The Dollar’s Death Spiral
The reason the American dream is dying for so many people is simple: the erosion of the dollar’s purchasing power.
Just take a look at the chart below. It tells the entire story…
the dollar has lost 97% of its value since 1913.
One of the biggest reasons for this is the surge in government spending.
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Every person on the planet has a mother and a father. And every thing had some other thing come before it, opening the door for it and making introductions. So it comes to be that when a generation of Americans got something for nothing, the next generation got nothing for something. It must pay $1 trillion-a-year just to keep up with the interest on the things their parents and grandparents consumed.
The young are getting tired of being ripped off. They are beginning to revolt. That may be the real meaning of Milei’s victory in Argentina. Milei ‘came out of nowhere’ to clinch the top job, running against one of the savviest, slickest, most professional politicians in Argentine history – Sergio Massa. Stephen Kinzer, writing in the Boston Globe:
The victory of Javier Milei, until recently a little-known economist who had served only a single term in Congress, is a symptom of global anger at sclerotic political elites. For decades, Argentina has been run by a corrupt and self-interested clique that has failed to provide the nation’s citizens with security or prosperity. This month’s election was a rebellion against that elite, which Milei calls “the caste.”
Milei’s victory is no aberration. Opposition candidates have won 17 of the 18 elections held in Latin America over the last four years. That same impulse is palpable in the United States. This is a main reason Donald Trump defeated Hillary Clinton in 2016, and why he may win again next year. When an entrenched political class runs out of energy and loses voter confidence, more people adopt a “throw the bums out” attitude.
The Political Caste
Argentina has no real immigration problem. Its problems are financial. The ‘political caste’ has spent too much money and fouled the economy.
The US follows along.
Today’s dollar is worth only about 55 cents, compared to a dollar in 1999.
Some ordinary people have kept up with it. Many have fallen behind. But for all people working for wages, it has been a struggle. A lousy way to thank them all.
‘Inflation,’ though difficult to explain or control, is the price we pay for letting a corrupt and dissolute elite tell us what to do. They told us we should invade Iraq…fight in Afghanistan…support conflicts all around the edges of the empire…and boost the economy by printing money to increase ‘demand.’ Of course, the new demand was as phony as the fake money and the fake interest rates. But it had its effect; more money bought more things…now rusting, collecting dust, used up and derelict. The new money also increased prices for the assets that the deciders owned…and for the products that the non-deciders now want to buy.
The things we needed to buy with money we didn’t have can be put into three categories – the absurd, the useless, and the dangerous. Sanctions…trade restrictions…subsidies to selected industries…trillions for extra ‘defense’ … diversity programs…. sex change operations (even in the military)…we needed to fight drugs, poverty, global warming, urban decay, misinformation, infection, white supremacy and anti-semitism. We needed to do this….we needed to do that…to find those ‘weapons of mass destruction’…or to shut down the economy for ‘two weeks to stop the spread’…– and everything had a price tag.
Bill Bonner
