The Case for Medium-Term US Pessimism

Dr. Robert P. Murphy
March 22, 2024
Economics, United States, Social Commentary, US Dollar
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Readers of this series know that I have been quite bearish on the short and medium-term prospects for the US economy. Although in this forum I haven’t discussed it as much, my concerns aren’t merely economic; I also think American society itself is breaking down, which is not surprising when a global empire slowly implodes from its own poor decisions. 

In this context, I was shocked to see Nick Gillespie—an editor-at-large for Reason, which is one of the largest libertarian media producers—recently posted a clip on Twitter (or X if you must) arguing in a talk: “This is a great time to be alive. You have more individual freedom, you have more cultural freedom...Enough with the misguided pessimism, especially among libertarians. We have the means, motive, and opportunity to build the worlds we want to inhabit.”

I posted my reaction, saying that I was surprised at Nick’s statements since my cousin and I, during our recent Bible study session, had merely disagreed on how much time Americans had left before “full police state USSA.” On a hunch, I checked and discovered that Nick was, what he called, an “apatheist,” meaning he didn’t really care whether or not there was a God. Nick in turn then responded to me, making a brief case for optimism for those concerned about civil and economic liberties. (If you go to this link, you can move backwards through the chain and see the whole discussion.)

I invited Nick onto the Austro-libertarian podcast I host (Human Action), and we are working out the date. In the meantime, I thought I would use this platform to spell out my case for short- to medium-term pessimism for those Americans committed to personal liberty.

The Economics

Because of the Federal Reserve’s policies—and as crystallized in our very inverted yield curve—I have warned that a sharp recession is in our near future. Moreover, I was recently in a debate on ZeroHedge arguing that the US dollar would forfeit its world reserve currency status sooner than most analysts think.

As I have documented on these pages, the US government’s fiscal position grows increasingly untenable. According to the latest CBO report, going forward the annual federal deficit will never fall below $1.6 trillion. Here is the chart of the overall federal debt, relative to the size of the US economy:

Before the end of this decade, we will surpass the all-time high that occurred at the end of World War 2. And unlike then, our current fiscal mess isn’t due to a one-off crisis. Although the debt zoomed up after the financial crisis and then Covid, it continues to soar because of entitlements (the aging of the population) and rising interest payments.

Already this year, the federal government is spending more on interest on the existing debt, than it is on the military budget ($870 billion versus $850 billion).

Don’t get me wrong, there are reasons for optimism, especially the longer our time horizon and the broader our geographical boundaries. On these pages, I have also stressed the immense economic benefits that will flow from ChatGPT and other large language models. And here at infineo, we are at the forefront of building new infrastructure and tools for the future of finance, which will not only make Earthlings richer but also provide them more personal freedoms.

However, I still think Americans in particular are in for a nasty financial storm in the coming decade and should plan accordingly.

Big Brother Is Watching You

Now I hope infineo readers will forgive me for leaving the strictly economic and moving into the political and social dimensions of our situation. Regardless of how you feel about Donald Trump, it is blindingly obvious that the Deep State—and by the way, we are now allowed to use that term in polite company, because the New York Times has admitted that not only is it real, but it turns out it’s “actually kind of awesome”—launched a systematic campaign to undermine the administration of a duly-elected US president. I won’t delve into the details here, but I assure you, we don’t need to rely on Alex Jones or even Tucker Carlson to make this case. For example, on my personal podcast, I walked through the findings of the US Inspector General’s December 2019 report to show how much the FBI systematically misled and even lied to the FISA court to get warrants to spy on the Trump campaign—even though the major media took that report to run victory laps, claiming Trump’s complaints had been proven to be “conspiracy theories.”

Now that he is the front-runner in the polls, Trump again faces unprecedented systemic roadblocks. To take just one example that is of particular relevance for a financial audience: The $355 million judgment in Trump’s New York civil fraud case is ludicrous. As even disinterested legal experts (who are no MAGA-hat-toting NASCAR fans) agree, the anti-fraud statute used by the NY Attorney General in the case was designed to protect actual victims of slick businesses where the naïve customers didn’t understand what was going on. In contrast, witnesses from Deutsche Bank itself testified in the trial that it performed its own due diligence on the Trump team’s statements of their property values (serving as collateral for loans), and “[i]n one instance, the bank adjusted Trump’s net worth down to $2.6 billion from the $4.9 billion he reported, Williams said, adding that such a revision was ‘not unusual or atypical.’”

