Manifest Debt

It is unusual, exceptional, when a country becomes vastly more powerful than all others. It happens. But then, its own people help it to un-happen.

American Progress, 1872, by John Gast

Wednesday, July 17^th, 2024 

Bill Bonner, writing today from Poitou, France

‘And so, tomorrow, if all of a sudden, I show up at a convention and everybody says, ‘We want somebody else,’ that’s the democratic process. It’s not going to happen.’ 

—Joe Biden 

In the news, the dots come in torrents. But the patterns are unmistakable. It is the way the world works. Down... then up... then down again. From average to excellence... then, like a drop of water headed to the sewer, the exceptional thing is drawn to mediocrity.  

The molecules, within the water, ask no questions. The caterpillar doesn’t choose to become a butterfly. And people adjust their attitudes and thoughts to play their roles in the great drama.  

We are parts of the pattern…not masters of it. 

A former Chinese ambassador to the US: 

America was very different back then compared to now. In the 1980s, America was confident. It identified the Soviet Union as its main rival and boasted about "Star Wars"; it viewed Japan as an economic threat, attacking its financial and manufacturing sectors. By the 1990s, with the end of the Cold War, America became the only superpower, proudly promoting the so-called "Washington Consensus" and even declaring the "end of history." 

Later, things changed. America instigated several regional wars around the world, orchestrated several "color revolutions," and caused chaos in many places. American-led financial capitalism triggered a global financial crisis. People worldwide, including many Chinese, gradually realized that America's strategic focus is its global hegemony, not the welfare of all humanity, especially people in developing countries. The so-called "Pax Americana" does not necessarily benefit world peace, stability, and development; modernization does not equate to Westernization or Americanization. Their methods cannot navigate us to our goals, and their grand teachings often come with double standards in practice. 

In recent years, many unexpected and perplexing events have occurred in America itself. People worldwide, including Americans, are re-evaluating the United States. Now, even Washington no longer believes in the old "Washington Consensus," and the "end of history" theory has itself ended. A few years ago, when I gave a speech at Harvard University, I posed a question: "What happened to the confident America?" No one answered me. In the summer of 2021, when I returned to China, I told Dr. Henry Kissinger and other Americans that the America I saw in 2021 seemed different from the one I arrived in back in 2013. They surprisingly agreed with me, making it feel like an entirely different world. 

Americans appear to have lost their swagger. They are eager to ‘make America great again,’ but not by doing what made it great in the first place. Where they were once optimistic, confident and unafraid of the future... now, they see bogeymen everywhere. 

It is unusual, exceptional, when a country becomes vastly more powerful than all others. It happens. But then, its own people help it to un-happen. 

Jefferson sent ships to quiet the Barbary Coast, in the Mediterranean, very early in America’s march to full-fledged empire status. Afterward, the US quickly went back to minding its own business. 

By the 1880s, the US had the world’s biggest economy; the temptation to hegemony was irresistible. It was our ‘manifest destiny,’ said our early homeland Caesars. And by the 20th century, the Caribbean was a ‘mare nostrum’ for the USA. The Wilson Administration used it to ferry US troops to anywhere the United Fruit Company or the US Department of State wanted to meddle.  

Pax Americana

America achieved its truly exceptional status after WWII... and went on to do what no nation before it ever had — gaining ‘full spectrum dominance’ over the whole planet. No sparrow could fall, anywhere on the planet, without setting off alarm bells at the CIA and countdown codes at the Pentagon. America’s warships ruled not just its own two coasts — where they might conceivably block an enemy attack — but coasts and inlets far from home where they had no special interest, no knowledge, nor any purpose.  

Today there is apparently no business anywhere that is not America’s business. US fleets patrol the far reaches of the Atlantic and the Pacific... the Gulf of Aden... the coast of the Levant (where they apparently assist Israel in its slaughter of terrorist toddlers)... the Java Sea... the Red Sea... the Indian Ocean. 

Naive or merely curious readers might wonder what all this surveillance, patrolling, and garrisoning costs. Closely related is the question... where does it lead? 

We wrote a book about it (with Addison Wiggin) nearly twenty years ago. In Empire of Debt we suggested that “an empire is a rare thing... nature will tolerate it for a while, but sooner or later the imperial people must revert to becoming a normal race.” 

How does nature go about ‘un-happening’ an empire? The dot patterns from history are clear enough. It encourages rivals to challenge, invade, and harass... and turns the imperial people themselves into morons. They spend too much... stretch too far... and line up behind incompetents and dumbbells.  

Currently, the cost of the empire agenda is about $1.3 trillion per year. Looking back through the whole 21st century, so far, the price of being the Big Man on the Earth’s campus is about equal to the entire national debt. 

Back in 2000, the US national debt was only $5 trillion. We controlled it. Now, at $35 trillion, it controls us. 

More to come. 

Regards, 

Bill Bonner 

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Investment Note, by Tom Dyson

The gold price, measured in US dollars, made a new all-time-high this morning, hitting $2,482/oz in London trading. I monitor the gold price in many different currencies, using goldprice.org, and no matter which national currency I look at, gold is at a record high. In Japan, the gold price has almost tripled since 2018.

Here's a way of looking at the gold price that does not show gold at a new all-time high. This is the gold price in US dollars adjusted for CPI. In other words, it shows the purchasing power of an ounce of gold in the USA, over time. Measured against the CPI, gold is still trading far below its 1980 high.

The inflation-adjusted gold price peaked at $3,432/oz intraday on January 21, 1980 or $850/oz in 1980 dollars. The chart below doesn't quite show the final extent of gold's spike that day.