Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression

Tyler Durden's picture

John Williams, who runs the popular counter government data manipulation site Shadowstats, has thrown down the gauntlet to deflationists, and in an extensive report concludes that the probability of a hyperinflationary episode in America over the next year has reached critical levels. While the debate between deflationists and (hyper)inflationists has been a long and painful one, numerous events set off in motion by the Bernanke Fed (as a direct legacy of the Greenspan multi-decade period of cheap and boundless credit) may have well cast America as the unwilling protagonist in the sequel of the failed monetary policy economic experiment better known as Zimbabwe.

Williams does not mince his words:

The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression. Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment. The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar. The results of those efforts are being seen in tentative selling pressures against the U.S. currency and in the rallying price of gold.

And even as Bernanke continues existing in a factless vacuum where he sees no asset bubbles, Williams takes aim at the one party almost exclusively responsible for the economic carnage that will soon transpire:

The crises have been generated out of and are centered on the United States financial system, triggered by the collapse of debt excesses actively encouraged by the Greenspan Federal Reserve. Recognizing that the U.S. economy was sagging under the weight of structural changes created by government trade, regulatory and social policies -- policies that limited real consumer income growth -- Mr. Greenspan played along with the political and banking systems. He made policy decisions to steal economic activity from the future, fueling economic growth of the last decade largely through debt expansion.

The Greenspan Fed pushed for ever-greater systemic leverage, including the happy acceptance of new financial products, which included instruments of mis-packaged lending risks, designed for consumption by global entities that openly did not understand the nature of the risks being taken. Complicit in this broad malfeasance was the U.S. government, including both major political parties in successive Administrations and Congresses.

As with consumers, the federal government could not make ends meet while appeasing that portion of the electorate that could be kept docile by ever-expanding government programs and increasing government spending. The solution was ever-expanding federal debt and deficits.

Purportedly, it was Arthur Burns, Fed Chairman under Richard Nixon, who first offered the advice that helped to guide Alan Greenspan and a number of Administrations. The gist of the wisdom imparted was that if you ran into problems, you could ignore the budget deficit and the dollar. Ignoring them did not matter, because doing so would not cost you any votes.

Back in 2005, I raised the issue of a then-inevitable U.S. hyperinflation with an advisor to both the Bush Administration and Fed Chairman Greenspan. I was told simply that "It's too far into the future to worry about."

Indeed, pushing the big problems into the future appears to have been the working strategy for both the Fed and recent Administrations. Yet, the U.S. dollar and the budget deficit do matter, and the future is at hand. The day of ultimate financial reckoning has arrived, and it is playing out.

Looking at the events over the past year demonstrates that Williams is not just being a drama queen.

Effective financial impairments and at least partial nationalizations or orchestrated bailouts/takeovers resulted for institutions such as Bear Stearns, Citigroup, Washington Mutual, AIG, General Motors, Chrysler, Fannie Mae and Freddie Mac, along with a number of further troubled financial institutions. The Fed moved to provide whatever systemic liquidity would be needed, while the federal government moved to finance corporate bailouts and to introduce significant stimulus spending.

Curiously, though, the Fed and the Treasury let Lehman Brothers fail outright, which triggered a foreseeable run on the system and markedly intensified the systemic solvency crisis in September 2008. Whether someone was trying to play political games, with the public and Congress increasingly raising questions of moral hazard issues, or whether the U.S. financial wizards missed what would happen or simply moved to bring the crisis to a head, remains to be seen.

More on the impending timing of the complete economic collapse of the US financial system:

Before the systemic solvency crisis began to unfold in 2007, the U.S. government already had condemned the U.S. dollar to a hyperinflationary grave by taking on debt and obligations that never could be covered through raising taxes and/or by severely slashing government spending that had become politically untouchable. The U.S. economy also already had entered a severe structural downturn, which helped to trigger the systemic solvency crisis.

