The “Conventional Wisdom” Trap

Events now race ahead at an ever-quickening pace toward the fiscal and financial Armageddon just down the road. Meanwhile politicians, pundits and plutocrats move to denial faster than the Coyote runs off the cliff chasing the Roadrunner. Our ‘leaders’ play games in Washington, D.C. Soon, all will have to look down at some point. That […]

Bear trap
Bear trap (Photo credit: Minnesota Historical Society)

Events now race ahead at an ever-quickening pace toward the fiscal and financial Armageddon just down the road. Meanwhile politicians, pundits and plutocrats move to denial faster than the Coyote runs off the cliff chasing the Roadrunner. Our ‘leaders’ play games in Washington, D.C. Soon, all will have to look down at some point. That Day of Reckoning still lies ahead. Oh boy, what a day that will be….

As we all watch the “Sequestration and Fiscal/Budget/Debt Limit” sideshow, know that you’re watching the opening gambit of the “Grand Correction.”

I’ve recently been traveling around the state of Idaho to various Republican, conservative and TEA Party events as part of the opening gambit for promoting my book, “The Citizen’s Last Stand: Are YOU Ready?”  It contains a full chapter on the “Grand Correction” to enable the reader to begin to comprehend what’s coming just down the road from the daily sideshow seen on their TV.  Well, seen at least by those not absorbed by sports and NASCAR.  Do those folks think that by ignoring fiscal and financial calamity, because it’s so distasteful, it goes away?  They will be in for the biggest surprise of all when the 2×4 smacks them “upside the head.”

The GOP, conservative and TEA Party groups seem to be in a funk. Not surprising.  Little local money is being raised, interest is flagging and groups are growing smaller.  Only in a couple of counties did enthusiasm seem to be higher and numbers up a bit.  However, raising money for the party still seems to be in short supply.  Bids were few to spend on donations or fund-raising at the silent and live auctions.

As part of this annual ritual, I noted the messages from the state officials to the party faithful at these GOP events seemed a little upbeat.  “Our budget is balanced and the state is doing OK,” says the State Treasurer Ron Crane and Lt. Governor Brad Little.  However, the congressional delegation was dismal.  The federal fiscal squall seems to have them in a real dither.   U.S. Senator Jim Risch has stuck to his favorite line through each successive rubber-chicken dinner; “However bad you might think it is in Washington D.C., it’s really much worse.”

He would then go into his standard spiel about how he traveled to the U.S. Bureau of Public Debt more than a year ago and watched an auction (debt sale) of U.S. Treasuries being conducted.  He would illuminate how the U.S. government was only collecting around $6 billion each day and spending $11 billion, thus having to sell new debt for the rest as the current deficit continues to accrue at a rate of $1+ trillion each year. At least he’s stopped stating the false claim, from his speeches last year, that “the Chinese are buying all our debt, jeopardizing our national security.”  He never mentions it is the Federal Reserve still buying the bulk of US Treasury debt and other bad assets to keep the ruse afloat.

Meanwhile, the Bureau also had to complete $50-70 billion of “re-funding” sales each day to rollover existing debt accrued against the $16.5 trillion “national debt.”

Mike Crapo, Risch’s Idaho partner in the Senate, has been evolving his message a bit as we’ve traveled through the state.  In the last Lincoln Day Dinner I attended in Bingham County, (Post Falls, ID), he was the most dire; “I believe the next 90-180 days will be a turning point for our Republic,” he said about the looming sequestration/debt limit battle.  I don’t know what either Risch or Crapo really meant but to the gathered crowds it came off dramatically.

However, in truth, both are still actually sugar-coating the message.  At the end of their talks both would usually try to put a positive spin on the situation and say something along the lines of, “…but it’s not too late, we can fix it….”  Neither would ever offer a hint or clue as to how, which is where the “Conventional Wisdom Trap” comes into play.  To me, at least it’s apparent they don’t know.  I suspect it also was to a growing number within the audience.

