Founder Of Reaganomics Says That "Without A Revolution, Americans Are History"

Tyler Durden's picture

By Paul Craig Roberts, First Published at InfoWars

The Ecstasy of Empire

The United States is running out of time to get its
budget and trade deficits under control.  Despite the urgency of the
situation, 2010 has been wasted in hype about a non-existent
recovery. As recently as August 2 Treasury Secretary Timothy F.
Geithner penned a New York Times column, “Welcome to the Recovery.”

As John Williams (
has made clear on many occasions, an appearance of recovery was
created by over-counting employment and undercounting inflation.
Warnings by Williams, Gerald Celente, and myself have gone unheeded,
but our warnings recently had echoes from Boston University professor
Laurence Kotlikoff and from David Stockman, who excoriated the
Republican Party for becoming big-spending Democrats.

It is encouraging to see some realization that, this time,
Washington cannot spend the economy out of recession. The deficits are
already too large for the dollar to survive as reserve currency, and
deficit spending cannot put Americans back to work in jobs that have
been moved offshore. 

However, the solutions offered by those who are beginning to
recognize that there is a problem are discouraging. Kotlikoff thinks
the solution is savage Social Security and Medicare cuts or equally
savage tax increases or hyperinflation to destroy the vast debts. 

Perhaps economists lack imagination, or perhaps they don’t want to
be cut off from Wall Street and corporate subsidies, but Social
Security and Medicare are insufficient at their present levels,
especially considering the erosion of private pensions by the dot com,
derivative and real estate bubbles. Cuts in Social Security and
Medicare, for which people have paid 15 per cent of their earnings all
their lives, would result in starvation and deaths from curable

Tax increases make even less sense. It is widely acknowledged that
the majority of households cannot survive on one job. Both husband and
wife work and often one of the partners has two jobs in order to make
ends meet. Raising taxes makes it harder to make ends meet–thus more
foreclosures, more food stamps, more homelessness. What kind of
economist or humane person thinks this is a solution?

Ah, but we will tax the rich. The rich have enough money. They will simply stop earning.

Let’s get real.  Here is what the government is likely to do.  Once
 Washington realize that the dollar is at risk and that they can no
longer finance their wars by borrowing abroad, the government will
either levy a tax on private pensions on the grounds that the pensions
have accumulated tax-deferred, or the government will require pension
fund managers to purchase Treasury debt with our pensions. This will
buy the government a bit more time while pension accounts are loaded
up with worthless paper. 

The last Bush budget deficit (2008) was in the $400-500 billion
range, about the size of the Chinese, Japanese, and OPEC trade
surpluses with the US. Traditionally, these trade surpluses have been
recycled to the US and finance the federal budget deficit. In 2009 and
2010 the federal deficit jumped to $1,400 billion, a back-to-back
trillion dollar increase. There are not sufficient trade surpluses to
finance a deficit this large. From where comes the money?

The answer is from individuals fleeing the stock market into “safe”
Treasury bonds and from the bankster bailout, not so much the TARP
money as the Federal Reserve’s exchange of bank reserves for
questionable financial paper such as subprime derivatives. The banks
used their excess reserves to purchase Treasury debt.

These financing maneuvers are one-time tricks. Once people have
fled stocks, that movement into Treasuries is over. The opposition to
the bankster bailout likely precludes another. So where does the money
come from the next time?

The Treasury was able to unload a lot of debt thanks to “the Greek
crisis,” which the New York banksters and hedge funds multiplied into
“the euro crisis.” The financial press served as a financing arm for
the US Treasury by creating panic about European debt and the euro.
Central banks and individuals who had taken refuge from the dollar in
euros were panicked out of their euros, and they rushed into dollars
by purchasing US Treasury debt.

This movement from euros to dollars weakened the alternative
reserve currency to the dollar, halted the dollar’s decline, and
financed the US budget deficit a while longer.

Possibly the game can be replayed with Spanish debt, Irish debt,
and whatever unlucky country is eswept in by the thoughtless expansion
of the European Union.

But when no countries remain that can be destabilized by Wall
Street investment banksters and hedge funds, what then finances the US
budget deficit?

