its imposition of democracy] plan. George Bush boasted about it in his February 26th speech. He intends to spread the American Way throughout Arab lands, to 'transform that vital region.'" [www.chaostan.com ]
Because the heathens lack democracy, they are prone to breed extremism and hatred, they war on their neighbors, and most importantly they wish to blow up people and buildings in America. According to the Kristol-Wolfowitz PNAC model, terrorism has its roots in the non-democratic political ideologies of the Third World, especially in the theocracies of the Middle East. Thus, the first order of the new Pax Americana is to bring those we deem as heathens to democracy, to modernize the poor devils, and while we're at it teach them the beauties of a more materialistic culture. Since democracy is the summum bonum of our day, we have the duty to impose it upon those who are backward. The fact that the British felt the same call to duty in their imperialistic dreams of the 19th century goes ominously unnoticed by our punditry. What is the difference between the Kristol-Wolfowitz vision and the expansionist policies of Benjamin Disraeli and Queen Victoria in England of the 1870's that promoted war against the Afghans and the Zulus? British style colonization may not be the goal of the PNAC vision, but the curse of world hegemony is, just as it was in the days of Pax Britainia.
History does not repeat precisely, but it does in general principle. And Washington is repeating the sins of the past while our pundits pusillanimously blank out. Our Federal Government has divorced itself from the true meaning and purpose of America in both its domestic and its foreign policies. It is to be feared as a despoiler among nations and men. It has crossed the Rubicon into imperial overreach.
In an article in January of this year, I wrote that I saw the coming Iraqi war, whether it was to unfold horrifically or painlessly, as just the beginning of a whole series of Islamic-Washington clashes over the next 10 to 20 years. I stated that genuinely healthy economies are not spawned from protracted periods of war. And that this is what lies on America's horizon for a long time to come. So better load up on gold and silver in whatever manner your risk tolerance allows. And spread the word about the hubris that is causing it all. That is what sane men do in times of upheaval. If the world wants to go insane, it has that prerogative. But the wiser heads of history always refuse to take part, and they always look to protect themselves from the insanity.
I see no reason to change that view. In fact, the events unfolding since then have only reinforced my conviction that there is so much ignorance and arrogance ruling Washington today that only a catastrophic denouement that extends for years can rouse the intelligentsia from their madness. Only through a cathartic crash of historic proportion can the necessary changes be brought about in our national perspective to restore freedom, sound money, and proper foreign policy.
The Costs of Empire
Trade and fiscal deficits are now exploding like Krakatoa and St Helens to pay for the delusions of our leaders. Years of prodigality that would make Louis XIV blush have gutted our national savings and sanity. Washington's welfare bureaucracy is today's Versailles Palace. Gold leases, swaps, deceit, and MANIPULATION are now the tools of Greenspan's Fed -- so terrified are his governors of the unmitigated horror awaiting the nation because of their 90-year experiment in dollar alchemy. Greenspan has become nothing but a gussied up Keynesian medicine man -- mixing interest rate tonics, Forex cathartics, bond purchase elixirs, and snake oil monetization into a putrid witch's brew to try and cast just the right spell over the economy to somehow turn fractional reserve dross into gold. But the laws of nature are not to be conned. The Fed's credit money is still debt, and it will not move an economy already suffocating in debt. Sir Alan sold out his youthful principles to ride around in the black limousines, and now he has only a shaman's bogus remedies with which to try and salvage his place in the history books. He gave up, with the sale of his principles, the only instrument that could save the nation -- gold. His recondite speeches, so popular among the sycophants of Washington during the go-go nineties, are now seen for what they always were -- self-serving gobbledygook and mystification to further perpetrate the power of the Federal Government in our economic lives.
