Robert McCartney writes in The Washington Post about attendees of Glenn Beck’s rally Saturday in Washington, DC. While estimates of the crowd’s size vary widely, the most reputable estimates put it somewhere in the half-million range. Most of the media coverage of the event (before, during, and after) has focused on its fringy elements and tried to paint the group as a bunch of hateful racists, but—as I’ve written before about the so-called ‘tea party’ movement—the realities are much more nuanced.
McCartney puts aside these hyper-exaggerated caricatures, and rightfully so, but then latches on the supposed ‘apocalyptic’ views held my many of the participants as being a bad thing for political debate. Normally, I might agree with this thesis. In normal times, this kind of ‘so-and-so is destroying America’ rhetoric cheapens and degrades our political discourse—another subject I’ve covered before.
In the article, the author points to a seemingly random selection of rally attendees who speak in nebulous terms about an impending apocalyptic end to the United States, at least as it exists today. It is unfortunate that so many people have these kinds of one-dimensional, over-simplified views on current events—although, in the interest of fairness, the majority of folks attending the last half-decade of anti-war protests probably couldn’t have articulated their views any more deftly. The American masses have never been known for their articulateness.
But here is the problem: while most of the people who swarmed Washington on Saturday to make a conservative political statement couldn’t explain their ‘apocalyptic’ views on the state of the republic, their views have a core truth behind them that too few people are discussing. Perhaps we should all be thinking a little apocalyptically right now.
You see, governments tend to fail after they bankrupt themselves and their national economies. The fall of the Roman Empire, the French Revolution, the Russian Civil War, the collapse of the USSR, the Argentinian military coup and its later return to free elections, the Cuban Revolution, Venezuela’s slide toward radical socialism, and the rise of Nazism in Germany all trace themselves (in-whole or in-part) to failed economies caused by poor governmental economic policy. It’s very rare for a system of government to survive for long after it decisively bungles its country’s economy.
“Surely,” you say, “that can’t happen here.”
Of course it can, and don’t call me Shirley.
The problem, at least in recent history, usually boils down to something called Keynesian economics. John Maynard Keynes, a British economist, developed a school of economic thought early in the twentieth century that says an active government economic policy is necessary for economic stability and growth. One of the lynchpins of his theory, which was in-vogue during the Great Depression, was that the way to get out of a large recession or depression is for the government to spend its way out. It seems sort-of logical, I guess . . . the idea is that massive spending puts people to work, gives them spending money, and contributes to a ‘jump starting’ of the economy.
It simply doesn’t work. Government spending and the artificial release of cash into an economy reduces the value of money and leads to inflation . . . and if the spending and printing isn’t stopped in time, it leads to hyperinflation and an inevitable collapse of the economy and (by extension) the government that destabilized it. This is what happened to the so-called Weimar Republic in Germany, and its collapse opened a power vacuum and made it possible for Adolf Hitler and the Nazi Party to rise to power.
In the United States, President Franklin D. Roosevelt (D), a Keynesian believer, embarked on a similarly ill-advised binge of government spending. We had the advantage, however, of not having to make war reparations so we were able to stay solvent much longer than Germany. But most reputable economists (i.e., non-Keynesians) now recognize that the mad federal spending of the so-called ‘New Deal’ and its successors prolonged and deepened the Great Depression, which otherwise may well have been ending—or over—by 1935. Following Roosevelt’s economic policy to its logical conclusion, assuming World War II had not intervened, our own economy would have collapsed and would very likely have taken our system of government with it before the mid-1940’s. The Great Depression was bad, no doubt, but if you think that’s as bad as it gets you might have some real surprises ahead.
The fact that our public schools continue to teach a simplified and false ‘Roosevelt saved America from the Depression’ narrative is a continual thorn in my side. Students only learn the truth about the ‘New Deal’ if a) they go to college, b) they choose a major that requires economics courses, and c) they are lucky enough to go to a school with an economics department not stacked with biased Keynesians. Obviously, only a small percentage of Americans (me included) meet the conditions. Most of the rest accept without reservation the fable that the ‘New Deal’ ‘worked.’
Despite there being no examples whatsoever of Keynesian economic policies actually working to end a recession or depression (unless there’s a world war involved), it keeps rising from the dead like a B-movie zombie. Every time an economy goes south, you have people spouting off about how we need to ‘inject’ money into the economy with government spending. It doesn’t even pass the common-sense test; how can you spend your way out of an economic hole? Even an attentive 5th grader could craft a more-sound economic policy than trying to spend our way out of a recession. It sounds idiotic on its face, and rightly so. Keynesian ‘recovery’ policies have failed every single time they have been attempted, and they will keep failing.