The only remaining financier is the Federal Reserve. When Treasury
bonds brought to auction do not sell, the Federal Reserve must
purchase them. The Federal Reserve purchases the bonds by creating new
demand deposits, or checking accounts, for the Treasury. As the
Treasury spends the proceeds of the new debt sales, the US money
supply expands by the amount of the Federal Reserve’s purchase of
Treasury debt.

Do goods and services expand by the same amount?  Imports will
increase as US jobs have been offshored and given to foreigners, thus
worsening the trade deficit.  When the Federal Reserve purchases the
Treasury’s new debt issues, the money supply will increase by more
than the supply of domestically produced goods and services. Prices
are likely to rise.

How high will they rise? The longer money is created in order that
government can pay its bills, the more likely hyperinflation will be
the result.

The economy has not recovered. By the end of this year it will be
obvious that the collapsing economy means a larger than $1.4 trillion
budget deficit to finance. Will it be $2 trillion? Higher? 

Whatever the size, the rest of the world will see that the dollar
is being printed in such quantities that it cannot serve as reserve
currency. At that point wholesale dumping of dollars will result as
foreign central banks try to unload a worthless currency. 

The collapse of the dollar will drive up the prices of imports and
offshored goods on which Americans are dependent. Wal-Mart shoppers
will think they have mistakenly gone into Neiman Marcus. 

Domestic prices will also explode as a growing money supply chases
the supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration.
When the dollar goes the US cannot finance its trade deficit.
Therefore, imports will fall sharply, thus adding to domestic
inflation and, as the US is energy import-dependent, there will be
transportation disruptions that will disrupt work and grocery store

Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots and looting?

Is this the likely future that “our” government and “our patriotic” corporations have created for us?

To borrow from Lenin, “What can be done?”

Here is what can be done. The wars, which benefit no one but the
military-security complex and Israel’s territorial expansion, can be
immediately ended. This would reduce the US budget deficit by hundreds
of billions of dollars per year.  More hundreds of billions of
dollars could be saved by cutting the rest of the military budget
which, in its present size, exceeds the budgets of all the serious
military powers on earth combined. 

US military spending reflects the unaffordable and unattainable
crazed neoconservative  goal of US Empire and world hegemony. What
fool in Washington thinks that China is going to finance US hegemony
over China? 

The only way that the US will again have an economy is by bringing
back the offshored jobs. The loss of these jobs impoverished Americans
while producing oversized gains for Wall Street, shareholders, and
corporate executives. These jobs can be brought home where they belong
by taxing corporations according to where value is added to their
product. If value is added to their goods and services in China,
corporations would have a high tax rate. If value is added to their
goods and services in the US, corporations would have a low tax rate.

This change in corporate taxation would offset the cheap foreign
labor that has sucked jobs out of America, and it would rebuild the
ladders of upward mobility that made America an opportunity society. 

If the wars are not immediately stopped and the jobs brought back to America, the US is relegated to the trash bin of history.

Obviously, the corporations and Wall Street would use their
financial power and campaign contributions to block any legislation
that would reduce short-term earnings and bonuses by bringing jobs
back to America. Americans have no greater enemies than Wall Street
and the corporations and their prostitutes in Congress and the White

The neocons allied with Israel, who control both parties and much of the media, are strung out on the ecstasy of Empire. 

The United States and the welfare of its 300 million people cannot
be restored unless the neocons, Wall Street, the corporations, and
their servile slaves in Congress and the White House can be defeated.

Without a revolution, Americans are history.

Dr. Paul Craig Roberts is the father of Reaganomics and the
former head of policy at the Department of Treasury. He is a columnist
and was previously the editor of the Wall Street Journal. His latest
book, “How the Economy Was Lost: The War of the Worlds,” details why America is disintegrating.

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bugs_'s picture

NIce to think the wars could be immediately ended by one side throwing in the towel.

Thanks for the efoods link that is at least useful.

Bringin It's picture

As others point out below, the wars are occupations.  They can be ended tomorrow.  They are not making anybody any safer.


HCSKnight's picture

Right, we leave and the terrorists will stay over there and the oil wont be f'd with... oh yea, and  the Chinese will leave the African continent and the Koreans will make nice.

Do you really think those who want to attack the US have gotten less sophisticated or capable? 

