The graveyard of discarded fiat currencies: Heaps of Soviet-era rubles decompose in a landfill. Chances are the fraudulent instrument of debt called the "dollar" will soon reach the same destination.
For decades, the American ruling establishment has enjoyed the privilege of exporting inflation.
This has been done, acknowledges Ben Steil of the Council on Foreign Relations (a group I'm not in the habit of quoting favorably), by compelling other governments around the world to print huge mounds of their own currencies to prop up the dollar by buying Treasury Notes.
Thus when the Fed inflates, central banks world-wide follow suit, thereby driving up consumer prices for those ruled by satraps of Washington's global empire. Not surprisingly, at least some of those on the unfavorable end of this equation are getting restive, which is why the Gulf Cooperation Council has been making noises about removing the "dollar peg" that holds this corrupt arrangement together.
He just can't leave wretched enough alone, can he? The execrable Alan Greenspan at an investment conference in Saudi Arabia, urging the region's petro-oligarchs to abandon the dollar.
Oh -- and wasn't it cute of Alan "I'm Forever Blowing Bubbles" Greenspan, addressing an investors' conference in Jedda, to advise GCC governments to drop the dollar peg in order to protect them from the consequences of his own inflationary policies?
Foreign purchases of our debt bonds started to taper off three years ago. If the GCC governments act on Greenspan's advice, it will probably provoke a world-wide flight from the dollar and, in short order, the end of our status as a First World nation. I wouldn't blame the GCC or anybody else for bailing on the buck, of course. But it is indigestibly rich to see Greenspan wielding the pin that may be used to pop the dollar bubble he so diligently inflated during his term as Fed Commissar.
To understand the likely consequences of the course Greenspan now prescribes, a different metaphor is called for.
For decades, the fiat dollar has been the world's reserve currency, issued by the world's largest debtor. The results of this unprecedented combination were entirely predictable: Washington has generated a flood tide of inflation that has inundated more or less the entire world.
A tide is a reciprocating phenomenon -- if it goes out, it must come back in. But how do we describe what happens when a relatively small stretch of coastline suddenly has to absorb the impact of every returning tide from all the world's oceans all at once? "Tsunami" is an entirely inadequate term.
Well, in economic terms, we're going to find out, and probably sooner than any of us will admit. And auguries of this potentially apocalyptic development abound.
For instance: "Euros only" signs have sprung up on the streets of Manhattan. No, this doesn't mean proprietors of small shops would flatly reject FRNs (Federal Reserve Notes) if offered in sufficient quality. It does mean, however, that with the inversion of the exchange rate in favor of the European Union's flavor of fiat currency, and the corresponding influx of European tourists, at least some small businessmen in New York -- particularly those who have traveled to Europe recently, and learned just how little a dollar will buy on the Continent -- are trying to avoid the hassle and stress of converting currencies.
"I need euros," one street vendor from Niger explained to the Washington Post. "The dollar's going down. I don't want to change it before I go home."*
We'd better get used to that kind of thing. In fact, it would be a good idea for Americans to study what's happening to another dollar, the Zimbabwean variety. The regime led by the demented Marxist thug Robert Mugabe will admit to an official inflation rate of 100,580 percent in January, up dramatically from a more, ahem, modest rate of 66,212 percent last December. But unofficial -- which is to say, more reliable -- estimates put the rate at around 150,000 percent.
A millionaire street beggar in Zimbabwe displays bundles of that nation's increasingly worthless fiat currency. He has an endearing and radiant smile now, but the history of hyperinflation suggests this young man is in for incredibly hard times. Say a prayer for him.
The typical Zimbabwean is a multi-millionaire: The country's per capita gross domestic product is $9 dollars (U.S.), or about 70 million of that country's dollars. But then again, a kilo of chicken goes for 15 million Zimbabwean dollars.
While Zimbabwe's "millionaires" starve, its ruler and his posse feast. Amid chronic shortages of gasoline, food, and other essentials, the sub-cretinous hordes who compose that nation's ruling elite recently raised 3 trillion Zim-dollars to celebrate the Dear Leader's 84th birthday.