The intensifying economic and solvency crises, and the responses to both by the U.S. government and the Federal Reserve in the last two years, have exacerbated the government's solvency issues and moved forward my timing estimation for the hyperinflation to the next five years, from the 2010 to 2018 timing range estimated in the prior report. The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, gross mismanagement, and a deliberate and ongoing effort to debase the U.S. currency. Accordingly, risks are particularly high of the hyperinflation crisis breaking within the next year.

What are the alternatives for the US? In a word, none. Presumably this means you should ignore what the axed "experts" from various bailed out sell side research chop shops try to tell you.

The U.S. has no way of avoiding a financial Armageddon. Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover obligations. The alternative would be for the U.S. to renege on its existing debt and obligations, a solution for modern sovereign states rarely seen outside of governments overthrown in revolution, and a solution with no happier ending than simply printing the needed money. With the creation of massive amounts of new fiat dollars (not backed by gold or silver) will come the eventual destruction of the value of the U.S. dollar and related dollar-denominated paper assets.

What lies ahead will be extremely difficult, painful and unhappy times for many in the United States. The functioning and adaptation of the U.S. economy and financial markets to a hyperinflation likely would be particularly disruptive. Trouble could range from turmoil in the food distribution chain to electronic cash and credit systems unable to handle rapidly changing circumstances. The situation quickly would devolve from a deepening depression, to an intensifying hyperinflationary great depression.

While the economic difficulties would have global impact, the initial hyperinflation should be largely a U.S. problem, albeit with major implications for the global currency system. For those living in the United States, long-range strategies should look to assure safety and survival, which from a financial standpoint means preserving wealth and assets. Also directly impacted, of course, are those holding or dependent upon U.S. dollars or dollar-denominated assets, and those living in "dollarized" countries.

In other words, the economic cycle will come back with a vengeance. Having pulled America out of the abyss by the last hairs on its Rogaine infused head, the Fed and the Administration have merely purchased one-two years of excess time in which insiders can sell all their holdings (look at recent reports indicating the ratio of insider sellers to buyers) and banks can book one/two years of record bonuses before signing off.

And whether one is a deflationist or inflationist, the take home message from Williams' thesis that everyone should be able to agree on, is what everyone knows yet is unwilling to admit: that the US economy (and its derivative, the undecoupled global economy, which that most certainly includes China) is that we are now caught in the greatest Ponzi bubble of all time. One small hiccup in which there is no incremental hollow value added on the margin courtesy of printing presses pushing fiat pieces of paper in overtime, would lead to precisely the same outcome as the world saw with Bernie Madoff: from $50 billion to 0 overnight. It is somehow fitting that world GDP is 1,000 time greater, at $50 trillion. Take away the fiat illusion, and the real value collapses to those concepts of tangible value that will remain in a post bubble implosion scenario: whether these be spam, gold, or lead.

And just so there is no confusion about the course of events, Williams presents the Zimbabwe hyperinflation episode as the case study that the historian Bernanke should have been focusing on, instead of spending long nights, "learning" from the Great Depression.

Hyperinflation in Zimbabwe, the former Rhodesia, was a quadrillion times worse than it was in Weimar Germany. Zimbabwe went through a number of years of high inflation, with an accelerating hyperinflation from 2006 to 2009, when the currency was abandoned. Through three devaluations, excess zeros repeatedly were lopped off notes as high as 100 trillion Zimbabwe dollars.

The cumulative devaluation of the Zimbabwe dollar was such that a stack of 100,000,000,000,000,000,000,000,000 (26 zeros) two dollar bills (if they were printed) in the peak hyperinflation would have be needed to equal in value what a single original Zimbabwe two-dollar bill of 1978 had been worth. Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy.

In early-2009, the governor of the Zimbabwe Reserve Bank indicated he felt his actions in printing money were vindicated by the recent actions of the U.S. Federal Reserve. If the U.S. went through a hyperinflation like that of Zimbabwe’s, total U.S. federal debt and obligations (roughly $75 trillion with unfunded liabilities) could be paid off for much less than a current penny.

