Bad Moon on the Rise

The Rise of Rove's Republic.

A constitutional order has three parts: mandate - what the government should do - and meaning - how the public views the role of its duties, rights and options in relationship to the government. These are tied together by mechanism - how the government functions. In American history, and to no small extent world history, the most important mechanism is money. Not in the sense of who gets money - but in the sense of how money works...

... the path to constitutional crisis runs through financial crisis...

The crisis then begins on the day where there is the last great compromise - in 1782 when the Articles of Confederation are created, in 1850 with the compromise of 1850, and in 1921, when the new Republican conservative administration agreed not to repeal, but would not extend, the half finished architecture of the Roosevelt-Taft-Wilson progressive-liberal era of government...

And, in 1990, when the pay go rules were put into place, as part of a series of revenue increases to pay off the ballooning budget deficit - and to bail out the bankrupt savings and loan system.

The 1780's, 1850's, 1920's and 1990's were consumed with efforts to prop up the old monetary order. But all of them failed, because none of them addressed the basic problem. Instead matters get worse, because every time a solution is converged on, a large minority that will have its interests gutted or reduced in importance has every reason not to cooperate. The reason Clinton was impeached was to prevent what needed to be done, from being done.

Then comes the moment when the bottom falls out...

Now there are many who would scoff at this idea, saying that big things don't happen. It is the strong version of the Copernican thesis - where ever you are is, by definition, unimportant. As far as I can tell there is exactly one person who has agreed with the reverse of that thesis all along, that instead we are at an important moment, and has methodically pursued the chance for the Republican Party to be the one that determines the shape of the new constitutional order.

His name is Karl Rove, perhaps you've heard of him...

Rove knows that to force the reactionary order, Bush must borrow. He must place a millstone around the necks of the next generation of government, and then make it so that to make those payments, the Republicans must be in charge. If the Democrats take the presidency by accident, the Republican Congress will merely stop doing the behind the scenes financial juggling - of budget borrowing, shuffling of money between accounts, raising the debt ceiling, passing huge unfunded mandates - that keep the economy alive. There will, in such a case, be a massive recession, and the Republicans will take power again. The government will become a massive protection racket, with the public held hostage...

Think about it, the government is borrowing more than a million dollars a minute - in order to produce hiring growth which is just keeping even with population growth. It's the Red Queen's Race. The Republicans are now building bridges to Europe, because it is Europe that will allow them to keep this up for a little while longer. And European leaders will be the biggest fools on the planet if they think that going along with Bush ends anywhere but their own ruin. The US played patsy to Europe in the 1920's - lending to fill the hole that Versailles and a foolish attempt at restoring the gold standard left. It meant the US was dragged down with Europe when the collapse finally hit.

The basis of Rove's Republic will be the massive debt, which can only be financed by back door agreements with Japan, China, Europe and Saudi Arabia. Since the money system won't actually work - merely present the illusion of working, as the real market will be what parts of America's future is being sold off this year in order to keep the money flowing from abroad...

The intent of the Republican Party is to make it so that the only ways that money enters the economy is through them. The genius of the Liberal Democracy is that money was created by land value. As people did things, at the ground level, that made houses and buildings and factories worth more - that allowed banks to lend more, and that created more money. While the Federal Reserve had the foot on the break, and the Congress the foot on the gas pedal - in a very real sense the money system of the liberal democracy was the most democratic that has ever existed, because everyone could, if they could figure out how, get some of what economists call "seinurage" - profit from creating money. As cities and towns had better communities, more people wanted to live in them. This increased housing prices, and that meant more lending, which meant more money.

But the flip side of every virtuous circle is a vicious circle. This entire system rested on manufacturing. Because, ultimately, it is manufacturing which allows exporting, or reduction of importing - and ultimately creates the "basic industry" which brings monetary base into a community to do all this magic with.

The drive is to break American manufacturing - and instead make it so that all new middle class hiring comes from either the security industry - which means only good republicans get hired, rather than the kind of people who worked the dot com boom - or the securties industry, which is dependent on the federal reserves interest rate policies, and on the retirement industry - pensions, 401ks, and, they hope, social security borrowing.

If people must be in line with the political ends of the Republicans to earn a good living, the nation will, because it must, become more like the Republicans. Those who do not want to play along must be poor, be careful, or be moving along to other nations...

The key change in the economy that has pushed the rise of the Republican party since 1969 is a change of the money system away from being based on assets - which is under the control of the people in their day to day economic, community and social activity, a truly grass roots money system in that the basic supply of money is governed by the value that people create - to one being based on oil. Oil is not something that people can create. Nor does conservation at the grass roots level help - because someone else will simply use the oil or energy you save to compete against you. Oil comes from a few places, and the money system is then under control of those places. The President became, in effect, the minister of oil.

And to keep the oil coming we had to borrow back the money we paid for the oil with. It went out, and came back. With each trip back it meant that financial sector had to eat a bit more of American life - because the dividends from the financial sector are what paid those who lent us the money. And with each round of paying more to the rich abroad, we had to lower the taxes on the rich here, so that they could stay even with the rich of other nations. It has been a vicious circle, this oil and money addiction, that has lasted for 30 years, and has now reached the every accelerating point from which there is no turning back.

And once an economic system is not about general activity, but about the control of some particularly scarce resource, it must become conservative, since economics is, on any given small time scale, zero sum...

... there are only two ways to pay off this debt. One is to sell everything in America - the national parks, government lands, the airwaves, the profits of our labor, the fruits of our agriculture, the mortgages that we pay on our houses - to foreigners so they will keep our economy lubricated with money and oil - or it will be to create new forms of industry and commerce will create more wealth and dwarf what was borrowed. The first is the Republican way - to strip the country bare to pay for present consumption. The second must become the proposal of the Democratic Party...

Read it all. It's that important.

I would only add that it's not just Karl Rove thinking this way.

There's Grover Norquist, who wants to get the part of government he can't control down to the size where he can "strangle it in a bathtub". There's old guard cons like Robert Bork who once said another Great Depression might be needed to force this nation into the proper social agenda. There's even crackpot intellectuals like our new Secretary of State, Dr. Rice, who specialized in the Great Game against Russia in her academic career.

This isn't just a conspiracy.

It's an attempt at a New World Order, which somehow looks and smells and tastes and tortures and wages war like the worst of the old feudal empires.  ¶ 10:01 PM