The Federal Government's fiscal deficit will come in somewhere between $300 and $400 billion this year, while the trade deficit will exceed $500 billion. According to Bill Bonner, the estimates on what the Iraqi regime change will ultimately cost range anywhere from $27 billion to $1.92 trillion. With the Federal Government's track record for "honest statistical evaluation," what are the chances that its final bill is closer to the $1.92 trillion figure than the $27 billion figure? Pretty damn good, I would say. Does anyone with a semblence of a brain still think such gross fiscal insanity can be rectified with "monetary policy," that such debt will not have to be purged through an excruciating economic collapse? Sadly yes, there are those that do. They ride around Washington in black limousines and pour forth, to media lackeys and talk show barkers, the most disingenuous fallacies of our age.
To compound the problem of trade and fiscal deficits that Demopublican statism has brought us via its 30 year orgy of buying votes with paper dollars, we now add the cost of empire. Heathens are not converted cheaply. Our Iraqi venture is beginning to settle into the morass of guerrilla resistance a little more each week. And guerrilla resistance, as the Russians found out in Afghanistan, can go on indefinitely. Its like the irrationality of the stock market; it can stay predominate far longer than a nation's treasury can stay solvent. What glee our enemies must be experiencing at sight of obtuse Americans trying to fathom why the Shiites do not care to adopt our democracy and our Constitution. As Maybury points out, they have their own Constitution. It's the Koran, and it has ruled them for over a thousand years. Yet Kristol-Wolfowitz, et al imagine that they can overturn 1400 years of metaphysical tradition with gung-ho American lectures. I have a bit of bad news for Kristol-Wolfowitz, et al. Change in a culture's metaphysical views takes place over centuries, not months and years. It moves like a glacier sliding across a continent. And it does not respond to the butt end of a rifle. Yet the madness has already been launched and cannot be retracted now. So America will have to play this game out. It will be, in my opinion, a game that will cost us hundreds of billions of dollars and many lives lost literally on the battlefield of the Mideast cauldron, as well as untold lives lost morale-wise on the home front as our economy slouches toward bankruptcy and an Argentine future because of our government's ever-extending reach beyond its financial and spiritual supply lines.
Because Keynes mesmerized our leaders in college, they do not grasp the critical role that savings play in creating productivity in a healthy society. They believe that consumption is the engine of economic growth, and that paper money can ignite it forever. They thus do not understand why military expansion, such as we are now embarking upon, must ravage a nation whose people are in debt up to their eyebrows in the domestic arena. They do not understand that a nation devoid of savings (as America is now) has extended itself beyond its capacity to finance "global hegemony." They believe in the power of printed money as if it is actual wealth. The Keynesian virus has done this to them.
Washington's original estimate was that a successful regime change would require the stationing of our troops in Iraq for 1-2 years. Then the estimate gradually became 4-5 years. Now President Bush merely tells us that Americans face a "massive and long-term undertaking" in rebuilding Iraq. Has anybody in the media noticed how specific the estimates were to sell the Iraqi venture, and now how vague the estimates are to sell the idea of a protracted American occupation? Does anybody remember LBJ and Vietnam, Clinton and Bosnia? For god's sake, they're all the same -- these despicable Demopublicans!
What is so aggravating today is to have to endure the dupes who buy into the establishment fiction that America has a "two-party" political system. Wake up Americans! We as a country are slowly evolving into a dictatorship. Both political parties -- Democrats and Republicans -- are at fault here. Both parties have abandoned the principles of a free society, and have adopted the collectivist-arbitrary law approach that undergirds all the tyrannies of history. It matters not whether it's LBJ or Nixon, Carter or Reagan, Clinton or Bush. Both parties have become merely subdivisions of one party because they are the same in principle. They both promote a subtle brand of economic fascism -- equivalent to Mussolini's corporate-statism. The difference is that Republicans emphasize the foreign policy arena, while Democrats revel in the domestic arena. But they both spread Big Brother omnipresence once in power.
This is what we in the libertarian/conservative movement (now led by Ron Paul and the Liberty Committee in Congress) have been preaching for 30 years, that both parties have been taken over by collectivism and arbitrary law. But America was founded upon individualism and objective law -- in other words law that is the same for everyone, that is Constitutionally limited in its scope, that requires self-reliance. Yet we have slowly throughout the 20th century evolved into our present Demopublican system of law that is different for different people, i.e., arbitrary, and which foments ever-increasing dependence upon government. It is a political system that is based totally upon the conveyance of privileges to special groups. Once such a system of law is taught by the intellectuals in the schools, and accepted by those who are subservient among the populace, then the rest is only a matter of time. A dictatorship will develop where once there was freedom throughout the land.