Of course, we're not suffering Zimbabwe-style hyperinflation, at least not yet. But here's the cold, unyielding reality: As measured by our current account balance (which is not the sole definitive measure of an economy, I hasten to point out), our country is poorer than Zimbabwe, at least according to the CIA's World Factbook (a fact brought to my attention by the diligent folks who run the Freedom's Phoenix newssite). Of the 163 nations on the CIA's list, Zimbabwe is 95th. The United States is dead last.
Our nation is broke in a way no country has ever been broke before. And as households, Americans are about to grow much poorer.
William Lapp of Advanced Economic Solutions recently told participants a the USDA's Outlook Forum that a wave (there's that image again) of "real food inflation" is about to reach consumers. His assessment was seconded by Larry Pope of Smithfield Foods, the nation's largest pork processor: "I think we need to tell the American consumer that [prices] are going up.... We're seeing cost increases that we've never seen in our business." (Emphasis added.)
Joseph Glauber, the USDA's chief economist, took note of a fact that should be obvious to anybody who's shopped for breakfast cereal recently: The price of wheat has surged dramatically, and stands at nearly $20 a bushel, an increase yet to be fully factored into consumer prices.
As Lapp soberly pointed out, we're just at the beginning of this trend. And the kind folks at the United Nations, who never met a problem they couldn't transform into a crisis, or a crisis they couldn't nurture into a full-blown humanitarian catastrophe, is reportedly drawing up plans for food rationing in urban areas should commodity price inflation go hyperbolic and food riots ensue.
Of course, this kind of thing would only happen in desperately impoverished countries without the means to meet the obligations imposed on them by their governments, and whose populations can't afford to buy food. You know, countries like Zimbabwe today ... and perhaps the United States in the near future.
*I experienced a moment of mild and bitter amusement reading this observation in the Poststory: "U.S. currency is the only legal tender money in the United States, but parties can agree to satisfy a debt by other means."
Oh, really? Well, what if the parties agreed to an exchange of goods for Liberty Dollars, which are either made of, or fully redeemable in, the only constitutionally permissible money -- gold and silver? The Feds regard an equitable transaction between fully informed parties that involves real money to be a species of "forgery." What the Post meant to say, apparently, is that parties are free to conduct transactions using other fiat currencies.
"I see nothing! NO-thiiinnng!": Affable, purblind doofus Sgt. Schultz, the patron saint of German Bank Regulators.
Klaus Zumwinkel, former CEO of Deutsche Post -- the German postal service and parent of the DHL parcel delivery company -- lost his job last week. He may soon go to prison. His "crime" was to protect his legitimately earned wealth from the omnivorous socialist bureaucracy that afflicts Germany. He did so by opening a foundation in neighboring Lichtenstein, where his earnings were protected by the banking secrecy laws of that tiny (pop. circa 35,000) but heroic principality.
During his tenure as head of Deutsche Post, concedes the New York Times, Zumwinkel "helped transform [the postal service] ... from a stodgy state bureaucracy into a publicly listed logistics and freight-delivery powerhouse...."
Despite operating within a thoroughly socialized business environment, Zumwinkel -- through the tenacious application of his considerable gifts -- added a great deal more wealth to his society than what he earned. Yet he is now being traduced by the German State as an enemy of society for the supposed crime of tax evasion. Even if he avoids prison, he won't get his severance.
With the serene confidence conferred by the knowledge that the taxpayers would absorb any losses, IKB invested huge sums in the sub-prime mortgage market here in the United States. As he did so, Ortseifen consciously defrauded investors, depositors, and the German public by assuring them that "uncertainties in the American mortgage market" would have "practically no effect" on the health of IKB's investments.
This was an obvious and vulgar lie, as would be recognized by any sentient being (or perhaps even Sean Hannity... well, maybe not). And just days after the last such assurance departed Ortseifen's schnitzel-hole, "IKB was on the verge of bankruptcy, with its supposed wonderful US investments worth little more than the paper [they were] printed on," recounts Der Spiegel.
At the very least, Ortseifen should be investigated for fraud and subject to both criminal and civi liability. Instead, he will be allowed to retire on his own terms and keep his pension, which is something north of $40,000 a month.
Liechtenstein's Castle Vaduz, one of many scenic attractions in that tiny but breathtakingly beautiful country.
In propping up America's government-abetted mortgage mess, Ortseifen pissed away countless billions of dollars earned by other people. Zumwinkel's "crime," recall, was to send his own money abroad to keep it out of the hands of people like Ortseifen.
