Another slow day on Wall Street. Stocks up a little. Gold down a little. A hot summer day. Ain’t nuthin’ goin’ nowhere. Except away.
“Bernanke vows no retreat from easy monetary policy,” says the headline on the Financial Times this morning.
“On to Moscow!” he might have added with flair… echoing Napoleon or Adolf.
Easy money is the headliner today. More comic than tragic. But it will be, we predict, one of the biggest public policy disasters of our time.
Here in Paris, talk is of leaving town. Either for the summer vacation… or forever. In sidewalk cafes, people talk of going to Cannes or Corsica or Deauville.
Practically every conversation ends the same way: “See you in September.” The French are used to long vacations. They are shocked when we tell them Americans get only two weeks off.
Old people are going away for holidays. They go north to the Normandy beaches… or south to the Cote d’Azur and Provence… or just out of town to the vast countryside where many of them came from originally.
No Country for Young Men
Young people have different destinations in mind…
“I told my children to leave France completely,” said a friend at dinner.
“One lives in Istanbul. One is in Singapore. One is in Seattle. He works for Microsoft.
“Of course, I’d rather have them here. Close to us. But there are so few opportunities for young people in France. And if they get work, the salaries are pathetic.
“My son who lives in Seattle is making a lot of money. He could come back to France and get a job immediately. But he’d make only a fraction of what he makes there. He and his family are happy in America. They live better than they could live here.
“France is a funny country. It’s great for retired people. You can live well. We live well. We have a nice house. We have a nice car. We take vacations and eat well.
“But France is a hard place to work. There are too many rules and regulations. You don’t want to hire anyone because it’s so hard to fire him. So young people spend years in school… and doing internships… while they wait to get a job. I tell my children that they are better off leaving the country and starting their careers somewhere else.”
It used to be different. When you were, as they used to say, “free, white and 21,” the world was yours to do with as you liked.
Now whether you are white or some other color doesn’t matter so much. And people still turn 21 just as they always did. But who’s still free?
In France, as in America, a young person sets out in life with a weight on his shoulders and a ball and chain shackled to his leg.
His parents have passed laws granting themselves lavish health and retirement benefits. They expect him to pay the bill. They’ve also set up a world suited to them… in which the poor young fellow can barely turn around without filling out three forms in triplicate. He can’t so much as smoke a cigarette in a public bar without bringing the wrath of the omnipresent state down on his head.
Why? Because his parents are against it!
Rules, regulations, restrictions – he doesn’t recall voting for a single one. Instead, they were imposed upon him. So were the costs of today’s omni-eternal state with claims – in the US alone – on (according to Niall Ferguson) some $238 trillion of future output.
Dear reader, between the time when we grew up and today, the world has changed. It has been taken over by zombies who are desperate to drain the future so they can enjoy it now. Old people get their benefits. Their laws. Their privileges. They get to have things more or less as they want them.
And the young? Take it or leave it.
No wonder so many are trying to leave.
The End of Credit Money
But how was this change possible? How was it financed?
If you have been following this trail of breadcrumbs, you’ve already stumbled on the answer. In 1971, the world switched to credit-based money. It allowed people in the present to spend the resources that will be created – with luck – in the future.
Credit-based money is old… and new. It stopped working about 5,000 years ago. That was when human society – at least in the developed areas – became too large to support it.
In a small tribe, you could keep track of who owed what to whom. You knew how good your claims on wealth were. These claims – expressing a relationship between people, often stretching over many generations – were “money.”
You knew who had it… who would honor his obligations… when and how. In short, this was “money” you could work with.
But in a city… or an economy extended over many nations, languages, time zones, cultures and political jurisdictions… a credit-based system falls apart.
That’s why the Romans used gold and silver coins.
More to come…