When our economy turned south in the waning days of President George W. Bush’s (R) second term, how did he, Treasury Secretary Henry Paulson, and Federal Reserve Chairman Ben Bernanke respond? They implemented a Keynesian policy of bailouts and willy-nilly federal spending, ballooning the 2008 deficits to record levels (much to the chagrin of fiscal conservatives like myself). Those of us who paid attention in Econ. 101 knew these efforts would fail and make the budding recession worse. That’s exactly what happened; we’re still paying the price today.
So the American people, in part because of their intuitive knowledge that it is absolutely impossible to fix a flagging economy with more pointless spending, rightfully rejected the Bush/Paulson/Bernanke doctrine and voted for a change. The Republican bailout spending was the last nail in the coffin of Senator John McCain’s (R-AZ) presidential campaign; his poll numbers, already dragging, dropped five points overnight when he ‘suspended his campaign’ to go back to Washington and pass the Wall St. executive bailouts that something like 65 percent of Americans opposed. He made me so mad when he voted for the bailouts that I rescinded my endorsement and seriously considered throwing my support behind a third-party candidate or even abstaining from the election entirely; our choices in the election were between ‘bad’ and ‘worse.’
President Barack Obama (D) easily took the presidency, and the Democratic Party took solid super-majorities in both houses of Congress. Americans were mad and sent a clear message to the powers-that-be: no more bailouts, no more mad spending, no more waste, and no more pandering to big business.
But what did Obama do when he took office? He appointed Tim Geitner, the President of the Federal Reserve Bank of New York who had worked with Bush, Paulson, and Bernanke to architect the Bear Stearns and AIG bailouts, to replace Paulson as Treasury Secretary. He re-appointed Bernanke—a Bush appointee and bailout architect—as Federal Reserve Chairman. He accelerated and expanded the bailouts, purchased 60 percent of General Motors, and added a series of ‘stimulus’ and ‘recovery’ spending efforts on top of all that. In other words: same stupid game Bush was playing, just bigger.
After being elected to stop the mad federal spending and bring back the balanced budgets we last enjoyed under President Bill Clinton (D)—continually arguing during the campaign that he was the fiscal conservative and believer in balanced budgets—Obama promptly set a new deficit record four-times higher than the one set by Bush in 2008. Bush turned out to be Keynesian, cleverly disguised a free-market conservative, and set us on this insane and destructive economic path. Obama, however, quickly made Bush look like a lightweight.
So where does this madness lead? Assuming that things continue on their present trajectory, the inevitable outcome is high rates of inflation which will further destabilize the economy. Once inflation takes hold, if the powers-that-be do not quickly correct their economic policy, it will accelerate until we see a Weimar Republic-style cycle of hyperinflation and a complete collapse of the American monetary system. The collapse of our monetary system will be followed quickly by a collapse of our Constitutional republic. I would not dare predict what will replace it, but there’s no guarantee that we’ll like it. How’s that for a concrete, clear explanation of those ‘apocalyptic views,’ Mr. McCartney?
The best analysis I’ve read of how hyperinflation can happen in America is a two-part series from Gonzalo Lira: part 1 and part 2. I strongly recommend you read it. The first part covers how it will happen, and the second covers what it will be like for us rubes.
This is not some hyper-partisan right-wing fear mongering; my regular readers should know me better than that. I’m the first to state, as I did above, that these idiotic policies were put in place on George W. Bush’s watch. The same eventual outcome would have happened with an open-ended continuation of Bush’s economic policies under John McCain, it just would have happened slower. Under Bush/McCain Keynesianism, we’d be looking at a catastrophic collapse of the American republic in, say, 10-15 years. Under Obama Keynesianism, I’d predict something more like 5-10 years.
Of course, these are merely rough estimates and worst-case scenarios. Even on the fastest possible collapse timeline, there are at least two intervening Congressional elections and one presidential election—either of which can bring about a drastic course correction, an abandonment of Keynesianism, and a drastic reduction in federal spending akin to Greece’s ‘austerity’ program. The flip side is that those elections, if we elect the wrong people, could just as easily lead us to double-down on these spending policies with the insane belief that Keynesian economics will somehow start working if we ‘just give it enough time.’ That approach will accelerate the collapse.
Does this all sound crazy to you? It really shouldn’t.
The United States as a free republic has already outlasted most free republics. The mean survival length seems to float around 200 years, and we’re already over 220 (counting from the establishment of the government under our current Constitution in 1789). It’s worth noting that our previous republic, under the Articles of Confederation, only functioned for eleven years (1777-1789)—and the first four of those were under an un-ratified draft of the document. There’s no reason to think that our current system of government will continue to exist in its current form indefinitely unless we dedicate ourselves to keeping it. Governments, by default, collapse now and then.
As long as we are indifferent, and as long as we allow our leaders (in both parties) to pursue these kinds of destructive economic policies, we have no right to complain when it all falls apart—and with this kind of complacent attitude pervasive in our society, the system will fall apart. It’s just a matter of when.