But dont worry, we'll call Mr. Bringin It to get it on when the s hits the fan.

akak's picture

Put down the neocon koolaid and step away from the FOX "news"!

The American wars of aggression and illegal and immoral occupations of Iraq and Afghanistan can and should be ended tomorrow.  The ONLY thing they are accomplishing is feeding war profiteers and furthering the wildly militaristic and warmongering US foreign policy of the last 60 years, which sees the world as America's playground and the world's people as pawns and playthings of the US war machine.

Geoff-UK's picture

You express concern for the oil supply which i agree with--but we're not getting paid off for being the OPEC Security Company.  In which case, we should stop providing free service.  And if asses need kicking at some point, we have an Air Force with plenty of bombs and bored off their ass pilots ready to go.

As for the bad guys bringing the fight to us?  Well, close all immigration, legal or otherwise, and stop international tourism into this country.  Island America for a while. 

Would all that make you happy?  Cuz it would certainly tighten MY pants...

Hedge Jobs's picture

Blah, blah, blah, we have heard it all before. Another great article but when are people going to stop writing and blogging about it and actually do something about the problem that is puposefully desrtoying America and enslaving its people? We all know what the problem is, its about time we do something about it. If you are not going do anything yourself then at least support someone who will.

David Duke has a plan and is worth supporting:

For your veiwing pleasure and also to prove that Duke has the testicular fortitude to take these scumbags on head to head, here is one of the best ever slap downs of a zionist traitor you are ever likely to see:

Bringin It's picture

The slap down of Wolf Blitzer is terrific and worth watching.  He talks about Zionist control of the media and Washington, the Zionist push behind the invasion of Iraq and intended attack on Iran.


Bananamerican's picture

fuck off and ENLIST bugs, ya chickenshit chickenhawk.

Roberts NAILED the self-inflicted amerikan dilemma here

Mad Mad Woman's picture

This "war" is not sustainable & is costing us way too much money. We must leave Iraq and Afghanistan ASAP. The economic and people cost is too much. This is a war that we cannot win.

egdeh orez's picture

I didn't read the whole article yet, but I agree with the conclusion, "Without a revolution, Americans are history." completely

Buzz Fuzzel's picture

February 07, 2006

It is time for a Revolution

Marty Evans

Pork Barrel spending and political corruption are suddenly top topics of the day in Washington power circles and the national media. Speaker of the House Dennis Hastert recently defended pork spending saying “Who knows best where to put a bridge or a highway or a red light in their district”. He makes a very good point. It is intuitive that people in local districts know best where to spend their tax dollars, which raises an obvious question. Why is the United States Senate and House of Representatives involved in deciding these questions at all? Our real problem is that too few people are deciding what to do with too much money.

Why and how money corrupts politics are not particularly daunting questions. George Will nailed it in a recent editorial column. He says, “People serious about reducing the role of money in politics should be serious about reducing the role of politics in distributing money.”

In the present political reality our government, regardless of which party is in power, does not focus on what is right for the people but rather on what is right for the political class and their symbiotic partners the K Street lobbyists. Our money has made them all exceedingly powerful.

Two simple steps would solve this problem. First eliminate the system of seniority in Congress and the Senate. The operating rules of both legislative bodies allow some Senators and Congressmen to have inordinate power and influence over their colleagues. The result, we are no longer governed by good ideas and convincing arguments. We no longer have equal representation in our federal government.

When did you last hear media referring to a Junior Senator or Senior Congressmen? What does it mean to be a senior member of this committee or that? Our elected representatives should be co-equals. There should be no subordinates, no juniors or seniors among them. Their power should be determined by the quality of their arguments and their influence determined by the strength of their ideas. Secondly, and more importantly throw out the current federal tax code and start over with the Fair Tax.

Our federal tax code is a monstrous abomination used by the political class to manipulate and control every facet of our lives. It is the source of the power that corrupts. Everyone, including the poor, the rich, the middle class, corporations, unions, farmers and small businesses owners say the tax code is unfair to them. Unfortunately they are all correct. It is unfair to everyone except the political class.

