Surprisingly, Thomas L. Friedman, the man most likely to misunderstand any trend, has fairly captured the American esprit, circa 2005, as though it were a tee-shirt slogan:
“Live wrong. Party on. Pay later.”
The later gets sooner every day.
Friedman refers to the way U.S. corporate executives focus on their own salaries…while those in China and India crave market share. Americans want something for nothing…and fast. Out in the Orient, people are willing to wait…work…and save.
Predictably, Friedman goes off the rails as soon as he gets up a head of steam; “green energy solutions are the wave of the future,” he comments in the same breath — as if the two thoughts were connected. In his wobbly mind they are. He thinks that if he could just get policy-makers to listen, they would pass a few hundred much-needed “reforms” — such as reducing U.S. gasoline consumption — and somehow all the problems of debt, lack of savings and capital investment, trade deficits and so forth, would disappear.
And yet, the real problem…or a big part of the challenge to the American empire…was revealed by James Ferguson. “Labor’s share of the pot worldwide has been in decline since the mid-1970s,” he writes. The reason for this is that there is so much labor available at such low prices — notably in China. America lives beyond its means because its means have scarcely increased…while its ability to live beyond them has soared. Thanks to low rates from the Fed and “innovative” lending policies, Americans have been about to buy things they cannot afford. When the time comes to pay the bills, neither “reforms” nor “green energy” are likely to make it much easier.
The only thing that will make it easier is stiffing the lenders — by means of inflation or default — which we fully expect.
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.