The Financial Hysteria of America and the Bankruptcy of Western Liberalism

Climate change activists protest at the Wall Street Bull in Lower Manhattan during Extinction Rebellion protests in New York City, New York, U.S., October 7, 2019. REUTERS/Mike Segar – RC1123B0D7A0

Western Liberalism is not only bankrupt: It bankrupts. Nowhere is this clearer than in the hysterical panic with which Republicans and Democrats alike in the United States are printing limitless sums of theoretical money to pump demand into a structurally wildly distorted and dying economic system in utterly futile efforts to fend off a looming super-Depression and world economic crisis.

Yet as becomes more clear every day, far from maintaining the current global structure, created by U.S. bankers and diplomats and dictated to the rest of the world back in 1944, all these efforts are just accelerating the disintegration of the Old Order.

There is a supreme irony to this, for the most important creator of the Old World Economic and Financial Order – the one that is now disintegrating as we watch – was none other than the patron saint of liberalism – a man who has become a non-person in the United States in the past 40 year “Age of Reagan” (as I explain in my 2015 book “Cycles of Change“) – legendary 32nd President of the United States President Franklin Roosevelt.

It is fascinating to watch Democratic Party leaders today as they desperately try to conjure up the great appeal and success of the only man ever to win four U.S. presidential held up Roosevelt’s leadership through World War II as a model of leadership for today.

That should be entirely true, But neither current (and sinking fast) putative party nominee Joe Biden nor his always-collapses-at-the-crucial-moment Senator Bernie Sanders haven’t a clue what they are talking about.

Two factors were central to Franklin Roosevelt’s extraordinary success as a war leader – and Sanders and Biden are both pathetically blind to both of them:

The first was Roosevelt’s unhesitating and consistent support for his allies, especially the unprecedented flow of Lend Lease aid in food, trucks and other equipment to the Soviet Union which was carrying the main burden of the combat war against Nazi Germany almost single-handedly.

The second was the remarkable fiscal prudence and caution Roosevelt showed throughout his presidency, especially in his creation of the landmark Social Security program.

Roosevelt was vastly more cautious and even cynical in developing this program to give financial support for the first time in history to aging Americans.

Although the landmark congressional legislation was passed in 1935 and became law on August 14 of that year as part of the so-called “Second New Deal,” financial contributions out of the pay checks of all legally working Americans only started to be withdrawn in 1937.

Even then, it was still another three years before the first U.S. citizen ever to receive a check from Social Security picked it up: That was 76-year-old Ida Fuller of Vermont on January 17, 1940. Her first check came to the generous sum of $41.30.

From 1935, when the legislation was passed to vast popular acclaim, it was another six years at the height of the Great Depression, when more Americans were starving and dying of poverty and related hardships than ever before or since in the nation’s history before a single individual actually got any benefit from it.

The actuarial calculations on which Roosevelt designed Social Security were even more cynical and ruthless.

Social Security was to be paid to retirees after the age of 65. But at the time, the median age of Americans was 61. Only a tiny privileged minority survived to the age of 65 or beyond.

Roosevelt practiced exceptional caution to keep the U.S. economy and currency stable during the New Deal and the Great Depression. Contrary to popular (Republican) myth, he was adamantly opposed to bankrupting the country either in his own time or in that of his grandchildren.

“It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in 1980,” he famously said. “We can’t do that. We can’t sell the United States short in 1980 any more than in 1935.”

Roosevelt’s exceptional caution contrasts with the wild spending both Republicans and Democrats from Bernie Sanders to Donald Trump have been practicing, driving their country into final bankruptcy during the current coronavirus crisis.

Comments financial analyst and former London merchant banker Martin Hutchinson in his May 4 “Bear’s Lair” column, “the CBO (Congressional Budget Office)’s estimate of budget deficits of 18% of GDP in 2020 and 10% of GDP in 2021 are truly frightening. …they bring the likely bankruptcy of the U.S. government much closer than seemed likely previously, probably to around 2030.”

Indeed, given the terrifying vulnerability of the U.S. financial system to the collapse of the $2 trillion junk bond market used to financial the collapsing fracking energy sector, projecting a meltdown U.S. financial crisis a balmy ten years ahead seems wildly optimistic.

In fact, the road from Franklin Roosevelt’s cautious callousness in designing Social Security so that it would not pay a penny to those who needed it for another five years (until, indeed, the Great Depression was already over!) to the “spend endlessly, spend now” crazed panic of both Republicans and Democrats is a very clear one:

It is the road of palliative Western liberalism, open borders and global Free Trade: It is a road that inevitably leads to ever huger debt burdens, ever-declining standards of living and inevitable ruin.

By contrast, the extremely fiscally cautious, highly conservative financial policies that Russian President Vladimir Putin continues to follow get no respect from the spendthrift, zero interest rate maniacs on Wall Street.

Yet it is Russia that is currently in a far stronger position to ride out the global financial as well as pandemic crises than the United States.

In statecraft and economics as in architecture, the most important issue is not how high you build but how well you build and how deep you build – How good your foundations are.

The storm of pandemic is already heralding the storm of financial crisis. That crisis can indeed be solved, but only by abandoning the old shibboleths, the old false gods that, as Dostoyevsky predicted at the very beginning of our modern industrialized, interconnected Age, would inevitably bring us to our ruin, unless reined in and reversed in time.

 

By Martin SIEFF, During his 24 years as a senior foreign correspondent for The Washington Times and United Press International, Martin Sieff reported from more than 70 nations and covered 12 wars. He has specialized in US and global economic issues.

First published by SCF

 

The 21st Century

The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of 21cir.

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