Stepping back, another watershed moment in the sad chronicling of dwindling US liberty was a 2012 New York Times front-page article declaring that the US president (Obama) had a “secret kill list,” which included American citizens, who would be eligible to be killed by flying killer robots. The Obama lawyers argued that it was OK to blow up US civilians without a trial because Administration officials discussed each person’s case internally before giving the green light to release the drones.

Another indication of how intense the surveillance state has become, and how it operates with impunity (and here I’m reproducing my discussion from page 25 in this pamphlet): In March 2013 the National Intelligence Director, James Clapper, appeared before the U.S. Select Committee on Intelligence. Senator Ron Wyden (D-OR) first explained that a statement the year before by the NSA director had been ambiguous, and so he wanted a simple yes or no answer to this question: “Does the NSA collect any type of data at all on millions, or hundreds of millions of Americans?” Clapper replied, “No, sir.” Wyden followed with, “It does not?” Clapper elaborated, “Not wittingly. There are cases where they could inadvertently, perhaps, collect, but not wittingly.”

And yet, as the Edward Snowden leaks would demonstrate later that year, Clapper was lying when he gave this knowingly false answer; the NSA was collecting information on millions of Americans, and as the Director of National Intelligence, Clapper knew it. Yet rather than being prosecuted for perjury, Clapper would still be placed on a federal panel to review surveillance programs, and years later would still be trotted out on CNN panels to comment on the news of the day, especially if he mocked Donald Trump while doing so.

Of course, when it comes to Big Brother, the elephant in the room is the Covid lockdowns. (I know that Nick agrees with me on this score, as he made clear in his follow-up tweet responding to me.) We had governors telling their citizens whether they were allowed to go to church, visit their dying parents in the hospital, or even have people to their houses for dinner. However, I didn’t want to lead with, or even highlight, the Covid era because the reader might dismiss it as a blip of temporary national insanity, due to an understandable but temporary fear of a new virus. As I hope my other examples above demonstrate, even without Covid, the police state is upon us.

The Kids Are Not All Right

I know that Nick is much more bohemian in his personal views than I am, and I want to be clear that of course, I do not favor agents of the State—or individual hotheads for that matter—using violence against people who are living alternative lifestyles, so long as they aren’t directly harming anybody else.

Having said that, the current state of US society would be unintelligible to 95% of Americans back in the year 1990. We are literally having national debates over boys being able to declare that they are girls and competing in physical contact sports. Things that were literally South Park jokes not that long ago have become our reality.

Moreover, race relations in the United States are the worst I’ve ever seen in my lifetime. Obviously the Left and Right will blame each other for why this is, but I’m just stating the obvious. We literally now have two national anthems before major sporting events. It’s hard for me to see why Nick is so optimistic about the growing tolerance that liberalism has ostensibly wrought. Fueled of course by the Hamas attack of October 7, online we see an open celebration of Hitler on the one hand, and the denunciation of people who don’t want to fund Israel’s Gaza campaign as “antisemitic filth” on the other.

Finally, if things are so awesome as Nick claims, why do we read the following in Wikipedia?

From 2000 to 2020, more than 800,000 people died by suicide in the United States, with males representing 78.7% of all suicides that happened between 2000 and 2020. In 2022, a record high 49,500 people died by suicide, while the suicide rate in 2022 reached its highest level since 1941 at 14.3 per 100,000 persons. Surging death rates from suicide, drug overdoses and alcoholism, what researchers refer to as "deaths of despair", are largely responsible for a consecutive three year decline of life expectancy in the U.S. This constitutes the first three-year drop in life expectancy in the U.S. since the years 1915–1918. 

NOTE: This article was released 24 hours earlier on the Infinite Banking (IB) 3.0 - The Future of Finance Group

Dr. Robert P. Murphy is the Chief Economist at infineo, bridging together Whole Life insurance policies and digital blockchain-based issuance.

Twitter: @infineogroup, @BobMurphyEcon

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