It is this unleashing of "arbitrary law" that has led us to centralized government and rampant power lust, which has now led us to compulsive hegemony and Pax Americana. This is what has created the chutzpah to imagine that those we deem as heathens should be purified with "democracy," despite the fact that both their rights and the rights of American citizens are usurped in the process. Our establishment pundits, of course, are busy defaulting on their responsibility to remind the American people about such truths. This is their nature -- to blank out on all hard truths so as to continue to feed at the trough of Power. Attending palace dinners and courting the favor of Washington bigwigs is what excites our establishment media.
This obsession with hegemony is why we are still in Korea 50 years later. It is why we are still in Okinawa, still in Taiwan, still in Bosnia, still in Germany, still in NATO. It is why, as Richard Russell points out, we have major foreign bases in 36 countries and more than 260,000 troops stationed overseas with 50,000 military personnel on carriers constantly prowling the oceans. [With the Iraqi occupation, the 260,000 troops overseas are now in the neighborhood of 400,000.] All told, Russell reports, our military has more than 800 bases of various sizes around the world, including 60 major ones. There are 189 nations in the UN, and we have our military in 140 of them! [www.dowtheoryletters.com, January 15, 2003].
A military presence of 400,000 troops dispersed to 140 of the 189 member nations of the UN! This certainly has to be defined as imperial overreach! This may not be the pursuit of empire in the conventional sense because we claim no territorial ambitions as Rome and England before us. But it is an insane over-extension beyond our supply lines; it is pure madness. We are now the world's Imperial Super Cop. The implementation of such a role in the Middle East will require decades of occupation. Just think of that prospect -- our troops stationed in Iraq for decades! It cannot help but create virulent enmity among the rest of the Islamic world and spawn even more terrorist attacks upon our shores! Millions of Muslims throughout the Middle East will simply solidify further their conception of us as vile Crusaders come to dominate them once again. Over time, we will be seen as modern day Roman legions hanging around afterwards to subjugate them. We will become as popular with the Arab street as the presence of toxic waste is in a community's water supply. All this to get rid of one tin-pot dictator? Great nations fall precisely because of this kind of blindness, this kind of ivory tower imbecility that the Kristols and Wolfowitzs of history always feel so eager to heap upon their fellow men.
What Is to Come Because of This?
Edward Gibbon wrote his History of the Decline and Fall of the Roman Empire over two hundred years ago. At the end, he concluded that modern civilization was too complex to fall. He was most indubitably wrong. All civilizations are prone to falling because they are comprised of flawed humans who, because they possess but a tiny flash of existence, are driven to seek all manner of aberrancies to gratify their desires -- to live, drink and be merry for tomorrow brings one's demise. Power lust is the most lethal of the aberrancies because it so often involves masses of humans, giant bureaucracies, wars, and warped visions. Will we in America be able to avoid Rome's path? Viewing the world from today's perspective, one would have to say the chances are not good that we will. Of course, this could change. History is not set in stone; it is the result of men's choices. If we were to experience a return to reason in the aftermath of the upcoming world breakdown, it is quite conceivable that out of the wreckage there would come a rebirth of freedom and sound money again. It won't be the result of our establishment thinkers, however. It will come from the contrarians of the world -- thinkers such as Ludwig von Mises, Richard Weaver, Thomas Sowell, Murray Rothbard, Ayn Rand, Rose Wilder Lane, etc.
One thing is certain; the new policy of Pax Americana will bring all Americans less and less freedom. This is already manifest in such legislative monstrosities as the USA Patriot Act. What an insult to name a legislative bill that opens the door for Big Brother with a term immortalized by the Founding Fathers. But this is the pathological nature of our government in Washington. It must now use tyrannical "newspeak" to pass its bills.
