#EconomicCrisis #CreditCrisis #Recession #HistoryLessons #SpanishArmada #CreditCardDebt #FiscalResponsibility #WealthIllusion
In a thought-provoking piece authored by Charles Hugh Smith on his blog OfTwoMinds and shared via Zerohedge, a contrarian view is explored regarding the downsides of excessive wealth and credit. Smith argues that an influx of money and credit, far from being beneficial, can lead to catastrophic outcomes both for individuals and nations. Drawing upon historical examples, the author illustrates how the abundance of resources has led to reckless decisions, wars, and ultimately to the downfall of powerful empires.
At the core of Smith’s argument is the notion that scarcity of money fosters innovation, discipline, and accountability. He contrasts this with the perils of excess, where the availability of easy money encourages procrastination, the avoidance of tough decisions, and a plethora of societal sins, including greed, pride, and envy. Smith points out how the saga of the Spanish Armada serves as a cautionary tale. He explains how Spain’s vast wealth acquired from its colonies led to overambitious military campaigns and unwise imperial projects, exacerbated by the illusion of limitless resources.
Smith extends this critique to the modern context, highlighting how the U.S.’s seemingly endless access to credit has fueled wars of choice abroad and speculative bubbles at home. He implicates both the public and private sectors in this critique, pointing to the U.S. government’s unsustainable borrowing practices and Silicon Valley’s grandiose ventures like Facebook/Meta’s failed investments in virtual reality as evidence of the destructive nature of financial excess. The piece closes on a sobering note, suggesting that a severe recession might be the necessary bitter medicine to curb the addiction to debt and force a return to fiscal responsibility and real problem-solving. Smith argues that confronting the harsh reality of financial limitations could lead America to abandon its reliance on narrative control and credit-fueled expansion, towards a more sustainable and accountable future.
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