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The End of Progress

After the "end of history", even Francis Fukuyama thinks things might get worse...

BEEN FOLLOWING the news? asks Bill Bonner in his Daily Reckoning.

Food prices are hitting record highs. Riots have broken out in Africa. Already, two governments have been Tunisia alone.

Nature seems to be giving us a warning. The thermometer in England hit a 100-year low in December. Airports were blocked by snow all across Europe. Florida, too, shivered in temperatures that hadn't been seen in generations.

Floods in Australia were worse than any since the time of Noah. An area the size of France was said to be submerged. For a while, it looked like the whole continent might disappear beneath the water.

And America...birds fell from the skies. Whole flocks of them. In Europe too. Thousands of them. And little fishes beached themselves and died.

Surely these are omens. The Second Coming is at hand!

Or maybe not. Even the first coming was largely ignored until hundreds of years later. At the time, only a handful of people knew or cared that Jesus had been crucified. It was only much later that it became a big deal. That's the problem with history – it's very hard to see what's going on when you're in the middle of it. gotta guess.

A study of tree rings tells us that periods of cold, drought and famine have often been accompanied by revolutions and war. People get hungry. Then they get mad. Then they get to work...attacking the system, whatever it is.

Mass man is not a thinker. He is a reactor. He reacts to the the demagogues...and even to ideas. He accepted the system of modern social welfare economies because he was comfortable. But what will he do when the system is unable to make good on its promises? Our guess is that "the system" in the advanced countries is approaching its final stage.

Why? It just can't pay.

We like to read Francis Fukayama. Not because he is right about things, but because he is wrong in a big way. But so is just about everyone. Most economists see the financial problem in America as a typical recession caused by a lack of demand. If they could just figure out how to stimulate the consumer...everything would be okay.

And most commentators see the political problem in simpleton's terms too. Like Krugman, they think the democrats are right and the republicans are wrong. Or like Boehner, they think the republicans are right and the democrats are wrong. And then, there are those who think that if the two major parties could just get together...they could sort things out.

Uh uh.

The real problem in Washington and the economy is won't be fixed by bipartisan cooperation – because both parties are wrong. They have to be wrong. They have to respond to the marginal voter, who is a lunkhead.

Nor will the economy recover by inducing the consumer to shop. American consumers already spend too much. They have a savings rate of just 5%...far too low to finance the kind of capital improvements the nation needs. Consumer demand needs to go down, not up.

But getting back to Fukayama, this is the man who – in the dizzy days following the fall of the Berlin Wall – lost his balance completely. He wondered whether we had reached the "end of history". The idea was that history was the march of progress and that after the triumph of American capitalist democracy no more progress could be made.

The idea was silly...but in a grand kind of way. Besides, the neo-cons loved it. It flattered them and vanity got the best of them. They figured they were the crown of creation; with their arrival on the political scene time could jolly well stop. Perfection had been attained.

That was then. In the here and now, Dick Cheney should be afraid to travel outside the US (for fear he will be arrested for war crimes)...and Francis Fukayama is having second thoughts.

The problem now, he says, is that the system in America has "ensured individual liberty and a vibrant private sector, but it has now become polarized and ideologically rigid. At present it shows little appetite for dealing with the long-term fiscal challenges the US faces."

Little appetite? As near as we can tell, the politicos are on a hunger strike. There's no way they're going to take up the greasy issue of US finances.

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New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

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