What helped to enable the evolution of the Zimbabwe monetary excesses over the years, while still having something of a functioning economy, was the back-up of a well functioning black market in U.S. dollars. The United States has no such backup system, however, with implications for a more rapid and disruptive hyperinflation than seen in Zimbabwe, when it hits.

Maybe in retrospect it is good that banks are not lending out. If the $1.2 trillion in excess reserves were to actually hit circulating currency overnight, or even in a much more gradual fashion, then hyperinflation would surely be unavoidable, not so much as function of the consumer becoming a dominant force once again, which is the deflationists' key point, but as a result of the excess liquidity of the capital markets, which is the only reason why the S&P is where it is, into Main Street. As it stands, banks' unwillingness to recreate the cheap credit bubble by lending to anyone who has a pulse and can walk is the only thing that is so far preventing America's name change to the United States of Zimbabwe.

 

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depression's picture

The proposal to cut taxes and cut regulation on businesses in the US will do much more to stabalize and stimulate economic growth than all the money printing the Fed can conjure up. Look at the velocity of money for example, given the massive expansion of the Fed balance sheet it has had no effect on either economic growth or the velocity of money in the real ecomomy.

Simply accepting an outcome as inevitable is not acceptable to me.

We need to change course, and enable entrepruners to invest in the US economy.

We need to get the federal government out of the the way and create the best possible environment that will enable the private sector of the economy to stabalize and heal itself.

Lowering the tax burden on business creation and expansion, reducing regulation on businesses, combined with a stable currency will not "surely destroy the economy". Rising taxes, excessive and increasing regulation, a collapsing currency and an unstable economic and social structure very well could do exactly that however (which John Williams is pointing out is exactly the course the US is currently cascading down).

We must change course, change tactics, in fighting this crisis. Applying the same failed Keynsian economic theory that put us into this mess in the first place is creating bigger problems than it is solving (as John Williams points out).

We must get govt. and business working together intelligently to solve this crisis in the best possible way for our long term economic survival as a nation.

trav777's picture

yeah, just flip a different switch and everything will be ok.

Peak oil says no it won't.

We're bankrupt; that's how we got "into this mess."

All this bs about tinkering here and there to solve what are immense and utterly intractable systemic and structural problems is just polyannaish bullshit.

The US economy is a dead investment, a sinkhole.  The entire world economy built on debt and growth tomorrow is bankrupt as a fundamental premise

cougar_w's picture

"The entire world economy built on debt and growth tomorrow is bankrupt as a fundamental premise"

Close, but people will just say "no ain't" because they think growth is magic.

Say it like this:

"The entire world economy built on unsustainable debt and growth tomorrow is bankrupt as a fundamental premise once the free-energy sugar tit is withdrawn."

Cuz it ain't magic adn never was. It's physics.

cougar

DaveyJones's picture

the fur won't purr 

and the black gold's gettin old

we built a house of cards

on a hand that's sure to fold 

DaveyJones's picture

must be a stacked deck. there are too many jokers

MsCreant's picture

Ouch! Had to look that one up.

THE DORK OF CORK's picture

Ok you lower the tax burden and release loans from the banks to stimulate the private sector - this will merely increase personal consumption for a limited period until consumer inflation takes off and you will be back to the summer of 2008 with less reserves to fight the crisis , more debt and less potential for investment in the core energy economy.

Keynsian stimulus on the capital infrastructure that is not oil dependent is the only way out of this mess.

docj's picture

Keynsian stimulus on the capital infrastructure that is not oil dependent is the only way out of this mess.

When, and where, has this ever worked?

THE DORK OF CORK's picture

The French state embarked on a major nuclear programme in 1973 (using  American designed PWR reactors)  - this at the time was considered a dramatic move as other western states were beginning to embrace the ideas of monetarism

They also developed there rail system beginning in the late 70s early 80s

There was not a rejection of large scale high technology which happened in The UK  (North Sea oil gave them the illusion of success)

France has extensive economic problems but is not a basket case like the UK and its economy is more balanced then Germany which is a mercantile state withen the EU.

