When Revolutions Roll Out Of Control
October 26, 2011 by John Myers
This is the autumn of our discontent. I believe something sinister is coming down the pipe. Week after week of demonstrations around the world could be a harbinger of revolt and even mass violence.
I am in the second half-century of my life. All my life, I followed the news because I was at the side of my father, a writer and publisher whose job was to predict investment trends. Not once in all these decades have I seen such troubled times, and that includes my memories of the 1960s.
I suspect a spark has been struck and we are all headed down a very destructive path, one that will not only destroy wealth through economic deflation but something worse: a period of violence wrought by tough times and widespread anger.
It will be up to historians to decide if the genesis of economic and social implosion began with the crash of 2008, the discontent that followed in Europe, or recent events — the mass protests that have been visited on major centers from Wall Street to Warsaw, Poland.
What is certain is that Western democracies are reaping what they sowed, especially in the United States. What began as a small group of protesters in Manhattan’s financial district has grown steadily. It now encompasses student groups, labor unions and, in some cases, the dregs of society.
The protesters in the United States call themselves “the 99 percent.” They say they represent the vast numbers of Americans struggling to pay their bills, while the income gap between the rich and the middle class widens. Throughout the ages, we have seen how small protests can turn into whirlwinds of violence.
Henry Ford said, “History is bunk.” I am convinced that the good and evil that have been expressed throughout the ages reside in today’s world. The worst evils are committed by “the crowd.” It is “the crowd” that rolls forward like a hand grenade with its pin set to slip out any second. It is “the crowd” that created the bloody madness that was the French Revolution.
The similarities between those events that lead to The Terror in France and what is occurring in the citadels of today’s civilization should not be ignored. Key to anticipating the future is an understanding of the past.
Like the United States that fought both the Cold War and decade-long wars in Afghanistan and Iraq, 18th century France spent decades fighting wars it could not afford. This overextended King Louis XVI’s treasury. Rather than taxing the elite of French society in an attempt to make up the imbalance, the king taxed the commoners who faced higher inflation as well as greater demands from the crown. The Bourbon Dynasty, which had persisted for 500 years, was forced to make compromises to the French people in 1789 because masses of unemployed people drifted toward urban centers where they were stirred into a frenzy.
In 1781 Louis approved a new council. A year later, the monarchy was abolished. However, that did not save the king’s head or the head of his wife, Marie Antoinette.
France had all the ingredients for revolt that we see in the United States. It had a leader who was impotent, and an economic crisis that could not be corrected. Only the wealthy elite were protected from the ravages of rising taxes and higher inflation.
One final link: The Court of King Louis XVI was hamstrung when it came to the nation’s energy needs. Coal was in short supply in France and had to be imported at great expense from other countries, many of which were seeking France’s ruination. It sounds much like America’s reliance on Arab oil today.
Wars were crucial in the demise of Bourbon France. In his book, The Rise and Fall of the Great Powers, famous historian Paul Kennedy writes:
The cost of a sixteenth-century war could be measured in millions of pounds; by the late-seventeenth century, it had risen to tens of millions of pounds; and at the close of the Napoleonic War the outgoings of the major combatants occasionally reached a hundred million pounds a year.
Kennedy adds that, “the link between national bankruptcy and revolution was all too clear.”
No sooner had I read this than I watched Republican presidential candidate Representative Ron Paul, R-Texas, on CNN. According to Paul, military expenditures have cost the United States $4 trillion over the past decade.
The Second American Revolution
I do not believe that what is going on today around Wall Street is what Thomas Jefferson had in mind when he wrote in a letter to James Madison on Jan. 30, 1787, in reference to Shay’s Rebellion: “I hold it that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical.”
I don’t think we are facing a little rebellion. All rebellions start small; but some, like the one France experienced and what we may have to endure, could be earth-shattering.
The reasons are simple: too much debt and too little economic growth. Consider the facts:
- The U.S. unemployment rate stands above 9 percent. The true unemployment rate, which takes into account people who have given up looking for work, is close to 17 percent.
- For the past decade, U.S. stock indexes have been flat. Accounting for inflation, they have actually declined. Many Americans have lost a lifetime of savings.
- The U.S. money supply has grown threefold in the past three years. If the investment banks ever stop collecting bonuses and lend this money, it will trigger double-digit inflation; an event which will make Americans even more angry.
- Since the stock indexes peaked in 2007, real income for Americans has dropped 10 percent. Despite the addition of trillions of new dollars courtesy of the Federal Reserve, many Americans are undergoing the greatest loss of wealth since the Great Depression.
The U.S. and other Western democracies stand at a precipice. It is a situation that is sending citizens to the streets in protest. Economic collapses and protests can quickly spill over with violence.
In case you think I am exaggerating the danger, consider these recent words from columnist Frank Miele of Daily Inter Lake:
The Russian Revolution (which coincidentally was another October Revolution) started out with slogans and protests, too, just like “Occupy Wall Street.” Of course, life in 1917 Petrograd was a lot harder and a lot more desperate than it is today in Philadelphia or New York — but the ruffians on the streets don’t care about that because they don’t study history. If they did, they might be more apt to follow the Russian example and overthrow Obama’s czars who have imposed absurd and unwieldy regulations on banking and business instead of trying to destroy the capitalists who actually have the capacity to create wealth — and jobs.
Action to take: I usually sign off suggesting you buy precious metals or a resource stock that looks good. This week, I urge you to consider what you will do if you and your family are beset by an emergency. In that case, Krugerrand gold or American Silver Eagle coins will not be of much use. I suggest you store lots of fresh water, canned foods, guns and ammunition. I hope I am dead wrong, but these items may be critical. In 30 years, I have never written such extreme advice. However, we may be entering the most extreme period of our lifetimes.
Yours in good times and bad,
Editor, Myers’ Energy & Gold Report