KA-POW! #19 - Barnes

This week's “Kick-Ass Post O’th’ Week” (KA-POW) goes to Harry Elmer Barnes for “Revisionism and the Historical Blackout” :

The First World War and American intervention therein marked an ominous turning point in the history of the United States and of the world. Those who can remember "the good old days" before 1914 inevitably look back to those times with a very definite and justifiable feeling of nostalgia. There was no income tax before 1913, and that levied in the early days after the amendment was adopted was little more than nominal. All kinds of taxes were relatively low. We had only a token national debt of around a billion dollars, which could have been paid off in a year without causing even a ripple in national finance. ...

Ours was a libertarian country in which there was little or no witch-hunting and few of the symptoms and operations of the police state which have been developing here so drastically during the last decade. Not until our intervention in the First World War had there been sufficient invasions of individual liberties to call forth the formation of special groups and organizations to protect our civil rights. The Supreme Court could still be relied on to uphold the Constitution and safeguard the civil liberties of individual citizens.

...

...In his devastatingly prophetic book, Nineteen Eighty-Four, George Orwell points out that one reason why it is possible for those in authority to maintain the barbarities of the police state is that nobody is able to recall the many blessings of the period which preceded that type of society.

A significant and illuminating report on this situation came to me recently in a letter from one of the most distinguished social scientists in the country, a resolute revisionist. He wrote, "I am devoting my seminar this quarter to the subject of American foreign policy since 1933. The effect upon a Roosevelt-bred generation is startling, indeed. Even able and mature students react to the elementary facts like children who have just been told that there is (or was) no Santa Claus."

While the First World War headed the United States and the world toward international disaster, the Second World War was an even more calamitous turning point in the history of mankind. It may, indeed, have brought us — and the whole world — into the terminal episode of human experience.

It certainly marked the transition from social optimism and technological rationalism into the Nineteen Eighty-Four pattern of life, in which aggressive international policies and war scares have become the guiding factor, not only in world affairs but also in the domestic, political, and economic strategy of every leading country of the world. The police state has emerged as the dominant political pattern of our times, and military state capitalism is engulfing both democracy and liberty in countries which have not succumbed to Communism.

Honorable mention goes to Bill Bonner for “Everybody Off the Beach!” :

But by trying to suppress a correction in the private sector, Japan’s central bankers have stretched out a slump over two decades and set up the nation for a bigger crisis in the public sector. And there is nothing they can do about it. Their fiscal stimulus no longer stimulates. Their monetary inflation no longer inflates. And every quack cure they offer brings the patient closer to the grave. You might think they’d give up. Instead, they increase the dosage. Fiscal stimulus hits a new record, right along with deflation.

But it’s the final act that interests us. With public debt at nearly 200% of GDP and 700% of tax revenues, we shouldn’t have to wait much longer. Given the track record, we have to assume that it will be the exact opposite of what central bankers expect. They are aiming for the whimper of newborn growth. More likely, they will get the bang of hyperinflation.

The Japanese were recently among the champion savers of the world. Directly or indirectly, these savings financed the government’s stimulus efforts. Banks, pension plans, insurance companies – all bought government bonds as a safe way to store wealth. The government then drew upon this stored up wealth to finance its bridges to nowhere and its other boondoggles. The result is a misunderstanding on its way to becoming a disaster. The typical Japanese person looks forward to his retirement with a mountain of savings in his backyard. He believes he still has his cake. The government, however, has eaten it.

Higher savings rates typically produce lower prices, for a while. Currencies rise. Even in Weimar Germany, there was a period in 1920 when the mark rose. Falling prices would seem to be proof that the money is still there. But the real money is gone. Then, suddenly, people notice that their savings are nothing but paper. The tide turns. Confidence disappears. The big wave of accumulated savings hits the marketplace like a tsunami. Desperate people try to get rid of paper. They want something solid to hold onto. Long-term bonds, the most vulnerable to inflation, are exchanged for cash. Cash and government securities flood the market. Prices soar. Middle-class savers drown. Meek debtors, relieved of their burdens in the flood, inherit the world. So do the arrogant debtors in the government. And the shrewd speculators. And then central bankers return to their desks and come up with a new plan.