Week 12 of the Quarantine
As we look at America, we see cities enveloped in smoke and flame.
We hear sirens in the night…
We see Americans hating each other; fighting each other; killing each other at home.
And as we see and hear these things, millions of Americans cry out in anguish.
Did we come all this way for this?
— Richard Nixon, 1968
SAN MARTIN, ARGENTINA — We interrupt our regularly scheduled programming with this update.
A health crisis… an economic meltdown… and now a social breakdown!
Half of the U.S. states have called out the National Guard. The President of the USA went into hiding in an underground bunker. USA Today:
President Donald Trump was briefly moved to the White House’s underground bunker Friday night to shelter in place for a brief period of time as the protest grew outside the Executive Mansion.
The protests over George Floyd’s death hit the nation’s capital Friday night as angry protesters arrived at Pennsylvania Avenue, leading to a lockdown at the White House.
Later, he appeared holding a Bible. “We have a great country,” he said. “It’s coming back… It’s coming back strong… It will be greater than ever before.”
But maybe not.
Riots, protests, looting — 4,400 people arrested, as the president urges local government to “get tough.” Bloomberg this morning:
Violence, Anger Sweep U.S. Again After Trump Threatens Military Force
What gives? Another Freddie Gray incident? Like 1968, after the assassination of Martin Luther King? Or the beginning of something more sinister?
Just so Dear Readers will not be caught by surprise, today, we will take some guesses about what’s ahead.
When the Money Goes
You’ll remember our dictum: “When the money goes, everything goes.”
Huh? You wonder. What’s this got to do with money? Isn’t this just about racism and police brutality? In short, we wish.
The monetary foundation of the U.S. (the Federal Reserve balance sheet) began the century at only $674 billion. That is where it had gotten since the Fed was set up in 1913. Now, it is $7.1 trillion, and it’s headed to $10 trillion by the end of the year.
And now, every crisis, every calamity, and every disaster, caused by the feds themselves, will be met with more money-printing… and more war. The war on terror… the Mortgage Finance Crisis of ’08-’09… the war on COVID-19 …
Each time, the feds go back to doing the only thing they know how to do… the only thing that increases their power and enriches their friends – running the printing press.
And each time, they make the situation worse.
The current round of riots and lawlessness, for example, are probably not just a reaction to another killing by the police… not just the work of a few subversive groups… and not caused by the Russians (as Susan Rice claims), nor by our “foreign adversaries” (whoever they are) as suggested by Donald Trump.
Instead, they are an inchoate reaction by millions of Americans to an inherently corrupt and unfair system.
“Racism” is something they understand. They were indoctrinated about it in school.
But “racism” may be just a rallying cry… a trigger… a focal point… for deeper bitterness and resentment.
Future of America
Money represents time… and life. And when people can’t trust it, they lose faith in their institutions, in the system, and in each other.
The center cannot hold. The masses become more extreme in their opinions… some wanting to tear down the “capitalistic” system… others wanting to protect it at all cost.
(In a recent editorial in The New York Times, for example, Roger Cohen shocked readers by suggesting that liberals might want to “gun up.”)
Again, we turn to the pampas where, we think, the future of America is foretold.
We’ve already discussed the political appeal of Peronism.
Promise, promise, promise… spend, spend, spend… print, print, print. You buy votes… then you print the money to pay for them. And then you go broke.
By 1976, after 30 years of Peronism, the inflation rate was edging up toward 500%. There were riots, abductions, kidnappings, shoot-outs… domestic “terrorists” were on the loose.
The military stepped in and began a “Process of National Reorganization.” But it soon became a “dirty war,” supported by the U.S. government.
People began to disappear — leftists, activists, complainers — their bodies were dropped into the Rio de la Plata or buried in huge pits. By the time it was over, seven years later, 30,000 people had been “disappeared.”
But killing unarmed civilians does not prepare an army for a real war. And when the generals went up against the Royal Navy in the Falklands War, they were badly beaten.
A few months later, in 1983, the military dictatorship was over. But the inflation continued for another six years.
Back to the U.S…
From Financial to Social Calamity
The extra $600 per week “bonus” given to the unemployed in March by a vote-buying Congress is scheduled to end in July. What will happen then?
Most of the unemployed were let go from leisure, hospitality, or health care. In other words, from the “service sectors,” where almost all the new jobs were created from 2009 to 2019.
How many of them will go back to work before the summer? Business Insider:
Even with dining rooms reopening in some parts of the country, it’s still nearly impossible for casual-dining restaurants to generate a profit at reduced dine-in capacity.
As a result, many chains have permanently closed some stores, and some brands have decided to throw in the towel altogether.
IHOP, Denny’s, and TGI Fridays are among the nine chains that have cumulatively closed over 600 restaurants for good.
Hmmm… The money is running out. No jobs available… fewer hours for the part-timers. Temperatures rising.
What do you think, Dear Reader? How many “incidents,” caught on video, will it take to light the fuse?
This is just the beginning
As the money-printing continues and the financial calamity worsens, it will cause more and more dissension, kvetching, and insurrection… This will lead to more softening in the center and hardening on the edges.
Riots are inevitable. Lawlessness is just part of the process. It gives the authorities another “war” to fight… another reason to assert their authority… and spend more money…
Call out the National Guard. Get tough. Announce a “state of emergency.” Curfews. Martial law.
Declare U.S.-based groups “terrorist” organizations… arrest their leaders… put them in prison (along with the million or so prisoners from the wars on “drugs” and “poverty.”)
Put the nation under house arrest (the current restrictions are only a rehearsal). And then, disappear the bastards!
More to come…
• This article was originally published by Bonner & Partners. You can learn more about Bill and Bill Bonner’s Diary right here.