Gold and the Demise of the American Dream
By James West
"O Gold! I still prefer thee unto paper, Which makes bank credit like a bank of vapour."
This quote is lifted from a poem by Lord Byron penned in 1822. Isn’t it remarkable that a verse from nearly two centuries ago can remain so salient through time, and yet we are bound to repeat the mistakes time and again against which it warns?
Lord Byron was described by her contemporary Lady Caroline Lamb as "mad, bad and dangerous to know." Even then, writers of vision were marginalized as crackpots and freaks.
In 1972, Richard Nixon sealed the fate of the U.S. economy when he de-coupled the value of the U.S. dollar from gold. Since 1946, the Bretton Woods system decreed that the United States Treasury would buy gold at the fixed price of $35 an ounce.
This system enforced a fiscal discipline on federal reserve banks around the world because they couldn’t just print currency that wasn’t represented by the same amount in gold holdings by the printer of currency. But actually they could manipulate their own currencies to some degree through the control of both currency flows out of their country and the exchange rate at which the currency could be traded for gold.
Throughout the ensuing period of unprecedented global growth amid economic stability that characterized G8 countries, there arrived in the collective American consciousness a concept known as the "American Dream".
A product largely of advertising agencies, the American Dream was theoretically simple and accessible to all Americans who were willing to work hard.
A car, a house, a job and a family.
That’s was all we were ever supposed to need to achieve the American Dream.
But now, somehow, that’s no longer the American Dream. That’s what poor people have. That’s the starting point for what is widely considered the bottom of the food chain.
ONE house? Come on. Anybody who doesn’t have a cottage on a lake or a cabin in the woods, or more significantly, a house in the Hamptons or Nantucket or Captiva. Or, moving up the food chain, a villa in St. Thomas or on St. Barts.
Two cars at least. A boat, or, better, a yacht. A plane….maybe a jet.
The American Dream is no longer so simple. The real winners in this life are those with millions to spend, who cavort around the planet as if it were their private playground. Those for whom the idea of a carbon footprint is something you can just buy your way out of, thanks to the delusion of carbon credits and their futile attempt at diminishing greenhouse gases.
Dot com millionaires, Wall Street wizards, Hollywood starlets, pop music stars….now that’s the American Dream.
But its starting to unravel at both ends, and that is the sign of civilization past its peak and in serious decline.
Lets objectively administer a pap test in search of our own malignant evidence. If we start with the demise of the gold standard in 1972, it isn’t difficult to extrapolate a deterioration in the values of business in America coincident with the removal of fiscal discipline embodied by the gold standard.
Now, we have millions of Americans in debt, losing their homes, their jobs, the credit cards and ratings. The entire manufacturing sector exported to China. The national currency in freefall. A desperate congress opening up coastlines and other protected natural resource treasure chests to exploration to offset the soaring cost of energy.
What is happening to us? How did we arrive at this confounded juncture? What can we do to reverse the situation?
The underlying cause of our mutual conundrum is one of corrupted values. Americans prey on each other now using despicable tactics that result in a cycle of boom and bust for divergent segments of society. The problem now is that the boom accrues to a dwindling minority, while the bust is suffered by a far greater ratio.
Christian teachings seem to be employed as just another tool in the arsenal of marketing and "perception management" practitioners, as does scientific study. Statistical analysis can easily be skewed to deliver biased results, as do opinion polls….all elements of business and society that we rely on to some degree. And forget the news...I’m not going to brand myself a sensationalist conspiracy theorist here today.
Looking backward, its difficult to intuit the absolute moment when these deviant devices of competition became so culturally embedded, but it has its roots in the industrial revolution.
The mechanization of effort diminished the requirement for cooperation within communities, and depending on the level of one’s mastery over mechanical energy, the opportunity emerged for clever individuals to acquire substantial wealth through the application of mechanical energy to the production of products. Furthermore, the harnessing of mechanical energy allowed these alpha achievers to execute their plans privately, while masking the nefarious elements of their output behind the "corporation", which was a byproduct of the industrialization of mankind.
Prior to that, clever alpha achievers were reliant on the cooperation of members of their community to achieve commercially viable output levels, and so the agrarian economics which dominated human society until the 18th century enforced the predominance of cooperation at the community level, and competition occupied a far smaller segment of society.
With mechanization of effort, and now, with the mechanization of logical processes through the advent of computers, individuals are capable of competing on an international scale through the mastery of mechanized effort combined with automated thought processing. The result is far more powerful individual competitors, diminished reliance on cooperation, and complete anonymity to perpetrate schemes with destructive outcomes on its victims.
Now we have multinational corporations, who regularly harvest the most agile minds from our educational facilities, to formulate products and sales strategies optimized to program the consumer into buying into whatever it is that can be sold.
The rapaciousness of the entrepreneur at the top of the food chain back in the days where he was reliant on the cooperative contributions of his fellow citizens was kept largely in check by the visibility his enterprise afforded his community. The bigger the business, the more local participants, the more widespread the information about the day to day goings on.
The prevalence of Christian values and moral fortitude in agrarian times was certainly a factor in the integrity that largely marked the business dealings of citizens among each other then too.
Since the industrial revolution, statistics demonstrate that the rise of atheism and proliferation of ambivalence towards all religions is a matter of fact.
So it is safe to conclude that a byproduct of industrialization is the erosion of integrity among participants in the global economy. Combine the diminished morality with the exponentially growing ability to harness mechanized effort and computerized networks, and then add the all consuming desire for the Hollywood high life generated by the non-stop barrage of television, radio, and internet –delivered, and its pretty easy to see how we’ve come to this impasse.
The question now becomes, How do we repair ourselves?
First step in this process is the recognition that we have been operating in a corrupt political environment for quite some time. The fact of the matter is that U.S. presidential cabinet members regularly move into the private sector occupying board and management positions with entities like Haliburton, Kellog, Brown and Root, Lockheed Martin, Fannie Mae and Freddie Mac. The incestuous relationships fostered by the government being the farm team for private sector business and vice versa (in the case of Hank Paulson who is ex-Goldman Sachs) undermine the possibility of any true objectivity when it comes to matters of policy and governance.
How else could it become legal for creditors to deploy predatory marketing schemes designed to capitalize on the vulnerability of a nation of poor who have been literally brainwashed into wanting everything they see on T.V.?
So in the absence of leadership, the changes that extricate the individual from a lifetime of debt repayment must be self-originated.
There are two strategies that need to be embraced by the individual seeking to regain some autonomy in their life from the banks and credit companies that might now be calling twenty times a day.
The first one is advised for individuals who find themselves in the situation of holding a mortgage whose principal now exceeds the value of their house, or whose assets are moving rapidly towards repossession to satisfy debt.
Declare bankruptcy, and so with a clear conscience. The only retaliation for the complete immersion in marketing and sales propaganda against the system that generated it is the declaration of bankruptcy.
This essentially will get you back to a zero balance net worth much sooner than riding your way through all of the foreclosure and repossession processes, and will ultimately provide peace from the onslaught sooner as well.
But absent a firm commitment to the second strategy, you’re likely going to repeat the steps that led to the requirement for strategy number 1. And that second strategy has to do with discipline – self-discipline, more specifically. And this is the most important strategy.
When somebody mails you a "pre-approved credit card" or a "guaranteed lowest rate mortgage" or offers you anything that gives you credit, politely smile and say "no thanks".
To close with another poignant quote from the antithesis of America Dreaming, Vladimir Lenin, "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation".
And I’ll bet you thought you were living in a democracy.