Neal Boortz, co-author of “The Fair Tax Book” recently said “Passage of the FairTax would constitute the greatest transfer of power from government to the people since the Revolutionary War.” Legislation is pending in both houses of congress to make the Fair Tax the law of the land. Support for this idea comes from both political parties, from the liberal left and from the conservative right. Redistributionist social engineers and laissez faire capitalists have both found comfort in it. Virtually everyone who has taken the time to truly understand The Fair Tax supports it. It is a bold proposal which could succeed in solving our most daunting social, political and economic concerns. Unquestionably the biggest winners with the Fair Tax will be individual Americans, regardless of their socio-economic station, re-empowered to control their own lives.

Perhaps we the people still wield the power. Let’s see! Vote, speak out, contact your representatives and let our elected officials know the status quo is not good enough. Tell them we are ready for revolutionary change one way or the other.


Mitchman's picture

Excellent post.  Thank you.

Captain Archer's picture

We need a Constitutional Convention. It's the only way out.

Conrad Murray's picture

I disagree.  Allowing the current crop of crooks free reign to legislate the further rape, pillage, and plunder of the American people is unacceptable.  The scum that constitutes the political overclass of our day must be disposed of and replaced with individuals whose most sincere allegiance is to the Constitution and the ideals upon which our country was founded.  Only then would a Constitutional Convention appeal to me.

cossack55's picture

Or, how about scrapping the Constitution and reinstating the Articles of Confederation, otherwise, we will be back in the same boat.  For immediate resolution, think NULLIFICATION.

weinerdog43's picture

It's the only way out.

No it is not.  Read the article.

hungrydweller's picture

Read up on the constitutional convention.  You DO NOT want this to happen.  Representatives to the convention will be chosen by our current batch of corrupt kleptocrats in congress.  Once the convention is authorized it will have COMPLETE control to rewrite the constitution in complete secrecy as it sees fit.  We will, at best end with a semi-socialist democracy similar to Europe or we will end up with a more corrupt system than we have now with God knows what provisions that will allow a dictatorship to arise.

Papasmurf's picture

Exactly!  Be careful what you wish for.

hangemhigh's picture


You DO NOT want this to happen. 

i agree with you absolutely.  allowing the crime cartel to legally meet and alter the only body of law left between them and complete control of the political class is a fool's errand.

resist such lunacy at all costs.

a case in point.  revisiting the 14th amendement to 'deal with immigration issues'.  that's a hoax. 

the real issue is " the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”  

"Well thank goodness once again for our Conservative cousins because House Minority Leader, John Boehner, is already on the case and has suggested repealing the 14th amendment under the guise of blocking citizenship for children born in the US to immigrant parents. "

Geoff-UK's picture

Sadly, the Judicial Overlords won't feel binded by the law as written.  This is all moot--guillotines are likely only option. 

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.


Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.


We are doomed--John Derbyshire

You Cant Handle the Truth's picture

"The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate. "

Hey bozo, point out where in the above you get "complete secrecy" and amendments being passed without 3/4s of the states agreeing. Oh that's right, you can't. Because you are an idiot.

24KGOLD FOIL HAT's picture

YCH: technically you are correct but TPTB had the boob tube tell US voters that NAFTA would be good for em.  Perot tried to warn em but they believed the boob tube.  Then they said WTO and MFN for ChiComm's would be good for em.  The boob tubers bought that crap too.

There is a great danger the Matrix would hoodwink the bread and circus crowd into some crazy sh#t.  Maybe when things get worse in 3 or 4 years the majority will be ready to hold officeholders to the fire.  If there is a chance for the web to overcome the boob tube, it can be censored for "national security". 

A founding father said that American law depended on an honest and moral population.  An immoral population would blow off the laws.  Well 200 years of gradual decay and you have NYC and DC callin the shots with a European feudal deathgrip on the money supply.

Sadly the Tea Parties are being seduced by one half of the Matrix.  We are up against a formidable opponent.  We are not checkmated.  There is a move that TPTB cannot fathom.  They will lose.

Mad Max's picture

We should nuke the site from orbit.  It's the only way to be sure.

Geoff-UK's picture


But that would make for a much shorter movie, with much less loss of life.  And the Goldman Sachs octopus/queen wouldn't have a chance to escape alive.


Buzz Fuzzel's picture


No to a Constitutional Convention. 

We can regain control of our government within the framework established in the original constitution.

