Why Governments Love Terrorist ‘War’

Dow down a little yesterday. Gold almost unchanged.

Oil keeps slipping.

From Bloomberg:

Oil fell below $45 a barrel amid speculation that US stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5½ years.

Oil slumped almost 50% last year, the most since the 2008 financial crisis, as the US pumped at the fastest rate in more than three decades and OPEC resisted calls to cut production.

Goldman Sachs said crude needs to drop to $40 a barrel to “re-balance” the market, while Societe Generale also reduced its price forecasts.

We’re studying the drop in the oil price. Is it an isolated phenomenon — the product of fracking technology, petro politics and other special circumstances? Or is it, too, a feature of the worldwide credit bubble?

We will write up our conclusion in this month’s Bill Bonner Letter. But you can probably guess. The more we look, the more we find telltale signs of the credit bubble at every accident and crime scene.

Through a glass, darkly

Tomorrow, we’ll start a new series on practical investing. Today, let’s look further at how the global credit bubble has distorted investment markets, perverted the economy and corrupted our government.

They all now depend on something that should never have happened…and can’t continue for much longer.

Hardly a day goes by that we don’t squint through a glass, darkly, to try to see what the end of the credit expansion will mean for stocks, bonds and other asset classes.

Today, we look at what it will mean for the US Empire of Debt.

Typically, empires succeed by conquest. They take property…women…slaves. The loot is then parcelled out like a federal budget — with big portions for the honchos and cronies…and lesser portions to the foot soldiers.

Because the US is a democracy (of sorts), token amounts must also be paid to the voters; each party bids for votes with the money it intends to steal after it has won the election.

The US is a master at the fraud of modern democratic politics. But it has never got the hang of empire.

It conquers foreigners, but it steals only from its own people. Its new lackey states becomes cost centres, not profit centres; it loses money on each ‘mission accomplished’.

How does this empire stay in business?


Protection racket

Government is always a protection racket. That is why war is so useful: It is something to protect citizens against.

That is also why the relationship between governments and terrorists is symbiotic.

Terrorists give governments an enemy to protect people against (conveniently, one that can never really win). In return, they get fame, power, money and more recruits, thanks to governments’ heavy-handed ‘wars’ against them.

The founders of our republic cautioned against the whole thing.

We ‘do not go forth in search of dragons to slay’, said Adams. Avoid ‘foreign entanglements’, said Washington.

Even up to the end of the Eisenhower administration, thoughtful leaders realized that the military-industrial complex — the Pentagon and its warmongering cronies — posed a much bigger threat to the US than a handful of rabid terrorists.

War may be the ‘health of the state’. But it is sickness and a broken leg to the citizenry.

To prevent it, the founding fathers of the United States erected walls against it in the Constitution. Only Congress can declare war. And Congress is also supposed to raise the money to pay for it.

The founders knew where the real threat lay. The separation of powers and the Bill of Rights were specifically and expressly intended to protect citizens from the biggest threat to their liberties and their safety: government itself.

Brushed aside

But the Constitution and its protections have been largely brushed aside. The power of the president has increased; Congress has become little more than a group of irrelevant clowns and bickering connivers.

And if the history of empires is predictive, we can expect more of the same — consolidation of power in the executive branch, more rules and regulations to ‘protect’ us from evil, more controls, more costs, more spending and more debt.

Money, lives and liberty will be taken without due process of law. Corruption and cronyism will increase, as more and more of the nation’s wealth comes up for grabs.

The lumpenvoters will grumble and groan, as prosperity decreases. They will kvetch and complain, as graft and underhanded dealing come to light. But they will fall into place behind the feds when ‘war’ is in the headlines.

As the Pentagon gets more money, it will favour more costly weapons systems, entrenched tactics, old military technology and a more bureaucratic internal structure.

It will become stronger and stronger on paper, but more vulnerable to quick-moving opponents. After fighting so many phony wars for so long, it will be incapable of defending the country in a real one.

How will it end?

Two possible ways: Either the US military suffers a crushing defeat. Or the US Empire of Debt goes broke. Whichever comes first.

Empires, like all bubbles, always blow themselves up…one way or another.


Bill Bonner,
For Markets and Money


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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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