Only to a mind entirely hostage to socialist assumptions -- and thus willing to abide the existence of an untouchable, unfathomably wealthy Nomenklatura-- could say that this makes any kind of sense.
In the decades since the advent of the Federal Reserve System in annus horribilis1913, the entire world banking system has become intertwined with government -- both national and trans-national.
Germany's banking system may be the most statist in the known universe: The relationship between that country's government and banking system is so flagrantly and conspicuously incestuous that amorous Appalachian cousins, upon seeing the spectacle, would exclaim in disgust: "Hey, that just ain't right!"
Going up the food chain from Ortseifen we find Ingrid Matthaus-Maier, CEO of the state-owned (and, therefore, unregulated) KfW banking group and a long-time member of the Social Democratic Party. The salary of this champion of social equity is $614,000 a year, all of it paid either directly by the taxpayers or from capital acquired through taxpayer subsidies. In exchange for this relatively modest (by international banking standards) compensation, Matthaus-Maier helped orchestrate the crisis now rippling through the German banking system.
"The state-owned banks are supposed to bail each other out when necessary," comments Der Spiegel, "but the problem is that many are in trouble themselves and hardly in a position to help their peers." Germany's "public-sector banks speculated far more heavily than private banks in American subprime mortgage securities. Now these banks' beleaguered executives are calling on the government to bail them out from a disaster of their own making."
O.K. -- by a show of hands, how many of you are surprised by this? Just one? Oh, right -- it's Hannity again, who's always the dullest implement in the cutlery drawer. (Just go sit in the corner, Sean, and tend to your finger-painting, 'kay?)
Matthaus-Maier and Ortseifen "are perfect examples of the fatal mix of amateurism, greed and political protection that is symptomatic of Germany's state-owned, partially state-owned and public-sector banks," observes Der Spiegel. "It is an environment that can only thrive in the shadow of the state" -- and has drained scores of billions of dollars from the public treasury. "
Once again, I wish to underscore the fact that these people were part of the parasite class -- State employees (the word "workers" doesn't apply) and executives of State-supported institutions. Their actions have destroyed huge amounts of confiscated wealth.
But they're not the real criminals -- or so we are urged to believe. The real criminals, again, are those like Klaus Zumwinkel, "tax evaders" ("tax refugees" is a more honest term) who did what they could to protect their earnings from the confiscatory, punitive tax system that kept statist drones like Ortseifen knee-deep in strudel and strumpets.
Zumwinkel's arrest comes as a result of an operation carried out by the German Federal Intelligence Service (BND). A few years ago, the BND had a "walk-in" by a disgruntled ex-employee of Liechtenstein's LGT Group, a financial institution that specializes in setting up the type of foundations often used by German tax refugees. The spitzel offered the BND a CD-ROM containing data on German banking clients.
That information was proprietary, privileged, and protected by law. The individual who offered the CD-ROM to German intelligence was trafficking in stolen property. So the German spooks, pillars of Teutonic rectitude that they were, refused to accept it -- right?
Uh, yeah, right. And you'll probably believe that there's never been an escape from Stalag 13.
To purchase that stolen information, the BND shelled out $7.3 million in funds taken at gunpoint from German citizens, including Zumwinkel and others whose data was found on the CD-ROM.
"The German government has used tax money to pay for a crime by a citizen of Lichtenstein," protested attorney Ferdinand von Schirach, a citizen of that stalwart Apline principality. "That's illegal."
Hans-Adam II, Lichtenstein's ruling prince (who is on record as saying that a tax rate in excess of six percent is "tyrannical"), quite properly condemned the crime as an "attack" on his country. Subverting Lichtenstein's laws and invading its institutions "does not solve the problems [Germany] has with its taxpayers," the prince correctly observed.
Like Switzerland and Luxembourg, Lichtenstein's banking secrecy laws date back to the 1930s, a time -- like the one nigh on arrival, I'm afraid -- of global depression, ubiquitous socialist tyranny, and incipient world war. Those countries provided a safe haven for the assets of German Jews. And then, as now, those havens were denounced by German collectivists, both "right" and "left," for offering refuge to those seeking to escape "social justice" as conceived and implemented by Berlin.