Its growth rate is higher relative to debt in comparison to anglo-saxon economies.

docj's picture

So, your answer is that we should build a whole lot of nuke plants (which I could certainly get behind though I think the stimulative effect is nil) and rail lines (which will never be used - Amtrak was, is, and ever shall be a failure and any follow-on program will fail as well) and hope we can only reach French levels of chronic unemployment and socio-political strife.

Well, that's a pretty loose definition of "working" but kudos (seriously, not snarky) for the info.

Cheers -

PS: You asked below - Warren G Harding, 29th President of the US.  I'll leave the rest to your curiosity.

THE DORK OF CORK's picture

Thanks for the info on Harding

Regarding Amtrak - very little money went to Amtrak so it cannot be a good example for stimulus spending indeed I believe cargo trains are always given priority and are believed to be the slowest main line trains in the western world.

The last nuclear plant  in USA was constructed in 1971! - the base load power is provided chiefly by coal fired power stations some over 50 years old(east coast)

The newer power stations are to a large degree gas powered - these stations have the lowest capital cost of any power station , this enables its owners to reduce risk by transferring the risk on to consumers who pay for fluctating gas prices

Both banks and Utilities share numerous characteristics - such as the above where these companys use very low capital ratios and transfer risk - the dynamics for nuclear power stations are reversed

 

THE DORK OF CORK's picture

Also stimulus is the wrong word ,I prefer investment indeed come to think of it I hate the concept - it invokes ideas of short termism and waste.

docj's picture

Oh, apologies - I wasn't using Amtrak as an example of stimulus or investment spending.  It's not.  It's just an example of a massively awful program that is absolutely radioactive.  The pork-politics potential for it is enormous and yet nobody will touch it because, short of some sort of on-high mandate that would be political suicide, nobody is going to give up their cars to ride the train from point A to point B.

In some ways it's a shame.  I've ridden the rails in the UK and France pretty often and found them to be quite cost effective, fast, timely, clean.  But they don't seem to me to be workable for the sprawled suburbia/exurbia we've become in the US and I'm here to tell you Middle America is not moving back to the cities anytime soon.

I largely agree with you on nuclear, but the problem there is that governments can't get out of their own way.  They'd need to do a complete 180 paradigm shift from their current 3-Mile Island vintage "NO NUKES NO WAY" mentality.  Which is also quite a pity - I love nuclear power, I've even spent some weeks underway on some US Navy nuke-driven subs - safe, clean, quiet.  The US is 30-40 years behind the times there - alas and alack I don't see that changing.

THE DORK OF CORK's picture

Both rail and nuclear seem to be natural monopolys - private companys seem to only want them after major goverment investment provides the capital and they then procede to run down their capital over time turning the goverment investment to profit for shareholders , also goverment agencies seem to have very strong labour contracts that are much more expensive then private companys.

Could the solution be that the goverment owns and invests in the infrastructure while having private companys staff the facilities..

You are correct the distribution of the American population makes commuter movements almost impossible but high speed rail is more of competitor for inter-city travel of up to 1000km and therefore could replace short-haul jet flight

 

Seer's picture

I'm curious, do the trains in Europe get second-class billing on the rail lines like Amtrak?  When the deal was done to allow Amtrak to operate it was only as a poor second-class citizen, freight retained the key timeslots and owns the tracks.

But it's still not fair to compare, as the trains in Europe have shorter connector points than in the US: the US has a LOT of real estate.

And, though this isn't the best place to place the following comment, transportation will be contracting EVERYWHERE.  Law of physics.  We're spending too much energy hurling our bodies all over the place (nature doesn't do it).

Yes, freight will be around for a while, but, what will it be hauling?  Not Chinese goods; not a bunch of lumber to build McMansions; not a bunch of autos.  Economies of scale also has a reverse, and it isn't going to be pretty.

