Victor Davis Hanson // Private Papers
Part Two
Item: For the millions of Americans who lived through inflation and stagflation from 1974-1983, why would we ever wish to return to all that? We more or less avoided both the last forty years by being semi-profligate rather than whole-hog profligate. Now and then we saw a rare balanced budget, a Tea-Party revolt leading to a budget freeze, or a rare Clinton-Gingrich-like deal, or a Reagan/Trump economic boom whose productivity created more stuff and services than even increased consumer demand and funny money could match.
But now? We owe nearly $30 trillion. We are running a trillion-dollar-plus budget deficit. And we are squabbling over another $2 trillion-plus ‘infrastructure’ borrowing bill. Worse, Biden all but denies inflation exists. Some unhinged postmodern economists think inflation is a phantom and so printing money is the best way to energize an economy by destroying some who have it and empowering those who don’t. Biden cannot form a coherent sentence when asked to explain the current inflation, other than to mumble that borrowing and spending more, and running up debt is an “investment” that will somehow lead to less debt?
Again, what is the logic? To return to the good ol’ days of Jerry Ford’s WIN buttons and Jimmy Carter’s malaise speeches? To recapture the glory days of the late 1921-23 Weimar hyperinflation? Or is the model the social justice monetary policy of Argentina and Venezuela?
Is the goal to make every small handy-man pay $75 for a sheet of plywood? To pay workers not to show up, so that the warehouse cannot ship out its supplies to the middle class? What is so wonderful about $5-a-gallon California gas? Is the price surge designed to keep those carbon emissions down for tractor driver Carlos Lopez on his 60-mile daily commute? Does Al Gore or John Kerry worry about the price of aviation fuel for his private jet?
Item: The US is now all but energy independent. Its massive production of natural gas and oil has enriched the country. It has ensured America virtual independence from any need to “secure” oil supplies in the Middle East, and thus had precluded preemptive interventions.
Natural gas has meant that the US exceeded most of the Paris Climate Accord targets, in a manner more woke countries still in the deal did not. Oil and gas enriched middle-class workers, kept energy and commute costs reasonable, and allowed a gradual parallel trajectory to solar panels and wind turbines—in the sense of discovering whether these trendy alternate sources of energy were even viable without destroying the country (e.g., we always had gas and oil to fall back on when green sources failed).
And now we are to give up on pipelines? There will be no Anwar or indeed any federal leasing of fossil fuels? We are to cut back on existing gas and oil production, as if to say, “Screw the middle class. It can go without affordable energy and gas, and easily borrow $50,000 to buy a Tesla and pay 25 cents a kilowatt to charge it.” AOC is our resident energy guru, worldly and wise at 31.
(NB on AOC: The most dangerous in a sophisticated society have traditionally been the ignorant of the upper-middle-class, half-educated and superficially degreed, who did not find status and income commensurate with their own perceptions of their singular genius and intrinsic worth. They are the stuff of 1793 and 1917. They flirt about as radical revolutionaries, whose furor can be traced back to their own pique, unhappiness and, yes, furor that the existing society previously had not appreciated, at least in terms of compensation, status, and honor, their rare talents.)
So is Biden’s energy policy societal cannibalism, French Revolutionary madness, a new Stalin 5-Year Plan, or Mao’s cultural revolution—self-destructive craziness on a massive scale?
Would a space traveler look at the plan to stop fossil fuel production, pay workers to stay put, print trillions of dollars of money, destroy the border, demonize the police, and conclude, “Hmm, how strange this dangerous species; it really is trying its best to destroy its own civilization?”
You have to look at everything the left stands for through the prisms of power, control and societal division. Eradicating the middle class give them enhanced control with the never ending Big Brother largesse We are in a double time march towards marxism and the GOP pols, by and large, are mum. Birds of a totalitarian feather. I do not see anyway out of this that does soak our soil in blood. Hope I’m wrong.
The $30T debt is the key to understanding the current madness. At 3% net interest, the cost of this debt would require a payment of $900B annually. This is a large number, even for federal expenditures. The outlays in the Federal Budget of 2019 were comprised of:
* $676B for Defense;
*$2053B for Medicaid, Social Security, and Medicare;
*$642B Federal employee retirement benefits, veterans benefits, and mandatory programs like Supplemental Nutrition Assistance Program;
*$661B for non-defense activities that encompass the vast bureaucracy;
*and just $375B for net interest on the debt.
So if the net cost of federal borrowing rises to just 3%, interest payments would constitute the largest item in the list above. At 7%, it would exceed all other items.
The Federal Reserve is playing fast an loose with the debt at present. It acquires a large portion of the new debt, and then returns the interest payments to the government. The upshot of this policy is that no one has any idea of what the real cost of capital is in the present environment. Only established companies have access to the bond market, and even in this market the Fed intervenes.
No one can predict what the individual response to this lockdown on capital will be. There’s no point in hiding it under the mattress, nor is there any reason to deposit it in a bank, since prices are rising. There is concept called the velocity of money that is used to help understand how bank lending used to encourage economic growth. With lending off the table, economists seem to think that this “velocity” will be near zero. But if every one spends what ever they get, then there is a new component to this velocity. Money will be rushing from individuals into items they think will hold their value, and sellers of these items will want to replenish their inventories rapidly to avoid future price increases. This money will not rest as it devalues.
Spot on. The democratic/liberal/socialist machine in full gear with overide. They plan to live off of congressional salary largess in Georgetown – not in Podunk with us.
The sad thing is that the men/women of commerce and industry seem to acquiesce to the madness. It has occurred to me and others that the globalists seem to have decided that democratic polities are unprepared to adjust and compete in today’s world. They seem to think they will benefit from collaboration with authoritarian regimes. Already we’re seeing a fascist/socialist effort to have private enterprise roll out a Chinese style social credit system.
Deplorables have a long and growing list of grievances no less significant than those of the founding fathers.
The Upper Middle Classes are the culture medium for the growing of those aspiring to be Nomenklatura. The best crop comes from ample fertilizing with glowing praise and doctrine of entitlement. Those most likely to have success in Social Demolition actions are those described as having Closed Minds, such as described in THE OPEN AND THE CLOSED MIND, Milton Rokeach, et. al., 1960.
VDH is at the top of my hero pantheon – along with the late great Bernard Lewis and Paul Johnson.
I wish you could use that awesome intellect and perception to join with other like minded forces (the list is too long but my favorites are on Salem Radio; Daily Wire; and Bill Whittle – oh and Robert Avrech is needed for his experience) and create a mighty conglomerate to fight for Truth, Justice, and the American Way…
The handful of liberals I know are intelligent, recently retired professionals who seem to take it as simple reality that Trump is an unhinged menace and that any criticism of middle-of-the road Biden is pure partisanship. Seems like their conclusions are drawn from deeper belief and facts selected to fit the belief.
On the other hand, seems we need a non-Trump leader since, in VDH’s argument, the populace does not tolerate tragic heroes for long.
Dr. Hanson as a Classicist you probably already know that you are a modern day Cassandra; A few will listen to your warning and even fewer will try to withstand the great river flow force of Woke lemmings as they edge ever closer to the cliff of national oblivion. Maybe it’s time to accept defeat start imaging a Post-United States of 5 or 6 autonomous nations resembling Central America. Hopefully my home in Texas will look more like Costa Rica than El Salvador; California already looks like a copy of Mexico.