Guest Post: "We Have No Other Choice"
Submitted by Charles Hugh Smith from Of Two Minds
We Have No Other Choice
America is just going through the motions because we have no other choice--or so we believe.
I have long thought that America Is Just Going Through the Motions--of caring about the deficit, of financial "reform," and everything else:
Let's be honest, shall we? There never was any fire for real reform of the financial sector. It was all rote, a foul, stupid play-act, a passionless pantomime of "caring" and fake-"progressiveness" displayed for propaganda purposes.
I now think we're just going through the motions because we have no other choice than to "extend and pretend" the Status Quo. Choice is of course a matter of perception, a situation where perception defines what is "possible" and what is "impossible."
Interestingly enough, the "possible" is what we think we can manage, while the "impossible" is what happens to us whether we thought it possible or not.
Consider the Federal Reserve. Liberal media mainstay The Atlantic published a fawning puff-piece lauding Ben Bernanke as the man who "saved the economy": The Villain: The left hates him. The right hates him even more. But Ben Bernanke saved the economy— and has navigated masterfully through the most trying of times.
We all know what Ben "saved," and it wasn't the economy--it was the fraud-based crony-capitalist financial sector. In case you missed the primer that explains the fundamental frauds at the heart of our economy:
Claiming that "saving the financial sector was necessary to save the economy" is akin to claiming that saving the massive tapeworm coiled inside the patient is necessary to save the patient: the logic is backward. The financial sector (tapeworm) is the cause of the economy's (the patient) weakness and collapse.
Ben is no genius nor is he a hero. He is simply doing what he has to because he has no other choice. What would happen if Ben didn't funnel hundreds of billions of dollars into the financial tapeworm? It would die, and the "too big to fail" banks--for all intents and purposes, the Fed's partners, and the generous funders of political toadies--would cease to exist. Extremely wealthy and powerful people-- the top 1/100 of the top 1%--would lose great wealth and the power it buys.
In a system that has become dependent on crony-capitalism and fraud for its very survival, then that is obviously not even a choice.
How about the political class of toadies, sycophants, leeches and cowards who passed a 2,300-page "reform" bill that nobody read, much less actually understands? Senator Dodd recently penned a bloviated defense of his "save the poor tapeworm" legislation, the Dodd–Frank Wall Street Reform and Consumer Protection Act in The Economist, claiming that it was "impossible" to "reform" our "complex" financial system with a mere 37 pages of legislation, the length of the original Glass-Steagal Act that separated commercial and investment banking: What If We're Beyond Mere Policy Tweaks? (February 6, 2012)
Consider the Glass-Steagall Act, at 37 pages in length, and the 2,319-page monstrosity of the “Dodd-Frank Wall Street Reform and Consumer Protection Act:" (Source)
Back in December, Nick Schulz helped put the size of the 2,074-page healthcare bill into some historical context by comparing its length to some previous bills that rank among the most consequential in U.S. history, like the 82-page Social Security Act of 1935 and the 74-page Civil Rights Act of 1964.
Now that Congress has passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” it might be a good time to compare the 2,319-page financial reform bill (245 pages longer than the healthcare bill) to the previous bills listed below (and see graph) that are considered among the most consequential legislative acts for banking and finance.
1. Federal Reserve Act (1913) – 31 pages.
2. Glass-Steagall Act (1933) – 37 pages.
Actually, the entire fraudulent tapeworm could be killed with a single page of legislation, or more correctly, a single five-point paragraph: To wit:
1. Commercial banks cannot conduct any investment banking, and investment banks cannot conduct any commercial banking. Any financial institution that accepts deposits or issues loans or financial instruments of any nature will be regulated as a bank.
2. All assets of any nature must be listed at the close of business daily marked to market, as in the futures and options markets. If there is no regulated market for a class of financial instruments, the Treasury is instructed to establish and regulate a market for that class of financial instruments. Holding assets off-balance sheet is a criminal offense with a minimim fine of $10 billion per asset. If the fine cannot be paid in full, the FDIC is instructed to seize the bank and liquidate its assets in an orderly and timely manner.
