What's That Got To Do With The Price Of Rice?

Gasoline and wheat costs are soaring, home values are falling, logical results of an M3 supply (money creation) that's growing so fast it's no longer reported and a federal deficit that keeps on bleeding like a sliced femoral artery. Total US defense costs over the past 6 years were $51,000 per household; costs of the Iraq War alone were $20,900 per househould, and could surpass that figure by 2017 according to a congressionally endorsed report (PDF). (Are the costs really calculable?) These news items are not disparate, and the effects are telling. When analyzing the US economy, which most everyone in the world has to do, it's important to look at the overall context. Therefore it's important to remember that the asylum has been conquered by its former inmates. For quite a while now. And if you are familiar with the economic philosophies of the free-market fundamentalists running this place, the outcome is no surprise. If you're not, they can be summed up like so: they're CRAZY.

For the record, I am not assailing the concept of markets, nor their dynamism; competition amongst makers and merchants fosters innovation and in turn new markets. This process is natural. The struggles to create wealth are biologically based, market economic theory and Darwinism share a conceptual root, and the competition of species and market economies appear to obey similar behavioral laws.

In fact we know from his diaries that Darwin was reading Adam Smith's treatise, The Theory of Moral Sentiments, in 1839 while making notes for The Origin of Species. What I assail is compulsive focus on one particular aspect of Smith's observations and rank ignorance or denial of the rest; and that is precisely what the orthodoxy of the New School, Dr. Friedmanstein's economic monster, does. If Adam Smith were around today, he would be on CNN talking up man's instinctual curiosity, and forcefully arguing that free markets are just a myth. A useful myth, to be sure, but myth nonetheless--of course we require wise laws else we would be engulfed by slag heaps and puddles of mephitic filth like the ones he stepped round watching factories in Glasgow.

Smith had the Scotsman's love of thrift, and he would say of our bedazzled money-theorists: "What pleases these lovers of toys? How many people ruin themselves by laying out money on trinkets of frivolous utility?" While the rest of the world's economies see US troubles as a time to batten down the hatches and raise interest rates, for the New School, it's a time for massive stimulus, for lowering interest and printing more money. Intellectual hedonists ignore a diving dollar because the best-of-all-possible-worlds "free market" will eventually even it out. I can hear them now: "Besides, if it drops low enough it'll be a bargain, by my calculations in the year 2030, when those Chinese factory workers will be out of jobs. Heh-heh-heh, that'll teach those communist fools!"

The ripple effects of human suffering, the foreclosures, personal bankruptcies, divorces, desperation, riots and murders are only known to economists as "externalities." They got places like Argentina to believe them, causing what is known as the Argentinian Currency Crisis. They're also the people who brought you the Orwellian motto, "Support Our Troops: Go Shopping." They may be wearing doctor's white coats, goatees, and be carrying clipboards, but you had best run if one of these unmedicated mountebanks draws near.

But come, let's find some sane people to talk to, like maybe a foreign investor or even a foreign central bank. People like those thrifty Japanese, who hold 12% ($586.6 billion) of U.S. government debt. They've lost 7% on their Treasuries portfolio in the past 3 months alone. So, understandably, they've stopped buying our bonds. In fact the logical thing for them to do is sell the bonds they have, and put their money elsewhere as fast as they possibly can. Dai-ichi Mutual Life Insurance Co., Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co., some of the biggest insurance companies in the world, are right now saying to themselves and each other, "How do we unload this shit?"

With a psychological, perhaps hereditary fondness for rice, Japan literally uses the price of it as an economic barometer--and it's up 5x over the past year. Japanese import 60% of their calories; they might be just a little worried. Once news gets out they're selling bonds, and they will if we attack Iran, many of us will be toast. Many governments will be toast even without that happening over the course of this summer, because of an avaracious, unstable empire, its cowed and corrupt courtiers, and general worship of false ideology. Short-term food prices are being driven up more by ideology's expressed effects, more by an enraged, ineffectual empire than a peaking population.

There's one hard but immediate way out of this mess; we get US troops out of Iraq, Afghanistan, and Africa. We do not attack Iran. Our own economic problems are the direct result of policy-makers whose wits became unmoored from basic realities all across the board, and the people gullible enough to believe their simplistic Easy Money Plans. Our very biggest problem is that a lethal Pentaconda is off killing other people so its owners, mostly Western oil companies at this point, can wear top hats and sing 'Billions from Heaven!' It's coiled around our necks, the ideology's getting tighter and tighter, and it's going to strangle us if we don't get help soon. What are the chances it will be, or can be, put back in its glass cage?

There is a chance. There is something that will loosen the snake and maybe turn it back. Those bond holdings provide enormous leverage, and the Long War is being financed entirely with debt. With the Price of Rice if you will. If I were the Japanese Minister of Finance, I would request a meeting with Warren Buffett, who used to be the richest man in the world. Because of the falling dollar, he isn't anymore. I'd inform him that if the United States military attacks Iran, we would sell every US Treasury note we own, and so would my colleagues in China, South Korea, and Taiwan; additionally, my country will not start buying US bonds again until the US begins withdrawing from Iraq. Nothing personal, Buffett-san. It's just the free market. Pass it on.