By Eric S. Margolis
A few billion here, a few billion there, and suddenly we are looking at real money. Even more important, is real inflation. Governments all over have been spending like drunken sailors in a desperate attempt to counteract the ruinous effects of the Covid-19 pandemic and resulting closures. We have seen panic spending accelerate as governments threw away all sensible financial guidelines after unemployment rose sharply and banks took fear. Markets swooned and financial markets issued storm warnings. Everyone remembered 2009 when ATMs began to run out of money. Panic was in the air and all this was in a mid-term election year where the Democrats appeared to be trailing significantly. Lurking not so far off was a giant storm cloud belching fire and smoke named Donald Trump and his legions of hillbilly Republicans, Christian evangelists and suburban gun owners? Economists assured TV viewers that the sharp inflation being experienced by Americans was due to various sorts of arcane mumbo jumbo, wicked Red Chinese, menacing Muscovites and even labour or supply chain shortages. But the real culprit certainly in the case of the US is the federal government in Washington sitting atop a monster US$30.5 trillion (RM144.7 trillion) national debt that keeps growing larger and larger. Economists have previously assured us that our ability to print unlimited quantiles and the world’s willingness to accept this fiat money meant that our huge deficits and run-amok borrowing did not really matter. But they do. In my native New York City, I went for my usual breakfast of eggs, turkey bacon and a toasted bialy (a sort of Jewish English muffin). It cost US$19.10. The next morning, I had the identical breakfast and then it cost US$21.10. That’s inflation, which Hermann Goering rightly observes can bring down governments faster than revolutions. Governments create inflation and benefit from it. Inflation is a form of taxation that increases their revenue and lowers debts (they pay back borrowing in depreciated currency). They get more from taxes. Republicans used to keep the lid on inflation until Trump came along. He blew the lid off and appeared heedless of the dangers of overspending. Farmers, a party bedrock, got huge subsidies and grants. The Democrats have always been the party of overspending. Many Democratic voters don’t even pay taxes. Many others receive subsidised food, rent, education and health care. Forty per cent of Americans pay no income tax, meaning that 60% must support them. America has ended up, like France, with a permanent underclass that lives off the fat of the land. France was crippled by having to support a large, non-productive class that always threatened to explode into violence. In a similar sense, America’s big cities have also fallen prey to a permanent welfare class that holds the urban areas hostage. I vividly recall the New York City power failure of 1977. Soon after the lights went out all over town, mobs of looters poured into the dark streets, smashing, stealing or burning. It was the heart of darkness. My father, a Manhattan liberal, told me, “If we don’t keep giving them money, they will come and burn down our part of town.” Trump supporters claim the last presidential election was stolen. This is not the case. But their claim of theft really codes for the mobilisation of black voters that propelled Joe Biden into the presidency. Without the big turnout of black urban voters in big cities, Trump would have won. But neither he nor his supporters dare assert that they mean black voters any more than Democrats dare claim that extreme Christian right-wingers form Trump’s base. Interestingly, all the banners seen during the mob attack on the US Congress hailing Trump have been scrubbed from TV news reports. Recall the warning, “When fascism comes to America, it won’t be wearing jackboots. It will be wrapped in the stars and stripes and carrying a Bible.” Attributed to author Sinclair Lewis. I went to school with the son of Charles Lindbergh, a leader of the US anti-war right. His memory still quietly inspires some Americans, particularly in the Midwest, South and Western states. History could be coming full circle.
Eric S. Margolis is a syndicated columnist.