THE DORK OF CORK's picture

Yes the population density of Europe is far greater and more suitable for medium distance travel (coast to coast high speed is not practical for the USA) - but if you imagine the West before train travel when the horse was the fastest - they managed the transformation , why not now.

Trains in Europe are getting more and more of there own high speed lines freeing up more freight trains.

Also the carter administration liberalised the trucking industry in the 70s before that era trains transported consumer goods to regional centres instead of being transported point to point which is done more so now - indeed Walmart would not exist without the carter adminstration! 

Anonymous's picture

That was not keynesian stimulus. It pre-dates keynesianism greatly. It was the American School of economics or the "National System". French Dirigisme adopted principles of the American school or National System. The National System was also what got Germany out of Hyperinflation and turned it into Europe's industrial powerhouse once again.

Seer's picture

but if you imagine the West before train travel when the horse was the fastest - they managed the transformation , why not now.

Lack of energy.  Plus, with job losses there will be less people commuting.  Again, it's the population density issue- nt enough people to subsidize (decreasing numbers) commuters.

For an idea on how this is going to turn out take a look at The Olduvai Theory (google it).

Anonymous's picture

In order to create new industries and have commuters to begin with the infrastructure needs to be build. Infrastructure has historically always come first, industry always comes second. This was proven in the 19th century US under the American system of economics.

As for energy, the whole grid needs to rebuilt. We need perhaps more nuclear reactors and a carbon-neutral grid.

Seer's picture

Saying it has to be so doesn't make it so.  Because one has never had cancer before doesn't mean that they won't end up with it.

There's NOTHING in nature or physics (or though devine intervention) that says that humans were meant to hurl their bodies all over the place at high speeds.

You're putting the cart before the horse.  Energy comes BEFORE infrastructure.

NEVER before has mankind been faced with deploying a new infrastructure on top of an already existing HUGE one.  Anyone familiar with deploying new computer systems into a production environment can attest to the levels of difficulty of this.  It's one thing to switch over to new computing systems, but global systems that people are dependent upon to survive? (yes, pull the plug and there'd be widespread chaos, death).

It's like being 50 years-old and saying that you'd once run a 3 minute mile therefore you could do it again.  Yes, you did it in the past.  Yes, you can still run.  But, the capacity to achieve the same, or in this case of new BETTER infrastructure, faster mile, well, let's not kid ourselves.  That infrastructure was built using massive amounts of fossil fuel that no longer exists; there is no amount of energy available today to duplicate our efforts, efforts that spanned decades, when we're going to need to make some change within perhaps two!  And, keep in mind that we've got a heck of a lot more people on the planet now: a LOT of energy today goes toward food production.

Look it up -Olduvai Theory.

Anonymous's picture

Of course it is not going to happen over night. Yes, many may in the world may die (possibly billion+). There still is nuclear energy, which can last for at least hundreds of years more at a minimum to thousands of years. First of course what has to be done is the implementation of an infrastructure that is capable of utilizing nuclear energy.

BTW Are you familiar with the new movie Collapse? I believe it is out on thepiratebay.

Seer's picture

One has to be careful about forecasting longevity rates of resources.  One has to state the rate of consumption in order for prognostications to have any real meaning.  For more on the importance of this fact see Dr. Albert Bartlett's presentation Arithmetic, Population and Energy (http://www.guba.com/watch/3000053112/Arithmetic-Population-Energy).  There's also Jevons Paradox, but, in a declining world I don't think that it will apply...

Yes, just watched Collapse the other day.  I've followed this stuff for many years.  I even think that I corresponded with Ruppert a couple of times :)

 

Anonymous's picture

Obviously uranium is also finite, but in terms of energy needs on a carbon-neutral grid it may carry us over for a few centuries to millenia until we can discover a new way to produce energy without depending upon finite resources. Perhaps a much more efficient form of solar energy or something along the lines of cold fusion.