3. No bank will be permitted to have assets or liabilities in excess of the smallest gross domestic product (GDP) of the 50 states.
4. No private banks may create any money through debt. All loans must be made out of existing deposits and equity. (via David V.)
5. No exceptions or exemptions are allowed to these statutes.
That would pretty much do it. Separate commercial from investment banking, require all assets to be marked to market every day, and limit banks from expanding to the point of being able to blackmail the nation, i.e. "too big to fail."
Instead, by one count, Dodd-Frank requires regulators to create 243 rules, conduct 67 studies, and issue 22 periodic reports. Does anyone seriously believe this complexity will "fix" anything?
But the legislators had no other choice. If they killed the TBTF banks, they would have killed their good friends and generous donors, so that was never a possibility. Ditto with healthcare "reform" and all the other phantom "reforms"--actually changing the Status Quo would cause immense financial pain in the class of wealthy people who fund the politicos and lobbyists, and trim money flows elsewhere in the system.
"Having no other choice" is a social fractal. Why do families persist in taking on $100,000 student loans for mostly mediocre educations with mostly mediocre "benefits" in the job market? Because they feel they have no other choice.
Why do people persist in mortgaging their future and accepting the yoke of debt-serfdom to own a house? Because they feel they have no other choice, and owning a house has become integral to the "American dream."
Why do local state, county and city politicos continue playing absurd budget games, shuffling funds, borrowing from their employees' pension plans to make this year's pension plan contribution and similar threadbare tricks? You guessed it: they have no other choice, lest someone somewhere feel some pain.
Why do our Federal "leaders" borrow $1.5 trillion each and every year now, fully 10% of the nation's total output, knowing full well that this level of borrowing will bankrupt the nation? (Don't forget to add in the "supplemental" off-budget borrowing.) You know: they have no other choice, lest someone somewhere feel some pain.
So instead they keep the accelerating vehicle pointed straight for the cliff. There are only two end-states to this level of borrowing: hyper-inflation or default. Any other "choice" is mere fantasy.
As noted above, what's possible is what you perceive, and what's impossible is what happens later whether you thought it possible or not. The Status Quo of a fraudulent financial system and a borrow-trillions-every-year-til-Doomsday Central State will implode, regardless of how many people think it "impossible."
If you take a star of sufficient heft such that it burns through its fuel at a rapid clip, then it will implode in a supernova whether you thought it possible or not.
"We have no other choice" is partly "deer in the headlights," partly fear of consequence and partly intellectual laziness, i.e. a continuing failure of imagination. Just to take two examples of many: anyone who is convinced they "have no other choice" but to enslave themselves with $100,000 in student loans should read Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents. Yes, it requires sacrifices and hard work, but it does outline a debt-free choice.
The Status Quo depends on debt-serfs who feel they "have no other choice" for its survival, but there are other ways of perceiving our financial options, for example Early Retirement Extreme: A philosophical and practical guide to financial independence.
OK, so these options may not be for everyone, but to deny they exist is delusional.
Consider America's second favorite obsession (the first being achieving "fame" by appearing on broadcast TV), losing weight. Here are two articles on the physics of weight loss by a UC-Berkeley physicist who lost 30 pounds: (via Ken R.)
The Physics Diet
Is it "convenient" to lose weight? no, it is generally inconvenient and requires sacrifice, discipline and embracing responsibility--all the attributes of life we avoid by perceiving no other choice.
What's possible is what we perceive, and what's impossible is what happens later whether we thought it possible or not. The "impossible" systemic collapse will happen because we've left no other option open. We will get "wake-up calls" along the way, but these will be ignored because to change anything in the Status Quo will cause pain to someone somewhere, i.e. it is inconvenient.
Could we choose another future other than collapse? At this point, the answer is no, because we have no other choice.