Our lifespans are long enough to enable us to see change over its duration, but usually not long enough to see its full implications. Countries rise and fall over many generations. Any one generation is likely oblivious to the major trends that are taking place during its span. It is all that we can do to stay abreast of our daily chores and responsibilities.
Like Rome before it, the United States dominated the world in terms of military strength, economic well-being, innovation, compassion, etc. Add whatever else you want to this list and, if it was positive, chances are that the US exceeded other countries. The peak of this dominance is over, yet many fail to realize it. Since the 1970s the gap between the US and the rest of the world has narrowed. It continues to do so at an increasing pace. Even for those mildly aware of this change, it is rationalized as the rest of the world catching up. Few think in terms of the US regressing.
Simply stated, the US is on the downside of its run. The plausibility of this statement is reflexively denied by the majority of its citizens. Chauvinism coupled with an abysmal ignorance of economics and history shields them from reality.
Few understand what has already happened to this country and that it will continue. Even as the decline accelerates most, like the Romans before them, have no sense of what is happening. Glacial change is always slow and nearly imperceptible.
Despite the problems of perceiving these moves, little signs are all around us. Simon Black offers this particularly bizarre and desperatel example:
Early in the 4th century, Emperor Diocletian issued an infamous decree to control spiraling wages and prices in the rapidly deteriorating Roman Empire. As part of his edict, Diocletian commanded that any merchant or customer caught violating the new price structures would be put to death.
This is an important lesson from history, and a trend that has been repeated numerous times. When nations are in terminal economic decline, governments will stop at nothing to keep the party going just a little bit longer.
I thought of Diocletian's desperation a few days ago when I read about the recent sanctions imposed on US rating agency Egan-Jones. It's a similar story– For years, major rating agencies (S&P, Moody's, and Fitch) have championed the outright fraud of our financial system by pinning pristine credit ratings on insolvent governments and their heavily inflated currencies.
In doing so, the rating agencies are effectively claiming that the greatest debtor that has ever existed in the history of the world is nearly 'risk-free'. Clearly this is a ridiculous assertion. With a debt level over 100% of GDP, the US is so broke that the government must borrow money just to pay interest on the money it's already borrowed. They've lost over a trillion dollars a year since 2008, yet they still spend money on things like drones and body scanners. It's crazy.
As with any good scam, the government must maintain public confidence. The moment someone says 'the Emperor has no clothes,' that shallow, fragile confidence will come crashing down and expose the scam.
Dissent must be vigorously and swiftly pursued. So when S&P finally downgraded the US one notch in August 2011, the SEC and Justice Department announced that S&P was under investigation, just two weeks later.
Egan-Jones, a smaller rating agency, has been even more aggressive, downgrading the US credit rating three times in 18 months. And while the federal government may not have imposed Diocletian's death penalty, they are just as willing to squash dissent. In a country that churns out thousands of pages of new regulations each week, it's easy to find a reason to go after someone.
As you read this letter, in fact, you are probably in violation of at least a dozen regulatory offenses.
In the case of Egan-Jones, the SEC brought administrative action against the agency within two weeks of their second downgrade. And a few days ago, the case was settled. I'm sure you have already guessed the ending: Egan-Jones is banned from for the next 18 months from rating US government debt. They've effectively been silenced from telling the truth.
The lesson here is obvious. Just as in Roman times, bankrupt nations today will stop at nothing to keep up the scam just a little bit longer. Given that all this is happening at a time when Congress is voting to suspend the debt ceiling entirely, these actions are the clearest sign yet of just how desperate the government has become.
Could the warning signs be any more obvious?
I have not bothered to look into the rationale or legal basis for the action against Egan-Jones. What does it matter? Such action would not have been attempted two decades ago, but "legality" is no longer a meaningful marker. Legality is now relative. It now means whatever government says it does.
The Rule of Law is violated routinely. The Constitution is meaningless in the minds of the political class, regardless of which party holds power. New precedents are now regularly set and there is nothing to prevent them from continuing.
The demand for power has no limits. The Constitution and the Rule of Law are given lip-service when it is convenient to do so. Otherwise they are routinely ignored and fantasies like "penumbras" are invented to get around them. "Legal" is whatever our government deems the moment calls for.
Power never retreats unless it is confronted by greater power. Those holding power do not willingly relinguish it, nor do they refrain from using it. Power gained is never not used. Thus, we increasingly become a nation ruled by men instead of law.
We are on Hayek's Road to Serfdom. Many agree with that statement because they understand our failing economic condition. But Hayek's wonderful, concise tome was not about economics. It should have been titled The Road to Totalitarianism except for Hayek's unwillingness to antagonize those he most wanted to convince of the dangers.
As we move down this path change begins to happen faster and become more noticeable. The proper analogy is the movement of water when a toilet is flushed. At the end of the process, the water circles the bowl noticeably faster than at the beginning. We are nearing the bottom of the bowl and more people will begin to notice.
The problem is that the damage has been done and when it is recognized it is too late to undo the process. You can't unflush a toilet.