"It's simply unacceptable to have tax havens in Europe that encourage capital flight and incite tax fraud," belched Ronald Pofalla, a high-ranking member of the German Conservative Union, at a Berlin press conference. "We must ensure that such refuges are shut."
Although the account I read was silent as to whether that last phrase was accompanied with a stiff-armed, stiff-handed salute, that gesture would have been appropriate in the context.
The flag of a free country:Liechtenstein's national banner. Like Switzerland, the heroic Alpine nation has not bent the knee to Ba'al by joining the European Union, and it permits productive people to keep their financial affairs hidden from the Argus-eyed monstrosity called "government."
German Chancellor Angela Merkel insists that Liechtenstein must revise its banking laws to make them more permeable by German authorities, and insists that the principality's "reputation is at stake" on its response to that demand. I don't know what the culture-specific equivalent of an upthrust middle finger would be, but whatever it is I hope that Liechtenstein's response could be summarized as such.
Once again, Merkel and Pofalla are described as conservatives. And from their perspective, "capital flight" is best addressed by prosecuting the productive -- such as Zumwinkel -- rather than purging the parasites, of whom Ortseifen and Matthaus-Meier are typical.
The Sunday Times of London offers some additional details regarding the source of this illegally obtained private information:
"The suspected whistleblower, accused of stealing data from the bank, was sacked and convicted of fraud. He also offered data to tax authorities in America, Canada, Australia and France."
OK, we have to do a little semantic housekeeping here.
A "whistleblower" is someone who, at personal risk, defies threats and pressure from corrupt superiors in order to reveal corruption, incompetence, and/or criminal wrongdoing. This guy is a disgruntled ex-employee and convicted criminal, not a "whistleblower." The bank he worked for did nothing illegal under the enlightened and commendable laws of its country.
Granted, the governments that afflict other nations don't like Liechtenstein's laws, but that's just hard cheese.
It's going to be exceptionally interesting to see what use, if any, our own Leviathan makes of this stolen information.
The frontman looks for cover: Bush cowers behind former Fed Commissar Alan Greenspan, architect of the debt bubble that is devouring the world economy.
TODAY correspondent Ann Curry: Some Americans believe that they feel they’re carrying the burden because of this economy.
George W. Bush: Yeah, well…
Curry: They say we’re suffering because of this.
Bush: I don’t agree with that.
Curry: You don’t agree with that? It has nothing do with the economy, the war, the spending on the war?
Bush: I don’t think so. I think actually the spending in the war might help with jobs.
Curry: Oh, yeah?
Bush: Yeah, because we’re buying equipment, and people are working. I think this economy is down because we built too many houses and the economy is adjusting. --
Occasionally the Mass Murderer-in-Chief will make a candid comment that serves as a core sample of his personality. Beneath the superficial affability that disguises his inbred sense of unearned privilege, below the dense-pack arrogance, hidden away under multiple layers of ignorance and corruption, at the center of his being, Bush is a creature of the kleptocratic State, in its crudest and most destructive form.
It’s not just that Bush has completely internalized a dimwit’s version of Keynesianism. He also appears genuinely to believe that war –heedless wholesale destruction -- is more profitable than constructive private enterprise.
“Y’see” -- I can imagine him saying in his practiced mock-drawl, his shoulders hunched over in that oddly simian way of his, a self-satisfied smirk creeping across that face that could have been designed by Matt Groening – “these idiots in the private sector jus’ went out and built a whole buncha houses nobody could afford, an’ now we gotta big mess. Don’t know why the fools went and overbuilt the housing market. Here’s the cool thing, though: You can’t overbuild the military. Heck, if we build too many bombs, or tanks, or missiles, we can always find some use for ‘em, and if we can’t, I’m sure the Israelis or the Saudis or someone can take ‘em off our hands – even if we have to pay them to.”
While Bush is well-known for his significant contributions to the practice of military Keynesianism, he has played no small role in expanding the practice of the domestic version as well – including the same vastly overbuilt housing and mortgage market.
The unwinding of the sub-prime mortgage market is what triggered the ongoing – and ever-escalating – global financial crisis. Bush (who probably thinks the term “sub-prime” refers to a steak that costs less than a C-note) probably doesn’t remember that he was directly involved in abetting the sub-prime disaster. Yes, the Fed created the mortgage mess as a matter of deliberate policy. But Bush did his considerable best to help things along.