The USA Patriot Act is a giant step toward that Orwellian world awaiting us in the future. As Nancy Chang, Senior Litigation Attorney at the Center for Constitutional Rights, describes it, "the Act sacrifices our political freedoms in the name of national security...by consolidating vast new powers in the executive branch of government."
1) "The Act grants the executive branch unprecedented, and largely unchecked, surveillance powers, including the enhanced ability to track email and Internet usage, conduct sneak-and-peak searches, obtain sensitive personal records, monitor financial transactions, and conduct nationwide roving wiretaps."
2) "The Act permits law enforcement agencies to circumvent the Fourth Amendment's requirement of probable cause when conducting wiretaps and searches that have, as a 'significant purpose,' the gathering of foreign intelligence."
3) "The Act allows for the sharing of information between criminal and intelligence operations and thereby opens the door to resurgence of domestic spying by the Central Intelligence Agency." [cited by Jennifer Bergen, "What the Patriot Act Means for Americans," www.Truthout.com -- April 4, 2002]
Big Brother is coming! And his omnipresence is being promoted by both Republicans and Democrats. Pax Americana is the straw that will break our economy's back. The debt load it heaps upon our already sated budgets will have to be monetized. Interest rates will reverse their present trend and begin a long-term rise. Large holdings of foreign capital will be repatriated. The Dow and the S&P will drift southward toward 3000 and 300 on the charts, even though the PPT will be hard at work trying to shore them up. Competitive currency devaluations will begin to spread around the world, as each nation scrambles to keep pace with America's weak dollar policy. Arabs will relentlessly dump dollars to counter American hegemony in their back yard, which will steadily drain foreign capital and cap any and all equity rallies. Greenspan will be faced with the dreaded "deflation of assets" that he is so fervently trying to avoid with his bubble creation policies. The Fed will then have to face the rock-and-a-hard-spot choice that they have been avoiding for two years. They will have to resort to actually printing up money, rather than just jawboning about it. They will have to ignite inflationary prices. They will do this because it will be their only option.
Will such Fed capitulation then bring on hyperinflation? According to Kondratieff theory, it would be almost inescapable. But this writer is just skeptical enough of formal theories about the future in a messy world to entertain doubts. There are far too many variables that flow in and out of the arena, that cannot be totally comprehended as to their impact, to state with certainty that deflation must result, and that hyperinflation must follow. All we can say is that the future will be one of SEVERE CRISIS. Whether that crisis is deflationary or inflationary, or a combine of both, depends upon how Washington's cornered rats react to the dilemmas of the upcoming years, and what measures of response come from other nations. Men and nations have free will, and history has a way of interminably fooling its prophets. It's as inscrutable as a cat.
One thing we can probably predict is that China will patiently sit in its cat bird seat and gladly accumulate all the gold that our bullion bank ignoramuses in New York keep dumping onto the market. China's historical respect for the metal was never quite obliterated by Keynesian doctrine as ours was here in the West. The rulers in Beijing wish to be a premier regional power at the very least, and perhaps even assume America's place as the world's reigning superpower. They know that such dreams will come about only if they attain economic dynamism, and economic dynamism is tied irrevocably to a strong currency backed by gold. So they patiently accumulate, and watch with appreciation the American death dance on Wall Street and in Washington.
Pax Americana is now official. It is openly proclaimed by powerful intellectuals and scholars in the establishment circles of Washington. It will guide both Republicans and Democrats alike in the upcoming years. It will result in monstrous debt burdens and the gradual erosion of America as a superpower. It will bring us $1,000 gold, and maybe much higher. A great nation has taken a step toward historical oblivion. The path is not irreversible, but it will take a great awakening in this next decade to avert America's fall. The Keynesian chickens that FDR set loose are finally coming home to roost. The laws of nature that Jefferson and Madison so wisely built upon, and which we so ignorantly scorn, are still there behind the scenes working their magnetic hold over our decisions. They are eternal. If an American renaissance is to take place, it will come only from a restored respect for those immutable laws that the Founding Fathers understood so well.