Article 1 Section 2 of our Constitution establishes the principal of Equal Representation.  We have lost equal representation due to the evolution of the Operating Rules of Congress.  Not every voice and vote in Congress is equal.  This leads to most of the problems, which frustrate the citizenry.

The Constitution provides Separation of Powers, Checks and Balances.  When there have been disagreements among the three branches of our Federal Government, The Executive, The Legislative and the Judicial, they are resolved by agreement of a majority of the branches.  The Executive and the Judicial can overrule the Legislative, the Legislative and Executive can overrule the Judicial, the Judicial and Legislative can overrule the Executive.

The constitution in Article 1 Section 5 also provides that each House may determine the “Rules of its Proceedings”.  Neither the Judicial nor the Executive may tell the Legislative how to form their rules.  This is confirmed in Supreme Court rulings.

The current situation however, is denying the citizens of this country their right to equal representation as established in Article 1. Section 2.  The Constitution is a contract between the people and those we choose to lead our nation.  The evolution of the "Rules of Proceedings" has resulted in a violation of the principal of equal representation.  The citizen’s interests have been damaged.  The contract is being violated.

Any citizen should have standing to sue both houses of the legislative branch for violation of the equal representation principal and the damages caused by the current House and Senate rules that propagate the system of seniority in each house.  A court ruling in favor of the citizens would not violate of Article 1. Section 5.  The Judicial branch would find that the "Rules of Proceedings" have denied the citizens their right to equal representation, as written these rules violate the Constitution.  The Court could order the Legislative branch to correct this deficiency.  If the Executive branch sided with the court, the Legislative branch would be forced to rewrite their "Rules of Proceedings" to restore the principals outlined and guaranteed in Article 1 Section 2, the principal of equal representation.   They would be forced to rewrite their rules eliminating all forms of seniority and equal representation would be restored.

It would also be the death of Political parties but that is a side effect most Americans would welcome and most of our Founders would have supported.

24KGOLD FOIL HAT's picture

Buzz: + 8trillion.  If we had 10 people in every precinct we might be able to checkmate the Matrix in 2012!

New_Meat's picture

Buzz, I'm against pork barrel spending for so many reasons. - Ned

Pondmaster's picture

Eliminating Seniority in the Congress and the Senate is the best idea I have heard yet . Term limits for the creeps next . However ... there will still be the upspoken seniority , just as in corporate America . The glass ceiling for those whom really support Joe Six Pack . Turning from complete corruption in those over us wil not happen in this generation , not for those 20 , not for those 60 . We are in the midst of a blooming "Soviet" style cornyism , heading to a Chinese slave state . No stopping this train .. sorry . Nice ideas , but no hope in mankind , inspite of Utopian rubbish inferred by Gov't and the Media , and pushed by mainstream religious millennialists .

Buzz Fuzzel's picture

Your pessimism is unjustified.  Re-read the original post "It is Time for a Revolution".  We the people have the tools in the current constitution to correct the deficiencies of our government.  Only two things are required.  1.) Eliminate seniority in both houses of congress through the courts.  2.)  Repeal the 16th amendment and restore the only proper form on taxation, as recognized by the founders, taxes on consumption.  This will allow the citizens to once again have direct control over their personal tax bill by deciding how much of THEIR money to spend.  This will require political action but that will come if the people are properly informed of the FairTax proposal pending in congress.

A further bonus could be gained by repealing the 17th amendment.  The people were better represented in our Federal Government when their State and Local governments were properly represented in the Senate.  If Senators were still chosen under the original terms of the original un-amended constitution there would be no unfunded mandates on the state and local governments and our federal budget would shortly be balanced by default. The states do not have power and authority to "print money" and they would immediately enforce the same standard on the U.S. Congress except in cases as originally provided for, in the case of National Emergency where Congress is allowed to borrow, Article 1 Section 8 as clarified in the Federalist Papers.

Geoff-UK's picture

Term limits is the answer?  I think they'll just steal and take fatter donations from GS and Citi on a shorter timeline.

Pladizow's picture

America = Dead Man Walking.


TBT or not TBT's picture

Euro dives first.   Just talking my book though.

MachoMan's picture

Euro dives first.  Plus, as an added bonus, I'll throw in that the dollar's replacement will come from the euro's ashes.