Anonymous's picture

But, just as you cannot have infrastructure and other things without energy, you cannot have infrastructure without materials. Chop down all the trees and then what? The Easter Islanders are no longer around to tell us what they were thinking when they cut down their last tree: we can see what it resulted in- their final demise.

sgt_doom's picture

Don't take this personally, dood, but your post suggests you really aren't aware, or are ignorant of, the details of the US tax structure.

There simply aren't that many existing taxes to be cut.  Instead, massive tax recovery should take place in the following arenas: monies parked offshore by U.S.-based transnationals - to avoid taxes, transfer pricing fixing via offshore finance centers - to avoid taxes, assets parked in SIVs, SPVs, SPCs, SPEs, SPRes, etc., - to avoid taxes.

End those changes to Internal Revenue Code of 1986 allowing for interest tax deductibility and the aforementioned tax dodges.

Bear's picture

Good start, but this will not put even a small dent in the problem. We are in a massive hole and there is no way out through any tax structure changes ... we collect 100% of all income and we still have problem.

Anonymous's picture

"The proposal to cut taxes and cut regulation on businesses in the US will do much more to stabalize and stimulate economic growth..."

Isn't that what the "W" did? That worked out real well, especially for the bankers.

Anonymous's picture

Dude I've got bad news for you. In our current cluster**uk, not only is a Keynesian approach destined to fail but your free market stuff is not going to work either. You need to recognize where we're starting from.

The loss of cheap energy inputs changes everything. It squashes all of these economic models. Right, Left, whatever.

The private sector did not do such a great job either the past 15 years of allocating capital. What was their BEST idea? Monetizing the nation's housing stock. Wow. Genius.

Your textbook won't save you now. But take comfort, the Keynesian's don't have the answer either.

Anonymous's picture

The only system that has ever worked has been the American school or the National System. The encouragement of investment into private infrastructure to increase industrial production and raise living standards. If the Austrians had their way and there had only been a corporate military in WW2, would they have national interests or business interests in mind? Corporations do not take risks on large magnitudes such as investing in infrastructure. Perhaps if it wasn't for the "socialist" Manhattan project maybe Hitler's Germany would have been able to develop the atomic bomb in time to change the outcome of WW2.

Seer's picture

The encouragement of investment into private infrastructure to increase industrial production and raise living standards.

This is meaningless unless there's a check on growth, as growth will inevitably result in a decrease in living standards.  Please note that 2/3 of the worlds population lives on $3/day or less.

If we can't find a way to operate given our daily allotment of energy (solar derived) then we will always be spending our childrens' future.

Anonymous's picture

This is why a new infrastructure has to built from the ground up. We cannot continue to rely on crude oil as a sustainable form of energy going forward.

Most of the world is un-industrialized and lacks the basic infrastructure to support a productive base.

Seer's picture

Could you please define what you mean by "productive base?"

Given that there are NO sustainable energy sources other than the sun* (what it is responsible for generating- solar, wind, water flows), any infrastructure could have no more than a day's (or so) worth of solar output. *The exception would be tidal flows (moon's contribution).

Those building infrastructure are NOT creating that which sustains us (only Food, Shelter [a slight exception here] and Water).

First priority?  Our food system.

Anonymous's picture

That is why nuclear energy as it stands right now can be used to replace oil to a considerable extent. Solar as it stands right now does not have the capacity to replace oil.

Seer's picture

Nuclear fuels cannot replace the myriad of oil-derived products!  Think of all that plastic!  Michael Ruppert does a fairly good job of laying out all the issues in Collapse; I recommend people watch this movie.

Also, people assume that there's plenty of uranium.  As Dr. Albert Bartlett says, the greatest failing of the human race is its inability to understand exponentials.  With increases in nucelar power you have increases in the rates of depletion of uranium (Jevons Paradox would be something that you should review as well).

Anonymous's picture

The transition won't be easy. There is glass, ceramic, wood and natural rubber.

Seer's picture

Perhaps if it wasn't for the "socialist" Manhattan project maybe Hitler's Germany would have been able to develop the atomic bomb in time to change the outcome of WW2.

