Alan Greenspan, long-time apologist for corporatist interests and recently reborn Bush neocon lackey, has had an epiphany: He’s now decided that staggering deficits and debts are a good thing in times of low interest rates. As long as ‘consumers’ can be ‘persuaded’ to keep buying the low-quality, over-priced crap that corporatists foist upon them, and as long as the currently wildly overpriced housing and stock markets can be kept at their artificially inflated levels, “balance sheets will remain in good shape”, he says, and hence interest rates can be kept low. And as the Chairman of the US Fed, Greenspan is the guy who single-handedly determines what interest rates will be.
It’s a house of cards, of course, a total fraud and extremely dangerous. It’s Enron accounting at its most deceptive, the kind of self-delusion that led to the absurd run-up of stocks in 1929 and the subsequent collapse that produced the Great Depression. Here’s the shaky foundation upon which the entire distorted economy now rests:
I’m sure, gentle reader, you can see the folly here, and all the things that can, and ultimately will, go wrong. Just as Enron’s profits and stock value were based on fraudulent overvaluation of assets, the ‘balance’ of everyone’s balance sheet — individuals’, corporations’, and governments’ — is fraudulently overvalued because the stock prices and real estate prices that constitute most of the assets are absurdly inflated.
If any of the following things occurs, the whole house of cards collapses — stock markets will plunge, housing values will plunge, the US dollar will collapse, and interest rates will soar — we’re talking the worst global economic collapse since the Great Depression:
So what do we do to prevent it? We’re so over-leveraged now that the best we can hope for is a ‘soft landing’.
Individual citizens can reduce their exposure to the collapse by paying down high-interest and variable-rate debts and short-term mortgages, selling US stocks and bonds (and getting your pension money out of these investments, too), and preparing for the likelihood that housing prices will plummet.
We also need to get rid of Bush and Greenspan, and ensure that Kerry has a program for dealing with the astronomical US debt and foreign payments deficit. And we need laws to reduce the power and influence of corporations, electoral campaign finance reform, cancellation of ‘free’ trade agreements and vastly strengthened anti-combines law and oligopoly regulation.
But I want to get back to my ‘pusher’ analogy. It’s really insidious. Just as rats in the laboratory have been ‘trained’ to push a button to get a ‘shot’ of addictive pain-killing drugs, and start pushing the button more and more often, we’re being trained — by our education system, by advertising, by the media, and by the entire oil-fueled corporatist economic machine — to want and ‘need’ to buy more and more stuff, to throw things out instead of fixing them, to get stuff done for us instead of doing it ourselves, to buy an endless stream of flimsy $5 doodads made in China instead of one $20 doodad made domestically that will last a lifetime, to undervalue our time and overvalue possessions, to buy overpriced ‘brand names’ for status, and to be terrified of not having enough. And to pay for our addiction to all this overpriced crap, we’re encouraged to borrow more and more money now (“no interest!”, “don’t pay a cent until 2005!”, “zero down!”) so we get as addicted to debt and as dependent on low interest rates as the big corporations and the Bush government.
By encouraging this reckless excess, Alan Greenspan really is the ultimate drug pusher, and he damn well knows that this, like all addiction, must ultimately end in tragedy. The corporatists, like all drug pushers, depend on reducing the people, the citizens, to mere consumers, mindless zombies. It’s irresponsible. It’s destroying our social fabric, wrecking families and causing irreparable damage to the environment. It’s shameful. It has to stop.
You know I smoked a lot of grass. Oh lord I pumped a lot of pills.
But I never touched nothing that my spirit it could kill.
You know I’ve seen a lot of people walking around with tombstones in their eyes.
But the pusher don’t care if you live or if you die.
God damn the pusher. I say god damn god damn the pusherman.
You know the dealer, the dealer is a man with a lot of grass in his hand.
Well lord if I were the president of this land you know I’d declare total war
– Hoyt Axton
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What can I say — one goddamn outstanding piece from stem to stern. (I loved the Hoyt Axton choice, too, btw.)
So true, so true, and when people realize the true rate of unemployment is actually double what the government says it is (because millions have given up looking for work and so don’t show up in the statistics), the claims that we are in a recovery will be shown to be cruel and baseless lies.
Uh Dave if Greenspan is crazy (and I think he is) he is not the only nut in the show. The whole idea of “money” is a huge freaking con job. Interest? WTF is that? Economics is a huge house of cards a grand illusion. There is nothing of value in the world that you can’t eat, screw, or shelter under. Arguing the Greenspan is bonkers without throwing out the whole damned philosophy is like saying you are a little bit pregnant.
Lao Tzu said the more you have, the more you have to worry about. That’s my mantra.
Good choice there with Hoyt Axton – I’m a long time fan :-) His version of Cocaine is still my favourite.
I had read little snippets of things about the US economy being in trouble and the volatile dollar, but Dave, this article really pulled it together for me. I am a college student, and when I am done in two years I wonder if I should move to say England or somewhere in Europe? I don’t have much money, but would it be safer in a foreign bank? Decisions Decisions. If Bush get re-elected my IP address will be coming from outside the USA in a few years, believe me! Thank you Dave for keeping us informed. -Casey
Thank you for this excellent essay here, which was source material for the one I wrote.And many thanks for your kind–and every wise–comments on my blog.I’m now a big fan.
As my Mom always said, “just good money chasing after bad”. The U.S.A. is a vortex of plunder.
I say the King has no clothes…and finally others agree. Thank God others see the insanity in this recent economic cluster fu!k. On the west coast prices are already collapsing but the Real Estate Titans are covering this up. It’s only a matter time before it’s on the front page and the drones realize their folly. Keep up the good work.Eric.