MISC in Action

A closer look at American's Military Industrial Snoop Complex (MISC)...

(Source: Getty Images)

Bill Bonner, reckoning today from Youghal, Ireland...

While we are laughing, the seed of some trouble is put into the wide arable land of events.  While we are laughing it sprouts, it grows and suddenly bears a poison fruit which we must pluck.

~ John Keats

Yes, those were the days…the 1960s… 

‘We’d sing and dance forever and a day….for we were young, and sure to have our way.”

Jimi Hendrix…a ’64 Corvette…Apollo 11…surfin’ safaris…Ruby Tuesday – America was on top of the world…we were on top of America…and we expected things to get better and better.  But we didn’t have our way.

Then, as the Rolling Stones put it, “we shouted out…who killed the Kennedys?  And after all…it was you and me.”

The Great and the Good

The Stones were being poetic. “You and me” did not kill the Kennedys. Charles de Gaulle attended JFK’s funeral, along with other world leaders. When he returned to France he told friends that the CIA had done it. DeGaulle, a soldier, and like Jack Kennedy, a war hero, knew how dangerous the “Deep State” could be.  Only two years before, he had barely escaped a coup d’etat, led by retired general Maurice Challe.

Looking back, the death of the Kennedys appears as an important ‘pivot’ in American history. The Kennedy brothers were idealists. They hoped for…and thought they could create…a good country. Lincoln had said that it was by being good that we might be made great.

But in politics, “good” and “great” soon part company. 

We pause to recall why we care. Most of the news is merely ‘noise.’ To understand what is really going on you have to look beneath the surface chop…down to the deep currents of history.    

The Kennedys thought the promise of America should be fully realized. They thought the government would help make it so.

That seems to be where all the idealists and do-gooders wash up. Birds gotta fly.  Church bells gotta ring. And governments gotta do what governments do…and it has little to do with improving the lot of the common man. At least, that is our ‘cynical’ analysis after watching more or less carefully for the past 60 or so years.

At a more practical level, ‘don’t fight the Fed’ was probably the simplest and most effective investment rule of the last 40 years. So…figure out what the Fed’s gotta do…and get ready for it.   

Inflate or Die

You’ll remember that the Fed (and the whole government) is stuck between a rock of inflation and a hard place of stopping it. ‘Inflate or Die,’ is how we put it. Once you have printed money and caused a fake boom, you either have to continue printing…or you stop the presses and the boom dies. Both courses of action are hazardous. Let inflation rip…and you destroy the economy and the middle class.  But let the boom die, and you have the rich, the deciders and the elite at your throat…including the most powerful industry group in the world – America’s Military, Industrial, Spook Complex (MISC). 

Yesterday, the Fed decided to neither inflate nor die…but simply to await events.  Tomorrow, we will look at the events most likely to confront the Fed in the months ahead. Today, we continue looking back at the Kennedys and the events of the last half century. 

Bobby Kennedy, like his brother, and like Cato the Younger of ancient Rome, rejected the promise of a great empire. As he rose in the polls, LBJ withdrew from the presidential race. This left Kennedy in position to get the Democratic nomination.    

Then, in the Ambassador Hotel, on June 5, 1968, Bobby was shot and killed.  

With Bobby Kennedy’s death, the last political obstacle was removed. From then on, it was clear sailing for the MISC. The Cold War…which the Kennedys tried to stop…burned hot for another 23 years. And then, despite the lack of any war…or any real enemy…the warmongers got even more of the public’s money. When the Berlin Wall fell, the Pentagon was spending about $270 billion a year. Now, the ‘empire budget’ – including support of international institutions such as the World Bank – is an estimated $1.3 trillion.

MISC in Action

Good soldiers in the Pentagon saw the problem. A real fighting force must be lean…efficient…and decisive. But when they tried to curb an ineffective, expensive weapon…or refused to lard-up the Pentagon with cumbersome, bureaucratic programs…they were overridden by lobbyists, politicians and the top-heavy brass. The insiders knew the real story: the MISC had nothing to do with defense.

But now, the MISC faces another challenge. This time, it is a financial threat. Next year, the interest on the national debt (much of it incurred by the MISC) will surpass the Pentagon’s budget. Since the days of Jimmy Carter, a growing economy…and falling interest rates…have allowed the feds to finance both guns and butter. No hard choices were necessary. But now, real interest rates are rising; it won’t be so easy. The feds will have to choose – either protect asset prices and the wealth and power of the elite…or, protect the value of the dollar and the commitments made to lenders as well as to the taxpayers.

Which way will it go? Guns or butter?  

Stay tuned…

Regards,

Bill Bonner