The American Republic’s Death Throes: Low Growth, Uncertainty, and Totalitarianism
More of the same, but worse
I’d like to begin this article by celebrating another Banks-to-Fed Reverse-Repo all-time high! $1,189.616 bln! Banks have been using over a trillion in liquidity (over 25% of the entire liquidity in the system), for overnight repo collateral. I talk about this constantly, and I believe this is where the finest piece of evidence of a liquidity crisis, crisis in confidence, proof of low growth, and total risk-off all brewing at the same time in the same stew.
Like I spoke about in my last article on the subject, big, smart money has been moving towards risk-off for a while now. Briefly spoken about in the article - I allude to, without speaking much on, an issue where money going into Prime MMFs (AKA, Money Market Funds that invest primarily in private sector debt - Certificates of Deposit, Bankers’ Acceptances, and Commercial Paper), will be highly disappointed when they’re GFC’d in the event of a banking crisis. Well what causes such a crisis? Simple: it’s a domino effect.
When Lehman Brothers’ and Bear Sterns had bought out too many mortgage lenders, and saddled on a ton of MBSs, they didn’t think too much of it. To them, even private-label MBSs (non-government-guaranteed), were as good as treasuries (AKA, as good as gold). Unfortunately, a meme doesn’t hold up an entire system. When the system deems lower-quality mortgage debt that Boudreaux has in Shreveport, or Misty has in Las Vegas, is deemed higher-quality, the tranches within this unguaranteed debt starts to sour. Not to add that the system still uses these MBSs as collateral, and are heavily invested in by foreigners, specifically the guaranteed kind, so that they can have collateral (albeit, maybe not collateral some primary dealers will take) that has a slightly higher interest rate. As I’ve pointed out, though, the Fed keeps buying up this debt, while the banking system continues to demand more and more pristine collateral (treasuries). Smart money knows where to be, and dumb money will get killed. That’s a market tale as old as the hills, though, and you lot know that. However, what’s more catastrophic is how the world changed in 2008, and you know that. I’m not talking technologically, but politically.
We know things will break, and our own uncertainty reflects it
The geopolitical landscape has shifted utterly and completely. In the aftermath of the GFC, there was still the Tony Blairite and George Dubyan attempts at reconciling a post-Cold War world into something brave and new. The free trade agreements that would culminate, starting especially in the 1970s with Nixon and China, are often blamed as what killed the American worker; shipping his jobs, and with it, his livelihood, to someone to do it worse and quicker in countries where people bail off the sides of their workplace roofs in an attempt to end their miserable lives. The free trade agreements were not an answer to the USA vs. USSR protectionisms. We sold away our manufacturing industry, doomed entire regions of our nation to rot in opiate addiction and capital flight, while the corrupt, fickle governments of communist oligarchies and flighty third-world nations reaped the benefits. The failures of internationalism has brought dismal growth to Africa, Far East Asia, South Asia, South America, and Central America. Some experienced giant GDP explosions here and there, but ultimately, in the wake of 2008, have experienced less and less. This goes against what they hoped for, and depended on, in the wake of a globalizing world. With globalism on life support, socialism and fascism have supplanted the once optimistic developing nations who seeked to be like America, and for Americans and the rest of the developed world, supplanting their dying industries and spiritual decay.
For times in history, especially post-WWII, and then again post-Cold War, we were able to revamp the impassioned risk-on distractions to steal away America’s attention from her dying Rust Belt (and now a dying Oil economy, too). Eh, so what!? Well, jobs have disappeared, and the pride and joy that a man feels when he finishes a hard day’s work at the factory, when the customer purchases a piece of equipment made in Pennsylvania or Texas, when an American can feel a sense of pride that his/her nation is united in its robustness and infinite talent is all gone. It was swept up in the winds of dollarization, where now sure - we’ve got a permanent unemployed class of overweight drug addicts, a permanent class of indebted students whose jobs only benefit from a financialized service economy and/or government spending, a permanent population of people who have no stories of industriousness and American might that maybe their parents or grandparents had, but hey cheap stuff! All they have is decay, their parents are doctors or computer programmers, at best.
We all know the entrepreneurial wit has gone to the tech economy. Capital flows have moved towards the financial economy, at least in America. If one wishes to start some business that produces raw materials/capital resources, then good luck getting killed by cheap, foreign competition who actively deal with terrible working conditions for trifling sums. Maybe they can if they’re a super talented craftsman and can make something that can be made for cheaper than something half-quality, but looks nice, in Taiwan or Egypt for a modicum of the price. And with the death of a multivaried American economy, long-dead tradesman industry, even longer-dead industriousness, and a fat, complacent population, the ultimate quadrillion-dollar question is who will bury this dead corpse? No longer can the patriotic conservative pretend his nation has any future. He knows it’s dead. He knows who killed it. The language of the right has gone from delusion, to acceptant defeatism, to just utter nihilistic fatalism in the last decade. And history has shown, unabated protectionism doesn’t solve his sadness. All he wants now is to destroy the fuckers who took it all from him.
The culture shifted after the mixture of internationalism, Eurodollar System, Blairite/Dubya/Nixonite globalism, and free trade that brought cheap goods at the expense of our dignity absolutely failed (and with it, our entrepreneurial, productive spirit and capacity). As I’ve pointed out, and as anyone who isn’t living under a rock knows, there has been low growth in the real economy at a rate someone from the nineties or before would’ve thought was unacceptable. When junk debt is yielding well under half what treasuries would’ve yielded in the nineties, you know there’s a crisis of confidence. After the GFC, all bank eyes were on collateral, and focusing on risk-off in a way that was ultimately unfeasible, especially after QE proved to be ineffective. Like Peter Schiff even points out, we were able to pretend this brave new system worked, and that we could restore trust in the system, after so many people got killed by a financial system that was supposed to be impenetrable. Unfortunately, we couldn’t revamp the global economy, economic growth, and have faced an impending crisis of confidence ever since. What makes anyone think it’s different now? What makes anyone think that QE will change things after it being used a couple dozen times by Japan, five or six times by us, and basically perpetually in Europe in the last few years? Nothing’s different, except the fact that the Fed, other central banks, and governments won’t be able to excite investment ever again. Not unless they put a gun to their head, but they’re aware that’ll be a disaster. So instead, we just have other crises to help buy time.