Turd Ferguson's picture

Try this on for size, too. PCR interview from a couple of weeks ago.

Monkey Craig's picture

Thanks for this link. Alex Jones gets the best interviews (Max Keiser, PCR, Jesse Ventura, Ron Paul). My fear is that the military industrial complex is too entrenched....i.e. peace would bankrupt us. Of course, this is the meme that main stream media  will portray if peace ever becomes within reach.

If World War 3 hasn't started, it is right around the corner.

jakeman's picture

A very interesting link, indeed.

Along the same lines, there's the concern about the millions of loyal servicemen and women who would be coming home, only to be greeted by our lovely jobless recovery. And I don't believe our shiftless pols want that.

New_Meat's picture

jake, generally in boot training, they don't do any drill with pitchforks.  But the lads and lasses do learn about things with a pointy-end and a "friendly" end.  Sometimes they get to practice.

So consider the oath that they have taken: " protect and defend against all enemies, foreign and domestic. ..."

and the realization they might have on getting the revered DD214, that "we're not in kansas any more."

Heinlein used this as a great backstory.

 - Ned

jakeman's picture

I'm with ya, NM.

I've been on a Heinlein kick recently....what's the book you're referring to?

laughing_swordfish's picture

I agree. In fact, I think it's the main reason the little foreign adventures in Iraq and Afghanistan haven't ended yet.

When these kids come home, get their DD214, and immediately join the ranks of both the homeless and jobless, there will be armed revolt in the streets.

Berlin 1931 , here we come

tip e. canoe's picture

"peace would bankrupt us."

note to monkey : we're already bankrupt bub.

we just haven't been forced to file yet.

Monkey Craig's picture

A bankrupt that can borrow at  under 3% for 10 years?

tip e. canoe's picture

repeat to monkey: we just haven't been forced to file yet.

ever see the movie Repo Men?  if not, don't worry, you will soon, and you won't even have to put it on your netflix hit list.

InconvenientCounterParty's picture

According to my charts of the U.S. debt, the shit broke in 1984. WTF is Reaganomics anyway? With history as a guide it looks like borrow and spend and weath re-distribution. In 2010 it's called Socialism right?

Bananamerican's picture

6 Junks?!?

How many dick bent Repubs are there are Z-Hedge anyway?

I'll say it again..."If you are a Republican...if you are a Democrat...YOU are part of the PROBLEM

hangemhigh's picture
by hangemhigh
on Thu, 05/13/2010 - 17:54 #349327

There is a lot of latent history here.

By the late 1960’s real organic growth in the US was in trouble.  What was then America’s primary technological asset, it’s unparalleled machine tool base, was ageing and in need of repair.  To maintain the country’s manufacturing ascendancy, billions would have to be invested over an extended time frame with real return on investment no more than a distant promise.

There were problems with that approach, though.  First was the Cold War. During the political struggle with the Soviet Union, the highest priority for both tax and investment dollars was always the arms race with the USSR.  All other allocations were secondary.

Public policy questions were an issue, too.  Increased investment in the machine tool/manufacturing base would only serve to further empower the unions and intensify the ongoing conflict between capital and labor.

With the costs of the ‘Great Society’ and Vietnam War escalating, something  had to give.  When ‘Tricky’ Dick Nixon closed the gold window in August 1971, the die was cast.

By the time the Reaganauts came to power signs of decay were clearly visible ( Watergate/ Arab Oil Embargo/12% Inflation-$850 Gold /Fall of the Shah-Iran Hostages).  Because of the dire nature of the geopolitical situation, long term solutions were out of the question.  Quick fixes were in.

The one irreplaceable asset America still retained was an impeccable balance sheet.  We were the pre-eminent creditor nation, with a huge stock of still productive, in-place, plant and equipment, and an unlimited capacity to borrow.

The rest is history.  Take a look sometime at a graph of the growth of public and private debt from 1980 on.  It’s a moon shot.  The ruling political class of that era, both  the Republicans and the Democrats, colluded and conspired to legitimize and institutionalize debt and deficits as a politically palatable short term solution to a very long term economic problem. 

Given the ensuing rise of debt based paper shuffling and the death of real productive pursuits,  Wall Street's considerable influence, over both spineless puke politicians and the get-rich-quick economy, was predictable.