海角大神

鈥淭he US seems to have gotten the worst of it,鈥� said a French friend this morning. We were taken aback. Everyone knows Europe is in a state of permanent crisis. The US seems solid by comparison, no?

鈥淣ow that the Supreme Court has approved Obamacare, you have the same problems we have in Europe, social welfare spending with no limits鈥�plus you have your colossal military spending. You have both 鈥榖read and circuses,鈥� just like the ancient Romans. You are doomed.鈥�

Yes, dear reader, we came to the fork in the road after the 9/11 attack. And the government took it!

And now the feds can fork over whoever and whatever they want. No kidding. They just have to think of it as a tax. Here鈥檚 the 础笔鈥檚 report on the Supreme Court鈥檚 decision:

Let鈥檚 see鈥�how about forcing all blue-eyed people to go outside, take off all their clothes, and give them to homeless people? That would be a tax too. Guess it鈥檚 okay.

While the social-welfare state is expanding, so is the police state. Another measure being discussed in Congress would declare the US itself a battlefield or a war zone. This would give the military the right to do what it does without going overseas鈥�and it would give the president the power to direct his kill list towards his domestic enemies.

Then, drones can fly over Kansas or Ohio鈥�and whack whomever the feds want.

But who are they gonna take out? No one鈥�or almost no one鈥�opposes the military agenda in the US. There are no serious terrorists鈥�and no serious challenge to the spending machine. The two candidates for president agree on the essentials 鈥� keep the money flowing to the zombie industries鈥�military鈥�education鈥�health鈥�and finance. Oh yes, and occasionally toss a few bucks at an industrial business 鈥� like GM 鈥� if it has enough unionized employees.

Wait鈥�the US has no serious enemies overseas either. And that doesn鈥檛 make the racket any less effective. On the contrary, it helps. With no serious enemies to worry about the military industry can spend its money on any damned thing it wants. Lots of boondoggles. Wide profit margins. Low casualties. What鈥檚 not to like?

But where were we?

We were talking about economists. Specifically, we left off yesterday describing how GDP figures are almost completely worthless. They tell you something; but do they tell you anything important? Apparently not.

You cut our lawn. We pay you. We cut your lawn. You pay us. We both have jobs. And we each pay a portion of our earnings to the government. The GDP goes up. Government revenues increase. And economists tell us we are 鈥榞rowing.鈥�

Earlier this week, Paul Krugman cited the experience of the US economy in the early 鈥�40s. A burst of federal spending between 鈥�40 and 鈥�42 produced a 20% big lift in output, he says, approvingly. More jobs鈥�more GDP鈥�according to the economists鈥� measures, things were getting better and better.

Were they really? Of course not. Government was spending money on the military. An economist can鈥檛 tell the difference between a Tiger tank and a BMW. But a passenger can. It doesn鈥檛 take him long to realize that a tank is no way to travel.

There are times you need to build tanks. But those are not times when you are building wealth and prosperity. Instead, you鈥檙e spending wealth in order to protect yourself (theoretically, in practice most wars are rackets鈥�for both sides). That鈥檚 what the US was doing in the early 鈥�40s 鈥� spending wealth, not building it.

Which just illustrates our point:

If even Nobel prize winning economists cannot tell the difference between building wealth and spending it, what hope is there for the whole profession?

More to come鈥�

Regards,

Bill Bonner,
听蹿辞谤 The Daily Reckoning