The average American can’t pretend things are better, are getting better, or will be better. The average American is just getting by. Nothing excites them anymore. Anyone under thirty-five knows they’ll never be able to own a house, pay down their college debt, and if they’re not all about this rising totalitarianism, even be an equal citizen. The approach to the future is completely uncertain. The continuous lockdowns and Orwellian demands to delegitimize and dehumanize dissidents is gaining traction, and the ultimate issues with ADE, original antigenic sin, etc will lead to a crisis on its own. Hell, maybe even civil war, secession, coup d’etat, who knows? The window to tomorrow has been closed, along with the blinds. They’re those electronic blinds for handicapped people, too, and the controller is broken, so we have to call the repairman or look up on the internet to see how to fix it.
Beyond acceptance, the average conservative understands ten years from now will look very different. I’m an amateur Fed watcher and armchair amateur e c o n o m i s t. I’ve been hyperfocused on being the mortician, when really it’s the undertaker who matters. The jobs Americans lost in the last half-century are gone. The solution will not be continued unabated free trade, as the world reserve dollar system will be called into question whenever the first domino is pushed over. In addition, the continued low growth and economic slowdown will prove to be catastrophic, at times, in places like China, who have to come to terms with growth that isn’t 8-15% annually and more like 1-7%. Trust me, it’s going to be vicious, but I’m not sure that’s where it’ll get interesting.
We know the Fed and government will fail at inducing growth. America’s most robust economy, Texas, recently faced a bleak economic number:
It was forecasted to be 23, and ended up being 9. The index explained:
Like I’ve belabored these past couple months: this is massively bearish in the long-run, and short-term/medium-term bullishness in stocks is utterly detached from the uncertainty of the public, risk-off from big banks, and clear growing totalitarianism and civil unrest. When Texas isn’t recovering, you know you have a problem. That’s the place where those people from the other state that used to be thriving are now flocking to.
Consumer sentiment, at a multi-year low (on the same level it was at the Covid crash in 2020) is reflective of this instability in the financial system and economy. Beyond just what should be assumed improvements, at least back to the piss-poor levels pre-Covid, the world economy has a revamping issue, and further totalitarianism, vaccine mandates, vaccine inefficacy, etc, in my opinion, is responsible for this.
In my own discussions with not just fellow autists online, and watching videos that reciprocate my own fears with where our failed, lame duck governments are headed, but with people at church, work, etc have come up with interesting responses. Normal people, conservative Christians that is, share the same fears for the future of our liberties, economy, and safety of our families, due to overreach of a government whose mandate from Heaven has been discontinued.
Politics matter more than economics
Monarchist, specifically anti-democracy/anti-republic literature and school of thought has intrigued me as of late, as I watch the failure of classical liberalism become mighty obvious. The values of such classical liberalism, that which constructed our republic, where economy and spirituality prospered, etc, has degenerated into its logical conclusion: moral relativism, the dissolution of private property rights, and a sordid, bleak society where entrepreneurial spirit has died. The ideals of virtue and equality don’t quite go hand-in-hand with private property and religious moral standards. Those standards that keep people devolving into dopamine-addicted degenerates disappear, and short-term time preference takes over. When a government, that had some level of aristocratic checks and balances in the twilight years of our republic, has full motivation to take advantage of its constituents, use legal grey area to push for anti-liberty, anti-property, anti-rich, anti-Christian edicts cloaked in the gown of equality for its own goal to control the public, and get what it can while it’s still in charge, society inevitably breaks down. The logical end to a republic is either:
Breakdown into complete anarchy and catabolic collapse.
Election or coup d’etat that ends in a tyrant or morally sordid oligarchy who further destroy its kulak class, and rules the rest through fear.
An absolute monarchy. In the case of Rome, this was a blessing, as a pitifully out-of-touch oligarchy, the Senate, had been replaced, literally by the plebescite peasant class, as they gifted rulership to Caesar.
I think this is what we should really be looking out for, and outright clamoring for. The financial system is fucked, and we are continuously reminded of it. There is a giant everything stock bubble that mimics that of the early 2000s tech bubble. There is a panicking lame duck oligarchic government who is trying its hardest to have its cake and eat it too, by trying to control the hearts and minds of the public, while trying to get them to go risk-on and keep the bubble inflating. The public itself is ready to explode. The economy offers no way up, the same way it did before we sold our industries’ soul to third-world nations. Young people continue to go batshit insane, as they realize there’s no way up, and turn to insane ideologies and spiritually dead movements. Everything is about to break - we are all very aware of this. It’s simply a matter of time, patience, and for the coming crises and aftermath - mental and spiritual preparation. This can best be done by educating oneself on the literature of the ancients, from spiritual leaders to economists to philosophers - read, read, read, learn, learn, learn. Because soon, we will have a time for everyone to offer an answer, and those who are educated, fit, mighty, and charismatic, will be able to offer an answer to the unwashed, panicking masses. Be there to be their tender, benevolent king (or queen). Be there to advise, be there to teach. We must realize that now is the time to figure out how we will answer these big problems, and rationalize what the meltdown will look like. We have history to show us. This is why there are certain mistakes we are unable to make — because history is sometimes too obvious to not forget.
“The opportunity to secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.”
Sun Tzu