Two fine specimens of rare imbecility...
WE KNOW an imbecile when we see one, writes Bill Bonner in his Daily Reckoning – and when we see Ben Bernanke or Tim Geithner our eyes light up...our nostrils flare...our chest expands.
Before us is a specimen we know very well. Boobus Americanus Economistica...a variety of imbecile that has gotten far too little attention from the academic world. Too little research has been done on them, in our opinion. That's why it is left to us amateur imbecile-spotters to keep track of them.
Mr. Bernanke is a standout example. The former head of the Princeton University economics department knows all there is to know about a depression – except the important part:
He doesn't understand what causes them.
Bernanke also completely misunderstands what the role of government should be in dealing with depressions. But we have already explained all this to our dear readers over the years, so we won't repeat ourselves here...except to say that any truck driver and hair stylist knows you can't spend your way out of debt.
Mr. Bernanke doesn't believe it, however, and that's the very definition of Boobus Americanus Economistica. He has educated himself out of his common sense.
Mr. Geithner, meanwhile, tries to make up for what he lacks in scholarly gravity with one heckuva nice wardrobe and a spiffy haircut. It's definitely a plus to have such a sartorial crackerjack at the head of the Treasury Department, but it would be nice if he had some dim notion of how the bond market works too.
Moody's warned that the US would lose its triple-A rating if it continues borrowing money at the present rate. Our old friend Marc Faber was on TV last week explaining what the consequences would ultimately be:
The US will default on its debt, he said.
Mr. Geithner did not even bother with the idea of default. It was beyond his imaginative powers. As to losing the three As, he said that would "never" happen. Which is what set us to thinking about the quality of US leadership.
Of course, the US will lose its bond rating...and it will default. There is no question about that. No nation has ever existed, except for present company...whose histories have yet to be completed...that didn't default, renege, collapse, go bankrupt, disappear, disintegrate, capitulate, or otherwise fall over and die.
The only questions are when and how.
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