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The No 1 Gold Stock for 2019

Impending U.S. Economic Collapse And Death Of Democracy

Politics / US Politics Oct 06, 2008 - 01:41 PM GMT

By: Clive_Maund

Politics Best Financial Markets Analysis ArticlePoliticians worship money and power. Every politician worth his salt secretly aspires to be a dictator, although they dare not admit this as it is not exactly politically correct. The ultimate goal of the consummate politician is to have absolute power, and be able to boss everyone else about, to have unlimited access to public funds for the purposes of profligate personal consumption and more importantly self aggrandizement, as well as to bribe and reward supporters, and to kill or otherwise neutralize anyone who disagrees or creates any opposition.

The reasons that General Pinochet, the former dictator of Chile, has become such a pariah are a combination of envy and hypocrisy. General Pinochet lived the politician's dream - he cleaned up Chile with an iron fist, and those who opposed him at times found themselves on a short one-way flight over the Pacific, which did not involve the expenditure of much fuel as Chile has a 5000 km long coastline.

The natural tendency of politicians to aspire to dictatorship and all the advantages it confers is of course at odds with the concept of democracy, which involves taking into account the views of others, or at least the views of the majority, so it could be said that politicians and the electorate they rule over have a permanent conflict of interest. It is for this reason that people who live in a democracy, and wish to continue to doing so, must maintain vigilance at all times and keep their politicians under close scrutiny and demand that they account for their actions. Failure to do so invites eventual dictatorship. Politicians are well aware of this and in the United States in particular they have developed sophisticated techniques to discourage citizens from holding them to account, some of which involve the exploitation of human weakness. The principal technique employed in the US is to get people so busy that they don't have time to think about anything, and it is important to remember that with one person, one vote, this doesn't have to be everyone, just the majority.

Thus, both men and women are encouraged to work long hours and coerced into accepting work with virtually no vacation time, and a sizable proportion of their free time is eaten up by bureaucratic concerns, such as paying bills etc. With what little time they have left they are often too fatigued to do much else and end up doing something like watching a movie. The long working hours and lack of vacation time also mean more profits for the politicians' pals and associates in the business world. Another technique involves what is called atomization in order to undermine the sense of community and the empowerment that a sense of community brings. This is achieved again through distraction, the principal weapon being the television, but also trivia such as video games.

A simple example of the way this works would be a person choosing to stay home and play a video game rather than going to have a chat with a neighbour. Still another important technique employed is obfuscation - making it hard for ordinary citizens to connect them with particular actions by acting as a group or through intermediaries. Perhaps the greatest factor contributing to the concentration of power and impending end of democracy in the US however is comfort. The majority of citizens have lived comfortable, affluent lives for many decades. This has led to unquestioning trust in politicians and a "leave it to them" attitude. Many people have more important things to do than keep tabs on what their politicians are up to, such as watching the ball game, drinking with their pals or going to the racetrack.

The attitude has also been cultivated amongst all classes of society that "money talks" and "might is right". Just a year or two ago when you stopped people on the streets of Chicago or New York and asked them what they thought of the huge salaries and bonuses of Wall St executives, a common reply was "What's wrong with it if they get results?" - the result of this attitude of course was that those with the power to do so voted themselves ever greater pay increases until the companies they worked for became little more than vehicles to funnel money into their pockets. Ordinary employees within corporations and companies felt powerless and that it was inappropriate and risky to question the actions of their "superiors", thus they gave their power away to business leaders in the same way that voters have given their power away to politicians.

The consequence of this progressive abdication of personal power on the part of the electorate and on the part of ordinary workers over many decades is the dangerous concentration of power into the hands of those whose goals in life are very different to those of the man in the street, a process which has been greatly accelerated by politicians and business elites gaining almost total control over the media who are now their servants and work assiduously to mould public opinion in whatever direction serves their masters' best interests.

The concentration of power in the United States into the hands of the elites and the concomitant disenfranchisement of the masses has now reached such extremes, that the elites no longer have to disguise themselves or even use subtlety. This was made clear by the passing of the "bailout plan", which most citizens were vehemently opposed to. After a few days of paying lip service to the voting public, they went ahead and passed it. The purpose of the plan is to sell vast quantities of near worthless financial sludge to the taxpayer at top dollar and the controlled media went into overdrive telling the masses that the system would collapse without the bailout, but they neglected to add that Wall St has known that this would happen for months or even years and that they will be back for another similar handout later, pointing a gun at citizen's heads in exactly the same manner.

The elites have almost arrived at their nirvana of dictatorial control in the United States. Milestones along the road to the servitude of the masses have included the takeover of the media, already mentioned, which was achieved by a process of syndication, the elimination of political choice by the reduction of political parties to just two, who maintain the thinnest facade of democracy, behind which the same masters rule, the endless mergers and acquisitions in the corporate world which have resulted in an immense concentration of financial and thus political power, the lobbying system through which politicians are bought by big business, whose interests they then represent, which accounts for, among other things, the vast defense budget, the events of 9/11, which provided the excuse for the predatory takeover of key strategic and/or resource rich countries in the Mid-East and also for the draconian Patriot Acts, that consigned the US Constitution to the dustbin of history and which have conferred dictatorial powers upon the leaders of the United States, which they can implement any time they like.

A crucial point to grasp is that the ongoing concentration of power and wealth over many years, both in the corporate world and in the political sphere, and the collusion between them has resulted in inevitable arrogance and resulting hubris, which is why, for example, the US Fed thought that it could override normal recessionary forces in 2003 and slashed interest rates to near zero, igniting the housing boom. This interference in normal market cycles has been going on for many years and its destructive effects are cumulative, resulting in massive distortions and misallocation of capital that have brought about the disastrous situation that now exists whose end results are likely to be hyperinflation followed by a deflationary implosion. The outright criminality fostered by the prevailing corporate environment in the US is what led Wall St to collude with the rating agencies to intentionally swindle foreign banks and institutions out of billions with their spliced and diced mortgage paper, and Wall St has been irreparably damaged by this debacle.

Payback time for Wall St and Washington will be when foreign investors fail to turn up at the bond auctions to finance the bailout plan, whose $800+ billion will have to be created out of thin air. So the bonds will have to be monetized, which will mean an immediate spike in inflation, which will cause the rate of corporate bankruptcies to soar as failing companies take down others in a chain reaction because the losses will be highly leveraged by credit default swaps etc.

This is the underlying reason why banks won't lend to each other - they can't calculate the counterparty risk. All of this will set off a massive derivatives meltdown that will bring the whole system crashing down. At this point Martial Law will be declared in the US which will effectively be a lockdown police state. There are similarities to the early 30's, one of which is that the collapse will present the elites with opportunities to buy physical assets at pennies on the dollar, and they may buy vast tracts of real estate, for example, for prime land, in full knowledge that the properties on them may get burned to the ground. However, unlike the 30's when families huddled together and helped each other out, and many people had basic skills and could make and grow things, the modern citizen is comparatively helpless and faced with a shuttered bank and empty shelves at the supermarket may panic and resort to desperate measures. For these reasons it is thought wise to have some cash stashed away and a supply of tradable gold and silver in a safe place or safe places.

Soon we will consider the likely impact of all this on gold and silver prices, both on the paper prices and on the prices for real physical gold and silver that you can hold in your hand, and consider the merits of gold and silver versus gold and silver stocks. Another subject we will turn our attention to is measures to improve security in conditions of anarchy or near anarchy.

By Clive Maund

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© 2008 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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