President Obama won another 4-years thanks to a convincing 303-206 electoral college tally (Florida is still not finalized). Mr. Romney was slow to concede but when he did he was gracious. The same cannot be said about billionaire Donald Trump (Twitter):
Trump: “This election is a total sham and a travesty. We are not a democracy!”
While emotion may have gotten the better of Trump, delusion also set in:
Trump: “Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. We can't let this happen. We should march on Washington and stop this travesty. Our nation is totally divided!”
In fact, Mr. Trump, leading into the election ‘the world’ heavily favored Obama. As for the notion that the U.S. is ‘totally divided!’, both parties are in agreement that the government should try to stimulate jobs growth, reign in the debt/deficit, become less dependent on foreign oil, etc. Where division does exist are in the policies to realize these visions.
Rather than delve into the land of policy options, it is important to note that the themes of ‘class warfare’ and ‘kicking cans down the road’ are being sponsored exclusively by the U.S. dollar. That is to say, without the dollar’s hegemonic and ‘Exorbitant Privilege’ (See Eichengreen), foreign central banks would have already reduced their USD holdings dramatically, the rating agencies would have already cut the U.S.’s debt rating down towards junk (S&P first cut in August 2011), and foreign investors and speculators would have already viciously attacked the U.S. debt markets. To be sure, take away the Fed’s willingness to temporarily (?) monetize government profligacy using ‘special’1 printed dollars, and there would be no political debate entrancing America right now. Why bother to debate how to stop the fiscal cliff when hyperinflation is becoming the threat and/or interest rates are skyrocketing?
But while the inability of a viable USD alternative to rise up has bought the U.S. some time, in time never ending deficits threaten to add to already dangerously high debt load. Left unchecked (or by some estimates simply in due time), this could further erode confidence in the dollar and/or ignite a financial calamity. And if currency meltdowns throughout history tell us one thing, it is that once the seeds are planted they can transpire without warning, or quicker than Donald Trump can delete a tweet.
Trump: “He [Obama] lost the popular vote by a lot and won the election. We should have a revolution in this country!”
The above post was deleted after Trump realized people in California also get to vote. Why bother admitting you were wrong when one click of the keyboard can make things right?
Chasing The River
The untold story of the election is that Bernanke, keyboard in hand, stands ready to click and create an unlimited amount of U.S. dollars. This, not to mention the fact that the Fed has started to openly debate the definition of debt monetization, should be on the minds of all politicians and pundits. Instead we get this:
Trump: “House of Representatives shouldn't give anything to Obama unless he terminates Obamacare.”
That millions of people are reading tweets from twits like Trump while blindly ignoring the fact that Medicare and Social Security outlays are forecasted to almost double for the decade ending 2022 (CBO) is absolutely scary. Scarier still is the idea that the two-party problem that has plagued the U.S. for some time can miraculously find solid common ground. With the dollar and Bernake providing the luxury of time, Republicans and Democrats could join together and actually make things even worse.
Incidentally, once upon a time Mitt Romney started to speak out against Bernanke and the Federal Reserve. Once upon time…
1. Moody’s acknowledged in August 2011 that the ‘special’ U.S. dollar allows for a different set of rules with regards to U.S. debt accumulation. To quote: “Characteristics that support the Aaa rating and that formed the basis of our decision to confirm the rating include the following…The global role of the dollar, which underpins continued demand for U.S. dollar assets, including U.S. Treasury obligations. This feature, unique to the U.S., provides unmatched access to financing, meaning that the U.S. government can support higher debt levels than other governments.”