The Builders

The Builders by Robert Gore for Straight Line Logic

The builders will be in the driver’s seat.

Debt is any enemy of government’s perfect ally. The more a government borrows the more it’s weakened. The consequences of debt, required repayment of principal, and compounding interest are inexorable, forestalled by central bank and government machinations but never prevented. The longer they forestall the more severe the consequences. Central banks and governments have fostered the world’s greatest debt bubble and promoted negative interest rates to facilitate it. An unprecedented tsunami of debt has creditors paying borrowers to lend them money. This weird and anomalous combination, impossible in a world without central banking, portends global disaster.

The enemies of government have only to wait. When the reckoning arrives, governments will find they no longer have the means to wage war or control their populations (see “The Illusion of Control,” Part 1 and Part 2, Robert Gore, SLL ). Their demands on their nations’ productive taxpayers and their depreciation of currencies have stripped their countries of their wealth and ability to produce. Be it by creditors, revolutionaries, or invaders, or some combination of the three, these governments will be toppled and replaced by something new. It’s a story as old as human history.

A graph of global economic growth versus the much steeper graph (in both percentage and absolute terms) of global debt growth above it conveys an obvious message: something has to give. When that something gives it will lead to the greatest deflationary depression in history. The trillions in fiat debt that governments and central banks will conjure in response will be no match for the quadrillions (one quadrillion equals one thousand trillions) in debt, unfunded liabilities, contingent liabilities, securitized collateralized-debt, derivatives, and other promises—all counted as a liability or quasi-liability on one set of books and an asset or quasi-asset on another—that will unravel and implode.

Governments are meeting the ongoing economic and financial crisis—whose “official” start will probably be placed at the 2008-2009 implosion, but whose roots stretch back to at least 1971, when Nixon closed the gold window—the same way they always have: stealing incomes and wealth, keeping for themselves or giving to favored recipients, issuing debt, “encouraging” or outright forcing their central banks to buy that debt, and debasing their currencies. This bag of larcenous and fraudulent tricks produces nothing, leads to no voluntary, mutually beneficial trade, and retards savings and investment, the foundations of economic growth and progress. It is how Herbert Hoover and Franklin Roosevelt turned what should have been a garden variety recession and financial reset into the Great Depression.

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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.