By Revolution’s release in 68’, the peace and love hippy 60’s were delivering new messages of politics and protest.
“I wanted to put out what I felt about revolution…I thought it was about time we stopped not answering about the Vietnamese war…I had been thinking about it up in the hills in India. I still had this ‘God will save us’ feeling about it, that it’s going to be all right…” -John Lennon, Rolling Stone 70′-
Revolution was the political voice emerging in Lennon. The Beatles initially voted the song down for release as a single out of concern for disrupting their fan base. It’s an interesting juncture, playing politically correct given the turmoil of that era and the voice that music has become, a voice that became much of Lennon’s later career. The band agreed to release the more upbeat remake as side B to the Hey Jude single. Both versions are great.
You say you want a revolution
To this Canadian looking in, these US elections seem frightening. Obama’s ticket of change has fizzled into the same dysfunctional, partisan, questionably financed DC lame duck politics, leaving both parties looking old and tiring. Americans seem looking for a new voice.
Maybe it’s cliché that every incoming president inherits the worst file ever.
Clinton’s 8 yrs in the 90’s left Bush with $5.6T debt and the tech bubble.
Bush’s 8 yrs closed with a housing bubble, global banking catastrophe, too big to fail bailouts and $10T debt.
Obama leaves a fragile world of bubbling stocks, bonds, real estate and +$19T debt.
Three 2-term presidential cycles, each handing off bubbles and a doubling of debt, isn’t cliché.
Don’t you know it’s gonna be alright
While democracy is the power to remove people that govern, a key element to these years has been the appointed unelected Fed. Maybe akin to Lennon’s “God will save us”, there hasn’t been a crisis that they haven’t tried to make alright with more easing, leading further down the hole of debt.
As stewards of financial prudence they own an abysmal forecasting track record. Greenspan’s 96’ “irrational exuberance” didn’t see the tech bubble, after which claiming the Feds’ role was not to manage bubbles but to clean up the subsequent mess. In so doing they spawned a housing bubble they also claimed they did not see, a devastating systemic banking malfeasance of leverage and fraud and outright bad Wall St behavior that flourished under Fed oversight.
“Get to work Mr. Chairman.” –Dem Sen Chuck Schumer, to Fed Chrm. Ben Bernanke, 12′ –
The Fed’s QEs crossed a line of playing with their appointed powers over free markets. Designed to elevate assets and advertised as stimulus, it’s proven to benefit Wall St more than Main St, exacerbating the now hot political issue of income disparity. Separating asset prices from free market reality doesn’t seem to be working. These monetary experiments command no accountability and because the dollar is the world’s reserve currency, they’ve served as a model for modern day central banking think for the rest of the world.
QE’s and low rates help fund and manage this massive US government debt, making the Fed DC’s power chord, the DC enabler. The Fed would argue otherwise, that DC’s dysfunction and fiscal incapacity render the Fed the only show in town, that the Fed is buying DC time to get its act together. But it’s symbiotic. Politicians won’t act if they don’t have to and certainly won’t reach across the partisan aisle if the Fed keeps the free-market monster from the political door. And, after 08′, nothing fears central bankers more than free-markets.
So the world still limps and these appointed unelected unaccountable enablers remain stuck in policies they cannot escape, leading the rest of the world into similar fate. Globally central banks now sit $12T QE deep and counting, with a whopping $9T of global debt priced at negative yields. Central banks are toying with the very foundations and concepts of money and banking that centuries developed. By buying corporate debt and equities they pry into the very mechanics of capitalism. Do voters really get this influence?
You say you got a real solution
There is a deep irony in the backlash the Republicans felt for threatening to shut down government over America’s self-imposed legal borrowing authority. It was an intersection between this debt and DC dysfunction.
In any event, the party has had 2 terms to groom a nominee and the best they could find annihilated their own. The next best front-runner was of fringe tea-party roots. How more divided and divisive could they be?
