The new slave race

We went down to Cafayate, Argentina last week, a three-hour drive, mostly over unpaved roads. There, old friends Doug Casey and John Mauldin were holding forth. The ‘deep state’, among other things, was their topic.

“The term actually comes from Turkey”, Doug explained. “People noticed that there was the government – you know, the government that they teach you about in school. And there was a deeper, more important government. It was not described in any constitution. The newspapers didn’t report on it. To most people it was largely invisible. But it was how the country was actually governed.”

In a nutshell, Doug – and many others – think a ‘deep state’ has taken hold in America.

“The War between the States was the largest and bloodiest war the US has ever had”, Doug continued. “Practically the entire country was mobilised, with a greater proportion of men in uniform than ever before or ever since. But after the war was over the soldiers went home. The army was miniscule. And things went back to normal. Same thing after WWI.

“But after WWII, things started to change. Gradually, more and more of America’s resources were going to the military on a permanent basis, even though there really wasn’t any war worth talking about.”

To look at it another way, after WWII the return on investment in the military sector fell. Why? Because there was no one worth fighting. There were no real challenges to the US, except the Soviet Union, which turned out to be a hollow threat. Then, in 1989, the Soviet Union disappeared. But US spending on ‘security’ hardly slowed down at all.

After the 1980s, the US was taken over by ‘deep state’ interests, which used ‘security’ to justify huge transfers of power and money from the public to themselves.

Bill Bonner on markets, economics & the madness of crowds

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“You know, France had a ‘deep state’ experience too”, Elizabeth volunteered on our drive home. “During the Revolution, it had secret political committees, a parallel army, and a whole apparatus for controlling people. The revolutionaries used terror, including the idea that the country was full of spies, to keep the public alarmed and afraid. It was a bit like what we see in the US with all its secret agencies and ‘code red’ alarms, and the ‘see something, say something’ campaign. They’re all designed to keep the public worried, and keep it lined up behind the state.”

It did not come up in our conversation, but there’s more to the ‘deep state’ than the military. In modern America, informal, largely-hidden power arrangements exist in all major industries – particularly health, education and finance. Every detail in these industries is closely regulated to prevent innovation and competition.

We’ve reported on the high percentage of retired generals who take up cushy jobs in the defence industry. But health researchers, ‘educators’ and Wall Street hot shots routinely pass between government, quasi-public think tanks, and private enterprises as well, trading information, favours, and pay-offs.

Witness Tim Geithner. He bailed out Wall Street. (The total cost is now estimated at $10trn, including the Fed’s assistance.) Surprise, surprise! Now, he is a partner in one of Wall Street’s private equity firms.

In all these industries, the return on investment approaches zero or is already negative. Still, the deep state insists that they receive more and more resources.

David Stockman knows this better than anyone. He was part of the official government, as Ronald Reagan’s budget director. Then, he went to Wall Street, where he, too, was a partner in a private equity firm.

He watched as the whole country was taken over by ‘deep state’ institutions financed with borrowed money and with one major goal – to look out for themselves.

Stockman calls the transformation of American society “The Great Deformation”. It’s what happens when capitalism is corrupted by the government and its ‘deep state’ apparatus.

“The deep state”, Doug elaborated, “includes dozens and dozens of agencies that we’re not supposed to know anything about. It includes a million people with CIA security clearances. At the lowest level, there are people who frisk you at airports… and at the highest levels who make millions of dollars by providing contract services to the government.”

“Americans, for the most part, submit willingly”, Doug went on. “That is the most astonishing thing. Americans have become a slave race, ready to go along with anything the deep state asks for.”

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  • Wotan

    This is all very well, Mr. Bonner. But what can you, what can the people do to change things? Any ideas? Or do we have to go with the flow until some geological or cosmic or other catastrophe sorts things out?

  • sodit

    Is this the same thing as “the establishment”, that amorphous assemblage of people of like minds, with power, who by holding similar ideas and values, manage to co-operate without collusion or conspiracy?

  • bagoverheadguy

    I’ll cut America a bit of slack with security…after all, 9/11 was a horrendous shock to all Americans, and the rest of us in democratic nations. Prior to 9/11 America had to deal with the Oklahoma City bombing..domestic terrorism…so now, everyone has to keep their eyes peeled inside and outside the nation for the next attack.
    Props to Doug for moving to Cafayate…I worked in B.A. for 6 months and fell in love with Argentina…might retire there.
    America is still and wonderful, entrepreneurial nation, but the growing disparity between the haves and have-nots is shocking…1%’ers, don’t push the envelope any farther or you’ll risk civil strife similar to ‘Middle East’ springs…

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