"Low interest rates have encouraged a housing boom here in America--and that's good, that's good," Bush exulted at an October 2003 forum on Hispanic-American affairs in California, years before he “discovered” that a housing boom is a Bad Thing. In the same speech, he urged that banks make more “zero down payment loans available to first-time buyers[,] whose mortgages are guaranteed by the Federal Housing Administration….”
If you want more of something – in this case, risky mortgage loans to dubiously qualified borrowers – subsidize it. And the subsidies that aided the housing bubble didn’t come only through the FHA, of course. Fannie, Freddie, and Ginnie all got into the act, as well, creating a world-historic debt bubble that is now rapidly collapsing. This wasn’t done out of an altruistic desire to help every American own a home, but because the politically connected investor class realized unfathomably huge profits in generating that debt and finding perversely creative ways to repackage it.
In a sane world, that would be a noose, rather than a medal -- and both of them would be on the scaffold. (I'm kidding. Sort of.)
As James Howard Kunstler* points out, our present financial system is nothing more than a “daisy-chain of liabilities” – beginning with the “dollar” itself, an instrument of debt posing as a form of currency.
Kunstler chose an unfortunate name for his must-read blog (caveat lector), and his assumptions regarding “Peak Oil” are disputable. He is entirely correct, however, in predicting an impending economic depression he calls the “Long Emergency,” and his analysis of the financial system strikes me as sound.
Bogus deity, real money: An ancient Greek silver coin bearing an image of the goddess Artemis.
Where once every national currency was backed by “reserves” of something considered valuable – generally gold – “reserves” came to be “denoted in just currencies themselves, or certificates that represented the existence of currencies held elsewhere, or pixels on a screen representing the movement of alleged piles of currency from one place to another, or the intention to move a notional pile of currency to a theoretical destination, and then that became an algorithm purporting to represent the future arrival of a notional pile of money at theoretical destination-to-be-named-later, and so on…. And after a while, the nature of money became so detached from anything real, so abstract, that its very existence became hypothetical. Even this `worked’ for a while, in terms of the managers of this money being able to `cream’ substantial amounts of this hypothetical money off the top of their notional operations and translate that hypothetical cream into Tribeca lofts, Gulfstream jets, and other real luxuries.”
“The rest of the economic food chain” – meaning serfs like thee and me – “got stripped of remaining asset value … until they had nothing left to trade with except debt, in one form or another, and this phase of the game turned out to have a short lifetime when the only debts remaining to be monetized were the contracts on houses occupied by people with no hope of ever meeting their obligations – and then the whole sorry racket started to go up in vapor.”
At present, the banks – with the quiet help of Helicopter Ben’s counterfeiting agency – “are pretending to have money and desperately cadging loans from all comers to keep appearances up, but the loans can’t come in fast enough.” At some point, somewhere in this purportedly wealthy country, news will leak out that an inconspicuous bank is about to fail. This will trigger a bank run, and the contagion will spread far and fast.
That’s what happened last September at England’s Northern Rock bank, that country’s fifth-largest mortgage lender. Northern Rock quietly applied to the Bank of England for emergency aid to prevent a bank run. Instead, it precipitated one.
In the course of a single weekend, before the government guaranteed Northern Rock's deposits and police turned away panicky customers, the bank lost some $4 billion as customers emptied their accounts. As the Economist magazine notes, this was England’s first bank run since 1866. Just a few days ago, the British government announced – after failing to arrange a subsidized take-over by Richard Branson’s Virgin Group -- that it was nationalizing Northern Rock.
Consider this: Richard Branson is willing to risk life, limb, and fortune in his effort to pioneer commercial spaceflight, but he wants nothing to do with the banking business unless the taxpayers provide him with parachute.
Right now, as noted above, American banks are doing exactly the same thing that triggered the run on Northern Rock: They’re on life support to the central bank, hoping to forestall depositor panic. But, once again, at some point, a significant bank failure will happen, a run will materialize and metastasize – and, as Kunstler writes, “that would be the magic moment that the USA discovered it was no longer a rich nation.”
Northern Rock may yet prove to be the pebble that starts a global financial avalanche. Or that catastrophe may begin somewhere on this side of the Atlantic. But it is coming, and probably sooner than most people think.