Along the way Trump has managed to offend women, blacks, American Indians, the disabled, Mexicans, Muslims, POWs, NATO, the press, the legal community, his competitors, and his chosen party’s elite. What’s it say about a party in disarray when a self-adulating, uninformed and politically incorrect outsider can take it hostage? Attacks on Trump by his own party will weigh. It’s shameful to see values erode when individuals stretch to unite in endorsing someone they don’t support but feel they must. This billionaire class DC outsider represents a revolution of sorts but so far one that seems to be taking the party down, not lifting a country up.
If Trump is the first presidential candidate being sued while running for office, for of all things, scamming the public via Trump U, Hillary is the first presidential candidate risking indictment.
Despite the many old and quite new skeletons in Clinton closets, as Democratic royalty, Hillary was pre-ordained. But the Sanders revolution out of left shows an equally powerful Democratic search for a new voice away from DC as usual.
Both these current revolutions are driven in part by lack of income growth, economic stagnation and growing income inequality. Sanders specifically targets Wall St. The Clintons specifically are very much tied to Wall St., complicit with the 90’s reforms that created too big to fail banks, elevated risk taking leading to the worst financial crisis the world has ever seen. Hillary has even recently milked the relationship, making $mms speaking to Wall St. To suggest she is part of the old crony DC capitalism that voters, including Sanders’ Democrats, are revolting against is an understatement.
So both parties are divided by their own revolutions. At the moment it seems its “Anybody but Hillary”, the devil we know, against “NeverTrump”, the one you might understandably be very afraid to. Never more so, the election seems a vote against something rather than for. Are the solutions for America’s woes really in building walls, better trade deals, debating hand size or free college?
This winner inherits a jackpot of almost $20T debt and global bubble central banking. China’s bubble beckons, Japan locked in stagnation, the EU experiment seems failing and income disparity is a growing global phenomenon.
You tell me it’s the institution, Well you know, You better free your mind instead
Shocking DC isn’t a bad thing. So maybe reassessing the unelected intrusive power of central banking wouldn’t be either. Not in a ‘abolish the Fed’ extreme, but in the spirit of exploring a redefinition of powers. Does leadership see that central bank manipulations and distortions are taking the world further down a debt hole or do they enjoy the cover? If voters are the shareholders of government, do voters know who the shareholders of the Fed are? If the elected can’t be held accountable by hiding behind the policies of those that aren’t, then the system is busted.
Sanders the socialist was naturally mocked by those to his right for all the free stuff he planned to hand out, his Robinhood-like pitch to tax Wall St. to pay for it all. Yet, where in political dialogue is the discussion of the relatively free ride the US government receives in the form of QE funding, manipulated borrowing costs and Fed “profits” reimbursed, at a cost to savers and income disparity? The symbiosis is inconvenient conversation for any politician. That is the problem.
Anyone following markets for a time should agree these extraordinary times feel like transgression, a crossroad between capitalism and intervention, presumably a desperation to delay an inevitable pain of years of accumulated debt and bad behavior. Nothing screams louder of this then Japan and the EU diving into negative interest rate insanity. Maybe this transgression, this undertone that all is not well, is finally seeping into politics and rooting revolutions. Maybe these revolutions suggest the symbiosis is headed for a crossroad too?
Free-market monsters are always there, even if forced into the weeds temporarily, modeled away by the same unelected academics whose models brought us here. Living with free markets and their very natural self-policing nature is called prudence. Finding a way back there is maybe the revolution the world really needs. It just isn’t on this ballot yet.
You Tell Me Its the Institution II
Since this post, the world’s turmoil over Britain’s vote to exit the EU has generated a list of explanations, not the least of which is a national pride no longer willing to succumb to the terms of unelected EU bureacrats – a definite revolution. Already some disgruntled EU members wonder out loud about their options. On the one hand it is numbing to hear this event being compared to the Trump movement. On the other, they do both represent a vote against status quo and political elite. Central bankers will no doubt panic in coming to financial market relief, reminding the world of their usefulness and importance. Over time, it should not be lost on anyone to ask what role central banking plays in this EU experiment. If nothing else Brexit serves notice to the ECB et al that revolution can come fast.