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Will of the People: All My Money Goes to...

...the government of course!
ONE THINGS we've known for a long time is that the institution of government in a modern democracy is misunderstood, writes Bill Bonner in his Diary of a Rogue Economist.
From an early age, children are taught (indoctrinated) to believe that it is supposed to be an expression of the "will of the people".
It is nothing of the sort.
No matter what you call it, there are always some who lead and most who follow. In the US, circa 2021, the followers have not suddenly become leaders...and never will.
The "voters" have some influence, of course. But very little.
They can select one empty pantsuit over another. At the margins, they can nudge the government towards building walls...changing the national anthem...or even cutting taxes.
But the important policies – war or peace, spending or saving – are decided by insiders...the Enlightened Elite Establishment, which includes millions of people spread across the media, universities, the bureaucracy, lobbyists, The Swamp, The Deep State...even members of Congress.
These people – accounting for between 1% and 10% of the American population – are the rich and powerful.
And even though they may fight viciously among themselves on a wide range of issues, they have one point of agreement that dooms the whole nation...
They are the bright, juicy apples on the top of the pile. The last thing they want is for someone to upset the cart!
That is, no matter what they say...important changes are what they don't want...and won't permit.
And the more their wealth and power comes to depend on either brute force (gestapo...secret police...death squads...gulags) or fraudulent money (printing-press Dollars), the more the whole society is headed for trouble.
As we've seen throughout history, they will resort to almost anything – robbery, disappearing people, torture, and counterfeiting – to make sure tomorrow looks as much like yesterday as possible.
The Future Delenda Est!
People want simple explanations and even simpler solutions.
Millions of years of adversarial conflict – between tribes, mostly – have produced an "us versus them" instinct.
The Democrats believe that now that their man is in the White House, for example, things will be a lot better. The Republicans, on the other hand, suspect things are going to Hell in a handcart.
A very dumb piece by David Leonhardt in The New York Times tried to add a veneer of pseudo-factual analysis to this "us versus them" dynamic. He showed how the American economy had generally performed better under Democratic leadership than under a Republican administration.
He even pretended that there was some scientific – the Science! – or, at least, statistical proof to it. Going all the way back to World War II, he allowed readers to believe that so many data points, over so many years, couldn't possibly be fake.
The trouble was, the whole thing was fake...from beginning to end.
Presidents do not make economies work. They have very little effect on them.
Instead, their economic success or failure is almost entirely a consequence of what came before them.
Bill Clinton, for example, inherited the boom created by Ronald Reagan and his Federal Reserve chair Paul Volcker.
When George W.Bush came along, the dot-com bubble was already blowing up.
Obama arrived in office just as Bush Jnr's mortgage finance bubble was blowing up.
And Donald Trump was graced with three more years of the Obama recovery (disastrously financed with $3.6 trillion in new, fake money).
Mr.Trump claimed credit for record-high stock prices and the lowest unemployment numbers since World War II...But he had very little to do with them.
What he did do – cutting taxes and boosting spending – merely exaggerated and prolonged the harmful Obama Era trends.
And now, Joe Biden...Will he really be responsible for the economic trends and inevitable misfortunes of the Biden Years?
Or is he just a prisoner of yesterday, like all the rest?
The voters don't have control over the administration. And the administration doesn't control the economy.
Each new set of jokers and jackasses that arrives in Washington (in the case of the Biden Team – retread has-beens, hacks, war criminals, and cronies from the Obama years – they never really left) is a prisoner of the policies and programs already in place.
This is especially true of government spending and deficits.
The Trump group accustomed the economy to $1 trillion deficits and zero real interest rates. Now, any significant rise in interest rates...or cutback in spending...will likely trigger a correction – the very thing the elite cannot stomach.
So, politically, no change of direction is possible.
The number of women or BIPOCs (black, indigenous, people of color) in high positions might change. Monuments might be toppled. "Green energy" might get even more taxpayer subsidies...
But the real course of the nation – from here to calamity – is fixed.
No significant change of direction will happen under Joe Biden, just as it didn't under Donald Trump.
The deeper into debt and disaster the nation goes, the deeper it needs to go to protect the wealth and power of its elite.
Don't believe us? Here is the Committee for a Responsible Federal Budget reporting on last week's Congressional Budget Office (CBO) Budget and Economic Outlook update...
"The budget deficit will total $2.3 trillion – 10.3% of GDP – in FY 2021 and total $12.3 trillion (4.4% of GDP) over the next decade.
"Debt will reach a new record as a share of the economy, growing from over 79% of GDP at the end of FY 2019 to over 102% of GDP by the end of 2021...and will grow another $13.6 trillion by the end of 2031, ultimately reaching $35.3 trillion.
"Four major trust funds are on a path toward insolvency. CBO projects Highway Trust Fund insolvency in FY 2022, Medicare Hospital Insurance Trust Fund insolvency in FY 2026. Social Security Old-Age and Survivors Insurance Trust Fund insolvency appears likely in calendar year 2032 and Social Security Disability Insurance Trust Fund insolvency in the mid-2030s.
"Debt could be even higher than projected. If policymakers enact $2 trillion of additional fiscal relief, extend expiring tax provisions, and grow annual appropriations with GDP, debt would total 120% of GDP by 2031."
"Our wyrd is set," said the Old English. Our fate is sealed.

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.

See full archive of Bill Bonner articles

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