Rich as an Argentine
Monday, 2/17/2020 09:01
Don't laugh. Used to be a compliment...
WE JUST flew by a new milestone on the road to Hell,
writes Bill Bonner in his Diary of a Rogue Economist.
In two remarkably asinine spectacles, we saw how the government of the US has become as phony and pointless as reality TV.
But let's come back to that in a minute...
This last week, we've been tidying up. We're clearing our desk at the office. And putting away tools on the farm. Our stay in the US is coming to a close.
First, we're skipping down to Nicaragua to check on our property development there.
Times have been tough. A near-revolution in 2018 frightened visitors. Then, the US government told people not to go there, making it hard to attract retirees and tourists.
But it's still a lovely place. The people are warm. The beer is cold. What more could you want? And someday, there will probably be millions of US retirees sprinkled along the coast. It is prettier and less expensive than just about anywhere in America.
Next, we'll go on to Argentina. We're curious to see how the country operates with 55% inflation and a new government determined to make things worse.
Since we were there last year, the Peso has lost about half its value.
"It's great down here," say our friends, "as long as you have Dollars." We'll find out.
The numbers show a clear decline in Argentina's money. One Dollar would bring you 30 Pesos a year ago. Now, it's worth 60.
But although numbers sound more "scientific" than feelings, they tell only a part of the tale.
In 1853, the Argentines agreed on a constitution, largely based on the US model. There are the familiar legislative, executive, and judicial branches. There are elected representatives. There are checks and balances. And the President's office is in a special house, called the Casa Rosada – rose-colored, not white.
The system worked plausibly well for the first 100 years. By 1914, the Argentines were richer than the French. The expression "as rich as an Argentine" was not followed by laughter, but envy.
Then, in the 1940s, Juan Perón figured out how to play the urban mob by promising the people more stuff. Over the next decade, he nationalized key industries, began aggressive spending programs, and redistributed wealth on a grand scale.
Output declined. Inflation increased. It kept increasing until 1980, when prices rose at a rate of 1,000%.
The inflation (as well as other things, presumably) soured the whole society. Corruption increased. And politics became more of a grotesque entertainment...
In Argentina today, one group makes extravagant and unrealistic promises. It gets elected. Then, when it has made a mess of the economy, another group takes over.
The new group tries to correct the errors and oddities of the first group. But this return to reality is shocking and painful to most people. After a few years, they've had enough and re-elect the bamboozlers.
Gradually, it becomes harder and harder to get ahead honestly. Then, people begin to excuse and admire those who get ahead dishonestly. In business, they turn to Biden-like grifts; in politics, they turn to notorious flim-flammers...shameless rabble rousers...and compliant stooges.
When the money goes, everything goes. Even the Constitution. Because money is the way we keep track of, control, and regulate our economy, our spending, our choices...the way we live...how we travel – everything. Ultimately, it's how "the people" – who earn real money – control the government.
And when the money is fake...when it can be created at will by the feds...everything else gets faked-out and phony, too.
Ludwig von Mises explained:
"Inflationism...is not an isolated phenomenon. It is only one piece in the total-economic, political, and socio-philosophical ideas of our time. Just as the sound money policy of gold standard went hand in hand with liberalism [he means open markets and open societies, not modern 'liberalism'], free trade, capitalism, and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism."
The US Constitution includes two provisions that are meant to focus our attention on serious matters: impeachment and the President's State of the Union address. Both took place the week before last. And both were pathetic shams.
Instead of solemnly weighing the evidence like the "jurors" they were meant to be, the pols simply voted the party line.
For the Democrats, it was as if they were willing to hang a man simply because he was Donald J.Trump.
For the Republicans, save Mitt Romney, it didn't seem to matter what the evidence told them. The man was innocent. Every one of them swore they saw him at home reading his Bible on the night of the crime.
And then came the State of the Union. That, too, was designed by the Constitution as a sober reflection on where we are...and where we're headed.
Instead, the occasion was turned into reality TV at its most gaudy and improbable, with the Republicans jumping up to applaud every cockamamie thing that came out of the President's mouth.
Meanwhile the Democrats were surly and restive, and even included a ghostly chorus of women in white, haunting the whole show.
And the state of the union itself? No mention was made of the two biggest threats every empire faces – bankruptcy and war. Instead, it was all theatrics: the cancer-stricken talk show host, the soldier reunited with his family, on and on.
The President, perhaps taking a cue from Argentina's Juan Perón, promised something for almost everyone, including paid family leave, child tax credits, and a cure for childhood cancer.
He said the US would put the flag on Mars...and it would plant 1 trillion trees. (Curiously, we used to enjoy Rush Limbaugh's mocking "tree huggers," and using the sound of chainsaws revving up as he described the latest outrage.)
Americans probably had no idea what to make of these remarkable displays. "What's going on?" they asked. "The Democrats are out of their minds," said some. "It's the Republicans who are crazy," replied others.
But Argentines recognized it immediately. They've seen this show before.
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