Collapse-O-Nomics Revisited

When policy-makers went dumpster-diving in 2008 to rescue globalization from the dustbin of history, they were not saving us all from depression, they were saving the Bush Tax Cut for the ultra-wealthy (now locked in by Obama), they were saving the doubled post-9/11 military budget, they were saving two ongoing military blunders, and they were saving McMansions and shopping sprees. In other words they were "saving" the inherently unustainable from its own inevitable collapse. It was all premised under the profoundly specious Krugman Assumption. In doing so, they didn't save us from depression, instead they guaranteed a depression...

No One Questions Ponzi Schemes

While they are underway, no one questions Ponzi schemes - those who are benefiting certainly don't question, nor even do those who are paying into the scheme, expecting some totally impossible future payout. Just yesterday, JP Morgan had to pay $1.7 billion in a settlement regarding the Bernie Madoff Ponzi scheme. Madoff ran the world's largest private Ponzi scheme without any comparison. We still don't know what exactly the settlement was for, other than to assume that it was to prevent a larger lawsuit i.e. JPM never admitted any wrong-doing. They never admitted having knowledge that Madoff was fraudulent despite the fact that there were multiple warning signs. Madoff had been carrying on fraudulently for decades yet none of his investor "victims" ever suspected anything suspicious even though he was systematically beating the market and every other investment fund, like an ATM machine. No one questioned anything. 

Don't Question Walmart or Old Navy

People don't question Ponzi Schemes because they ALWAYS pay out abnormally high returns which people just assume is some sort of secret mother lode. Right now, for example, why is it that almost everything is made in China and yet few if anyone questions why the Chinese still have a minimum wage that is 10% of the U.S. minimum wage (80 cents)? It's because people don't want to know why China's wages have never risen to match developed world wages despite the fact that they do everything we used to do. People don't want to question something that they see as being inherently beneficial to them. They don't want to admit that globalization is merely a ponzi scheme that benefits the early entrants at the expense of the latecomers and therefore will inevitably implode due to ever-growing financial imbalances. And even though "for some unknown reason" Third World wages are not rising to meet our wages - to perform the exact same work - we must never contemplate that our wages could one day collapse to meet theirs. The fundamental delusion of our time, must never be questioned.

Same thing for Social Security. Back during the Republican primaries in 2011, when Rick Perry suggested that Social Security was a Ponzi Scheme, he was widely chastised across the media, such as this article in Mother Jones. Of course that article in no way addresses whether or not Social Security is financially solvent in the long run given the ageing demographics, youth unemployment of 15%, and the fact that the system is already contributing to the U.S deficit. The article merely says that everyone knows that the system is long- run insolvent and therefore it can't be a Ponzi Scheme because everyone knows that it is in fact a Ponzi scheme i.e. it's not fraudulent. Point #1 in the left hand Venn diagram literally states that Social Security is run by the government which can print money. Therefore it can't be a Ponzi Scheme. 

Holy fuck. We are doomed.

P.S. Don't get me wrong, I am all for a strong Social Security (and Medicare) - especially relative to wars, shopping sprees, tax cuts for RomneyBots etc. but the fact remains that there is no money in those "accounts". There are only intra-generational counter-parties who happen to be living in the basement and playing xBox, as I write...