THE UNITED STATES
has been printing paper Dollars, backed by nothing but paper and ink, for more than 40 years, writes Eric Fry for the Daily Reckoning.
That's a bad habit. And yet, the greenback is still with us and it is still the reserve currency. So it looks like this particular bad habit has produced no harm. And that is absolutely true, provided you don't mind paying $4.33 for the same Big Mac that cost 50 cents in 1971.
That's right, the price of a Big Mac has soared 866% since the year President Nixon severed the Dollar's convertibility into gold
. I ate a Big Mac yesterday and it was very good, but not 866% better than the Big Mac I used to eat after my Little League games in 1971.
"We live in a technological golden age," asserts Jim Grant, editor of Grant's Interest Rate Observer, "but in a monetary and fiscal Dark Age...Science and technology may hurtle forward, but money and banking race backward."
The proof of Grant's assertion: A 1971-vintage Dollar has lost an astonishing 88.5% of its value. That's a bad habit. Revoking Constitutional rights
is also a bad habit. So is fanning class warfare
. So is militarizing local police departments
. So is expanding the role of government in the private sector. So is manipulating interest rates in the name of "monetary policy."
Incredibly, all of these bad habits are unfolding at the same time. Right now. Right before our eyes. And yet, our national "lung function" feels entirely normal. So does our eyesight and our hearing and every other vital sign. We feel completely healthy...even as we are becoming terminally ill.
But these bad habits — these incremental changes for the worse — produce their bad consequences so slowly that almost no one will notice them...until it is too late to prevent them. No one knows, of course, the exact date that "too late" might arrive. But according to the research of Peter Turchin, the US is drawing near to an ominous timeframe.
Specifically, Turchin says the United States is approaching a period of violent upheaval. He bases his prediction on a field of study called, "cliodynamics," which identifies significant behavioral patterns in a nation's history. US behavior, according to Turchin, operates on a 50-year pattern.
Turchin did not pull the 50-year number out of the air. He compiled copious historical data about major violent incidents in US history between 1780 and 2010 and concluded that a cycle of violence repeats itself every 50 years in America.
"Circa 1870, the North fought the South in the Civil War," livescience.com explains. "Half a century later, around 1920, worker unrest, racial tensions and anti-Communist sentiment caused another nationwide upsurge of violence. Then, 50 years later, the Vietnam War and Civil Rights Movement triggered a third peak in violent political, social and racial conflict.
"Why 50-year cycles?" livescience.com asks. "After a period of sustained violence, [Turchin explains], citizens begin to 'yearn for the return of stability and an end to fighting.'...The prevailing social mood swings toward stifling the violence at all costs, and those who directly experienced the civil violence maintain the peace for about a human generation — 20 or 30 years. But the stability doesn't last. Eventually, 'the conflict-scarred generation dies off or retires, and a new cohort arises.'...As a result, periods of intense conflict tend to recur with a period of roughly two generations (40-60 years)."
"My model suggests," says Turchin, "that the next [peak in violence] will be worse than the one in 1970 because demographic variables such as wages, standards of living and a number of measures of intra-elite confrontation are all much worse this time...After the last eight years or so, notice how the discourse in our political class has become fragmented. It's really unprecedented for the last 100 years. So basically by all measures, there are social pressures for instability that are much worse than 50 years ago."
But there's a silver lining to all this: After the next worse-then-ever peak in civil upheaval, we are supposed to get a 50-year break until the next one.