DREGS VOL. VII # 10: LIES AND CONSEQUENCES


“Osama bin Laden is to terrorism what Colonel Sanders is to KFC. They both evoke an emotional connection to a promise. Osama bin Laden’s promise is a resistance to the West, and all terrorism that goes on in his name delivers on that promise…If you break that trust, you lose the brand.”

— Dick Martin, former PR chief for AT&T
Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth…Government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues…The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit….
But the fact is that there are now more claims outstanding than real assets. ….In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value…Deficit spending is simply a scheme for the confiscation of wealth.

— Alan Greenspan, 1966
Just as Chinese cat food is now inalterably associated with dead cats in the American consciousness, the Enron-ification of America has resulted in a tanking of trust in the American brand around the world.
Brands are built on trust. America’s economy, however, since the erosion of the gold standard, has been built on credit, which was extended to America based on trust in the strength, endurance and credibility of the American brand – a trust which has now been severely abused.
Osama bin Laden’s stock, however, is rising, according to Michael Scheuer, the former chief of the CIA unit charged with neutralizing him.
In a recent RADAR article by John Cook, Scherer reports that Osama is perceived as extremely credible among young Muslims, having “left a $14-$16 billion fortune to live and fight with the mujahadeen… he’s been wounded four times. Most Muslim leaders talk the talk, but they spend their time whoring around in Monaco. With bin Laden, we’re up against a guy who really is what he appears to be.”
Hence, the rise of the Osama brand into a romantic, Che Guevara, Malcolm X-ish T-shirt symbol of the globally disenfranchised.
Meanwhile, America is now perceived as a fat greedy evil liar with sinister imperial bully motives – and nothing to back up this posturing.
To paraphrase an article in HARPERS by Kevin Phillips: our official statistics don’t accurately portray how dismal our economy really is. The Consumer Price Index (CPI), unemployment rates and the Gross Domestic Product (GDP), figures by which “the vigor and muscle of the American economy are measured” have all been hopelessly perverted by truth-erosion since the Kennedy administration in order to paint a rosier picture of our value than what the real numbers suggest – a truth gap that has gotten progressively worse over the years in a tendency that economic analyst John Williams nicknamed the “Polyanna Creep.”
Each administration felt that certain indicators brought the economic mood too far down – so they gradually stopped factoring the bummers into the number pile, or cooked the books to make the numbers look better. Nixon, for example, decided not to include figures for the volatile food and energy markets in “core” inflation figures, resulting in a figure that economic commentator Barry Ritholz called “inflation ex-inflation” – (in other words, inflation figures after all the nasty inflation bits had been taken out.)
According to Phillips, the Reagan administration further perverted the CPI figure by fiddling with the housing market numbers, using as a figure “based on what a homeowner might get for renting his or her house.”
Why keep this picture so artificially bright?
“…Who profits from a low-growth U.S. economy hidden under statistical camouflage (?) Might it be Washington politicos and affluent elites, anxious to mislead voters, coddle the financial markets, and tamp down expensive cost-of-living increases for wages and pensions?” asks Phillips.
Meanwhile, a usual loose coalitions of mutually interested parties ( i.e. oil, military industrial) is still recording record profits and pay increases. Boeing, for example, already giddy with revenue from our dirty little wars, got the $80 million contract to build the electric immigration fence that nobody really wants. Their $20 million prototype apparently didn’t work, so, they’ll probably need more money.
Perhaps President McCain will hire Boeing to build a fence around space.
In order to sidestep surging inflation, America requires a durable new commodity to serve as a medium of exchange — a new standard to restore the credibility of government-created bank credit.
Unfortunately, the Chinese have completely outclassed us in terms of gold ownership. So, we’ll have to start getting creative with what we put in the United States Bullion Depository at Fort Knox. Along with the 4,570 metric tonnes of gold bullion, we should consider adding goods which Americans themselves consider to be our most valuable assets: Leroy Neiman prints, the Batmobile, sports memorabilia, and the virginity of Miley Cyrus.
That would put some meat back on the dollar.