We’ve made three major predictions in this space.
Today, we add a fourth one.
- The Fed will never “normalize” interest rates (at least, not willingly). We were right.
- The Trump team won’t go crazy in its trade war with China. So far, the trade war is still at half crazy. We will see what happens.
- MMT, or Modern Monetary Theory, as crazy as it is, will become the new humbug creed of both Democrats and Republicans. MMT is gaining ground daily. Both parties are canoodling with it, even if they don’t admit it.
And today, we add:
- There will be no serious federal budget cuts … and no attempt to bring runaway government spending under control.
This weekend, for example, lawmakers girded for a budget battle. They took up their shields and swords in the solemn knowledge that if they failed, the enemy – bankruptcy, defaults, hyperinflation, and mass poverty – would lay waste to the Homeland.
And so, they put their differences aside to face a common enemy: a debt ceiling.
Pelosi, Trump … and the whole company of Congress and the White House pledged to do what the Fed governors had failed to do (our Prediction No.1).
The wimps at the Fed had not stood their ground. They had not done their duty. They had failed to protect America’s money.
Instead, they let themselves be overcome by terror in the face of falling stock prices. In a panic, they threw down their weapons … ended their policy of interest rate normalization … and fled the field.
And now, the Fed governors would forever live with the scarlet C upon their blazers — marking them as cowards; they can barely show themselves in public without someone throwing an insult or a stone in their direction.
No … the elected occupants of Congress and the Oval Office would do better. They wouldn’t let their people down. They would do what they had to do, what they promised to do. They would cut spending in order to preserve the financial integrity of the nation.
And so it was that this weekend, they stood, true and stout defenders of the realm, turning hard and determined faces toward the calamity in front of them.
If not them, who? If not now, when? Hadn’t they been entrusted with the sacred duty to protect and defend the U.S. republic from all foes, foreign and domestic?
And didn’t every one of them know, in his brain, that there was no way they could continue to spend $1.30 for every $1 of income … and, in his heart, that at least half the spending was a damned waste anyway?
And didn’t they realize that a great nation cannot depend on the kindness of strangers to fund its vital services — defense, medical care and congressional boondoggles?
And so it was that they waited in the Washington heat … like the 300 at Thermopylae, their polished armor shining in the summer sun … each with his private thoughts for the husband, wife and children left at home, most likely … praying that the gods of war were on their side… that the battle might be won before the August recess… and that America might remain free … solvent … and sturdy.
Unbowed by adversity. Unbroken by policy errors. Unrepentant, even as the jackasses caused one disaster after another.
It Shall Not Pass
And then … as the tension mounted … hearts raced and bowels fluttered … a shot was heard from the left flank … smoke rose on the right … The first skirmish had begun … as the mass of government debt advanced toward them at the rate of $114 million per hour.
The time for thinking was over. The time for discussion was past. Now was the time when good men and women would stand together … shoulder to shoulder … their sacred honor on the line … their mortal bodies in the breach …
The place to stop runaway government spending was here. The time was now.
“It shall not pass,” they said.
And then, the war-wild enemy grew closer … with the thunder of thousands of footsteps as they came forward in a single body like a terrible monster … and with the howls and battle cries to give themselves courage — and strike terror in the ranks before them.
Still, our elite forces, selected by popular vote of the American people, held their ground. They would wait unflinching … wait … wait … for the signal … the moment when they would unleash their terrible counterattack.
Let the enemy come.
“Let him exhaust himself. Let us make our stand here … immoveable … implacable … impossible to turn our flanks or crush our resolve.”
Then, they showed their backsides and ran away.
The Washington Post has the story:
[…] instead of the $150 billion in new spending cuts recently demanded by White House acting budget director Russell Vought, the agreement would include a significantly lower amount of reductions. And those reductions aren’t expected to represent actual spending cuts, in part because most would take place in future years and likely be reversed by Congress at a later date. […]
In practical terms, the budget agreement would increase spending by tens of billions of dollars in the next two years, a stark reversal from the White House’s budget request several months ago that sought to slash spending at many agencies starting in October.
What happened? Was the most elite corps of U.S. forces overwhelmed by a superior adversary? Or did it just sell out the American public?
More to come…
• This article was originally published by Bonner & Partners. You can learn more about Bill and Bill Bonner’s Diary right here.