I doubt that in the end we'll look back at this as being as glorious as people portray.

It has been proven that Germany wasn't working on a nuclear project.  The reason they weren't is because Hitler didn't accept any expenditures on projects that couldn't produce within 6 mos (?).  In a somewhat supporting way, this backs up your statement that it would take a socialist approach; Hitler's was more of a corporate approach (short-term).

Germany was bound to fail for all the reasons why wars of agression fail: over-reach; wouldn't be able to appease/control far away populations (just like the US has failed in Iraq and Afghanistan).

Anonymous's picture

So instead if the Soviet Union had been able to develop their own Manhattan project and nuclear energy first the world would have been a much better place, no? They certainly didn't even have regard for their own people.

Seer's picture

And IF pigs could fly?

Your point?

The USSR was a f*cked up system.  F*cked up systems cannot prevail, because, you know, they're f*cked up!

China's government is an exception, though it has adapted to change (albeit slowly) which alters itself just enough to keep internal revolt from taking it down.  But China hasn't been an aggressor; with the exception of some of its fringes (like Tibet) it doesn't act like a controlling empire of other peoples.  In time, however, China's government WILL fall (all nationalist/statist governments are going to crash and burn because they're not sustainable- think of the energy equation).

But back to the USSR... the Stalinists were/are more interested in maintaining power than really spreading.  Small wars (think Granada) are good to keep some control over the local populations, but big wars, being highly unpredictable, risk destroying governing power (think WWI, WWII, Vietnam or Afghanistan).  The USSR was never going to spread itself all over the globe.  All the militarism was for show, for controlling its own people (folks have to understand how militarim is used to ward of internal dissent- in the US one can not question military actions without being accused of not supporting "the troops" [like stomping on the grave of grandad who served in WWII!]).  The USSR needed an adversary in order for the ruling elite to stay in power!

Anonymous's picture

The USA right now is also a "f*cked up system". China is willing to fight for taiwan and it will if necessary.

Well if you put it that way ALL governments will eventually crash and burn. China is Market Socialist, the National Socialists of Germany actually did not do bad economically.

If the USSR had developed the bomb first, the US as you know it might not even be.

WW1 was a disaster for Europe, it was incited by the British as a way to keep Britain the dominant power in the world. Hitler was appeased to be used against the Soviets.

If you look at modern day Latin America you will see that China and Russia are now allying themselves as a future bulwark against the US. The Soviets had a long term plan, they are not finished yet, Putin is ex-kgb.

Seer's picture

If the USSR had developed the bomb first, the US as you know it might not even be.

Sigh, this commie paranoia stuff just doesn't die easily I guess.

The US _WAS_ the first and it used it on a CIVILIAN population!  If the Soviets had developed the "bomb" first, then one would have to ask whether THEY would necessarily have been evil to drop it on a population that had the moral capacity to do the same (and in fact did so)!

But, as I said, the Stalinists were about hanging on to power, engaging in uncontrollable wars, esp wars of aggression, present great threats for maintaining stable power/control.

Anonymous's picture

Well the soviet union always really an empire of sorts.
It was a union of 15 different nations, 100 languages with racial backgrounds ranging from slav to mongol. In fact the soviets did a pretty good job of secularizing the formerly muslim central asian nations. Even prior to the soviet union most of area known as russia was formerly not inhabited by slavs. Siberia of course was composed of various sorts of central/east asians and eskimos. The urals were inhabited by asian uralic peoples such as the magyars. The pontic steppe and the northern caucasus were inhabited by turks and various caucasian peoples.

Anyway the soviets did expand their influence, they had eastern European puppet states. Now of course this all comes pre-ww2. They also supported mao initially of course.

Considering as they already were an empire, all they would be doing is expanding that empire.

Anonymous's picture

Harding did that and look what happened after that!

THE DORK OF CORK's picture

Excuse my ignorance but who the hell was Harding and what did he do?

Bear's picture

US President 1921-1923, ushered in the Roaring Twenties in the States.