The Kids Are Not Alright

The Kids Are Not Alright by Robert Gore – Straight Line Logic

Debt initially dazzles and deceives, then it disappoints, disillusions, devastates, and destroys.

The thing governments do best is borrow. Performance varies across the range of their purported functions—warfare, maintenance of public order, provision of goods and services, redistribution, regulation—but they all go into debt. The structure of governments and their underlying philosophies also vary, but there’s one commonality. They are set up to optimize their own borrowing. Thus, central banks are essential.

There is a cottage industry devoted to the minutia of central bank personnel, policies, and pronouncements and what they mean for humanity’s future. Actually, cottage industry is not a correct characterization. No cottage industry could generate the kind of money paid to central banking’s acolytes.

After months of speculation, President Trump named Jerome Powell as the next Chair of the Board of Governors of the Federal Reserve System. If you know why the Fed exists and how it operates, the speculation was so much dross. The Federal Reserve exists to “facilitate” the US government’s issuance of debt. Mr. Powell will do what Janet Yellen, Benjamin Bernanke, Alan Greenspan, Paul Volker, G. William Miller, Arthur Burns, and every chairperson has done on back to the first one, Charles Hamlin: make it easier for the government to borrow. All of the other candidates would have done the same.

Central banks, their fiat debt, and ostensibly private banking systems that either control or are controlled by governments (take your pick) have facilitated unprecedented global governmental indebtedness. Suppressed interest rates and pyramiding debt via fractional reserve banking, securitization, and derivatives have led to record private indebtedness as well. The totals so dwarf the world’s productive capacities as measured, albeit imperfectly, by gross domestic product figures that the comparison yields an inescapable conclusion: most of this debt cannot be repaid.

A debt instrument is a promise to pay interest over the life a loan and return principle at a date certain in the future. If a private debtor dies before that date certain, his creditor can look to his estate for satisfaction of its claim, which has precedence over the claims of heirs. However, the creditor cannot go after the assets of those heirs. A government that borrows, on the other hand, is pledging repayment from the income streams and assets of future generations, binding parties that may not even exist at the time the debt is incurred. Specious as it is for governments to bind present taxpayers to debt repayment with only their “implied” consent, it is odious in the extreme for them to bind future generations incapable of any kind of consent.

Continue Reading / Straight Line Logic>>>

Sharing is caring!

Author Image

Robert Gore

Robert Gore was born in 1958 in Livermore, California. He grew up in Los Alamos, New Mexico, where both his parents worked for the Los Alamos National Laboratory. His undergraduate education was at UCLA. He graduated in 1980 summa cum laude and Phi Beta Kappa with a double major in economics and political science. He completed the JD/MBA program at UC Berkeley in 1984. He held part-time jobs throughout undergraduate and graduate school. He passed the bar exam and is an inactive member of the California Bar Association. Mr. Gore’s career in finance began in 1984 with a bank in San Francisco, trading municipal bonds. In 1985, he went to a Wall Street firm’s west coast municipal bond office in Los Angeles as a bond trader. He developed its block and institutional sales capabilities and after four years was promoted to manager of the region.