The last Depression we endured took place in a country with enviable natural resources, a large and growing industrial capacity, and blessed with a population familiar with discipline, thrift, and the deferral of gratification. The next depression, Kunstler predicts, “will play out against the background of a society that has pissed away its oil endowment, bulldozed its factories, arbitraged its productive labor, destroyed both family farms and the commercial infrastructure of main street, and trained its population to become overfed diabetic TV zombie `consumers’ of other peoples’ productivity, paid for by `money’ they haven’t earned.”
To the extent this description of the hoi polloi is accurate, the behavior described reflects the priorities of the ruling oligarchy, in which – perhaps to an extent unprecedented in our history – fortunes are made through the vulgar redistribution of wealth by the State. And in this respect, George W. Bush is a perfect exemplar of his class.
In his infuriating and informative new book Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill), David Cay Johnston recounts the old and sadly neglected story of how Bush the Younger became wealthy. Like Kunstler, Johnston is mistaken in some important ways, but he does an admirable job exposing the machinations of our ruling oligarchy, of whom Bush the Lesser is a suitable specimen.
During the reign of Bush the Elder, Duhbya was wealthy, but not extravagantly so. Unlike Joseph in Egypt, under whose hand every venture prospered, Bush the Younger had a knack for running businesses into the ground. His was the touch of Tantalus, rather than Midas.
Bush did know how to manage one asset only a handful of Americans enjoy: His family political connections, many of which we reinforced by his inherited membership in Yale’s Skull & Bones secret society. (Depending on whom you ask, Skull & Bones is either a satanic coven or an oddly packaged Good Old Boy network; my view is that it is a little of both.)
"Yeah, we may look like the founders of the Paul Anka Fan Club -- but trust us, we're evil": George "Poppy" Bush (immediate left of the Grandfather Clock) and fellow Bonesmen.
Unlike his father or his grandfather, Bush the Younger didn’t take his Bonesman duties all that seriously. As an initiate, he was given the new name “Temporary” as a placeholder until he thought of a more appropriate sobriquet, and he never bothered to change the default. So to this day, Bush the Younger remains “Temporary” to his Bonesman brethren.
In the early 1990s, several Bonesmen were among the investors Bush turned to when he conceived the idea of buying the Texas Rangers. The underperforming team wasn’t a bargain at any price, but Bush believed that the Rangers could quickly become profitable if a new stadium could be built for them. In fact, the investors quickly devised a plan to build a 200-acre “entertainment zone” surrounding the new stadium, including hotels and restaurants.
Bush and his cronies could easily afford to buy the Rangers; they could even afford to build a stadium. But getting the land to build the “entertainment zone” would be a little more difficult, since many of those who owned the property weren’t interested in selling.
Ah, I see that at least some of you know where this story is headed….
Rather than paying what the owners would have been willing to take for their land, Bush and his buddies “simply had the city of Arlington seize the land they needed and more, using government’s power of eminent domain,” recalls Johnson.
The new stadium was built by a municipal “Sports Authority” (represented in court by Ray Hutchison, husband of Texas Republican Senator Kay Bailey Hutchison). The Authority was funded through a half-cent increase in sales tax approved in a quick and dirty referendum held after Bush threatened to move the Rangers to another city – a now-familiar extortion tactic by owners of professional sports teams seeking municipal subsidies. It also administered an interest-free rent-to-own arrangement for the team’s new owners, with every payment – and all maintenance expenses – applied to the purchase price of the stadium.
“The investors Bush assembled paid $86 million for the Rangers,” summarizes Johnson. “They sold nine years later for $250 million. The $164 million profit was $38.5 million less than the [total] subsidy” provided through the Authority. As a result, “Every dollar that Bush and the other investors pocketed when they sold the team came from the taxpayers…. Bush and his investors made no economic profit from the market when they sold the team. The only money they received came from the increased sales taxes that flowed into the stadium deal” – and that deal was made possible by the theft and extortion carried out through eminent domain.
In many ways, Bush’s Arlington Scam prefigured the much larger and infinitely more murderous criminal enterprise called the Iraq War. In Texas, Bush used the power of eminent domain to seize property to enrich himself and his buddies; in Mesopotamia, he arranged a military occupation of an energy-rich nation for more or less the same purpose.