Conventional Wisdom always attempts to hold in abeyance the necessary changes well past the time change has to occur to successfully mitigate the coming failure.  It is a key failure of both conservatism and liberalism.  Conservatism and liberalism both want to maintain the status quo of their worldview at the expense of that which needs to be changed.  The conservative and liberal adherents hate the fact that almost the only reliable thing in the world is that the sun will come up tomorrow.  They cling to the status quo despite the glaring fact that, every day, everyone thinks a little bit differently than they did yesterday and will do so tomorrow.  They do so despite the fact that each day the world changes dramatically and new challenges arise, no one saw coming.  The status quo thereby grows untenable.  So they cling harder to it.

Conventional Wisdom among the mass population holds that somewhere along this perilous path some magic will occur and we’ll start to get out of this mess.  All we have to do is wait for our “Masters of the Universe” in Washington, D.C., to come up with the right mix of policy decisions and, “‘viola!,” problem solved.  “If we just elect the right legislators, that’ll get ‘er done,” is the refrain.

What the Masters of the Universe can’t say, what they refuse to say, is that there is no conventional wisdom ‘fix’ for any of this.  Conventional wisdom’s fundamental flaw is always being based on what supposedly worked once before.  However, the conventional wisdom always fails to recognize that since the generals or politicians fought the last war or thought they ‘fixed’ the economy last time, it has changed in fundamental ways they never accounted for.

The mass also never realized it was not the supposed “Masters” that won or fixed anything.  It is using the correct set of principles coupled with the People who fix their own problems in spite of the ‘direction’ and interference from above.  Economies and Wars are built and fought by the People not Presidents or Generals.  As Field Marshall Karl von Moltke has been attributed “….no battle plan survives initial contact with the enemy….”  Whatever fix or plan the Generals and politicians thought they devised was immediately improvised, adapted and overcome by the folks on the ground in order to actually gain victory and success in the real world.

Why does it happen that way?  Because, in the fiscal and monetary realm the conditions and changes the policy makers are ignoring, right now, are huge and many:

Never before has there been a world reserve currency comprising almost 2/3 of the world’s foreign reserves and circulating money that was not based or linked to any hard asset anchor (i.e., gold and silver).  Never before now.

Never before was such a global, fiat currency scheme also subsidized through the enforcement of a commodity (in this case oil) currency transaction scheme (known as “petrodollar recycling”).  Since 1973, this scheme has subsidized the dollar’s value by forcing oil-importing nations to first acquire Federal Reserve Notes in order to buy their base industrial energy resource.  They get those Notes by selling Americans cheap goods they manufacture and ship by the boatload to the U.S.  Americans ship back boatloads of cheap money conjured out of thin air.  Not only does that keep the foreign oil we buy cheap relative to all those other countries but gives us bargains on foreign goods.  A good deal while it lasts.  Well, except for all the domestic jobs and manufacturing capability it costs our citizens.

Never before has the banking cartel, or government, controlling that currency and its oil-subsidy scheme been at will to further debase that currency with trillions upon trillions of dollars through liquidity injections and deficit spending in a desperate attempt to prop it up as it began to fail.

As explained recently in the article, “Now What, Genius?,” the genius’ supposedly in-charge at the Federal Reserve and in the federal government have no real idea what the next step is or what form it will actually take.  If they do they certainly wouldn’t be saying the things they’re saying and doing (or not doing) the things they’re doing (or not doing).  Instead, they would act immediately on behalf of Americans to recognize the actual fiscal and financial emergency already underway.  However, the old legal maxim, “fraud vitiates (corrupts) all that it touches,” is in play.  Consequently, they want you to believe that it is some far off time when the Day of Reckoning arrives, not right around the corner.

It’s going to affect you and your children, and probably beyond your grandchildren and most Americans do nothing to stop, or even attempt to alter, the outcome.  It’s more fun to watch sports and NASCAR.  Soon, the Conventional Wisdom Trap is going to look much more like a bear trap with real teeth.