In both cases, the taxpayers were plundered for the benefit of Bush and his fellow kleptocrats, although in the case of Iraq the price is paid through the relentless debasement of the currency, and the resulting theft of our earnings and savings. Oh, yes, the costs also include the death, dismemberment, or derangement of tens of thousands of Americans sent to colonize Iraq.
But from where Bush and his comrades sit the war is a sweet deal for the economy, and it’s churlish of the rest of us to cavil over the costs of such a profitable enterprise. After all, Bush explained with an idiot child’s impression of regal generosity in the above-referenced TODAY show interview, “we’re just about to kick out 157 billion dollars to our taxpayers” in the form of tax rebates, a lagniappe that will do little more than trigger a brief and inconsequential spasm in a dying consumer economy.
The most useful thing any of us can do with that rebate is to use it – along with whatever liquid funds we can spare – to invest in some combination of the three Noble Metals: gold, silver, and lead.
UPDATE: The Contagion Spreads.... Germany's state-owned KfW banking group, which invested billions in the US sub-prime mortgage market, is "on the verge of bankruptcy, with its supposed[ly] wonderful investments worth little more than the paper [they were] printed on," reports Der Spiegel. And other state-owned banks are beginning to totter:
"The state of North Rhine-Westphalia has injected 1 billion [pounds] into WestLB, another state-owned bank, as well as providing the ailing bank with another 3 billion [pounds] in loan guarantees. The situation is even worse in Saxony, where the state has issued 2.73 billion [pounds] in guarantees to Sachsen LB, that state's Landesbank, as Germany's state-backed regional banks are known. The other state-owned banks are providing another 14 billion [pounds] in guarantees. Hamburg-based HSH Nordbank urgently needs 1 billion [pounds] in fresh capital, while Bayern LB announced Tuesday that the bank's chief executive, Werner Schmidt, will be stepping down as of March 1 as a result of the crisis.
"The situation for Germany's public banks has become so dramatic that it threatens to topple what has been one of the key pillars of the country's banking system. The state-owned banks are supposed to bail each other out when necessary, but the problem is that many are in trouble themselves and hardly in a position to help their peers. And things could get even worse."
That's Will Grigg's First Iron Law of Reality (c): Things can always get worse. Where the international banking system is concerned, they will get radically worse in a hurry.
(Thanks to Lew Rockwell for drawing attention to the Der Spiegel story.)
*In the original version, I mistakenly referred to James Howard Kunstler as "William" Kunstler. That's a pretty major "whoops," one I regret as earnestly as I appreciate a reader's gentle correction thereof.
Point of Personal Privilege...
Please forgive the lengthy hiatus between essays. During the past two days I did something uncommon -- I took the equivalent of a brief vacation. (My last genuine vacation was in August 2001, and my former employers managed to bisect that one by sending me to New York in the middle of it.) This was dictated by simple exhaustion.
Korrin has been in the hospital since early October, and even with the considerable and heroically generous help of my friends and family it's been difficult to maintain a reasonable work schedule while being a temporary single parent to five young children.I sure appreciate your patience, and your prayers.
Owing to problems with my local ISP, this post is uncommonly light on graphics and links. When those problems clear up, I'll probably revisit today's edition and upgrade it considerably.
Don't forget: My new book, Liberty in Eclipse, is available at The Right Source.
The graveyard of discarded fiat currencies: Heaps of Soviet-era rubles decompose in a landfill. Chances are the fraudulent instrument of debt called the "dollar" will soon reach the same destination. 
He just can't leave wretched enough alone, can he? The execrable Alan Greenspan at an investment conference in Saudi Arabia, urging the region's petro-oligarchs to abandon the dollar. 
A millionaire street beggar in Zimbabwe displays bundles of that nation's increasingly worthless fiat currency. He has an endearing and radiant smile now, but the history of hyperinflation suggests this young man is in for incredibly hard times. Say a prayer for him. 
As Lapp soberly pointed out, we're just at the beginning of this trend. And the kind folks at the United Nations, who never met a problem they couldn't transform into a crisis, or a crisis they couldn't nurture into a full-blown humanitarian catastrophe, is reportedly drawing up plans for food rationing in urban areas should commodity price inflation go hyperbolic and food riots ensue.
Liberty in Eclipse is on sale now at The Right Source. 
