An entrepreneurial force was unleashed with the re-election of Ronald Reagan. The economy soared as Reagan began a massive military buildup and slashed individual and corporate income taxes. The stock market skyrocketed as leveraged buyouts and hostile takeovers dominated the business world. Reagan's mantra of smaller government was good PR, but it never happened. He cut taxes, but never cut spending. Deficits became acceptable. The National Debt at the beginning of Reagan's Presidency was $900 billion. Today it stands at $11.9 Trillion. The military buildup proved phenomenally successful as the Soviet Union collapsed under the weight of its war in Afghanistan and attempt to keep up with the U.S. military buildup. A "greed is good" attitude permeated Wall Street and spurred Boomers to seek riches at any cost. Fraud was rampant in business across the lands. Bankers led the charge. The S&L crisis led to the failure of over 1,000 banks. Citibank and Chrysler needed to be bailed out by the government for the 1st time. The last hurrah of good feelings occurred when General Schwarzkopf and his U.S. forces pulverized Sadaam Hussein's invading army in Kuwait in 1991 losing 379 men versus 35,000 dead Iraqis.
The 1990s deteriorated into a series of culture wars as Pat Robertson's Moral Majority and Jesse Jackson's Rainbow Coalition staked out their positions. The dissatisfaction with the status quo was made clear when populist Ross Perot was able to garner 18.9% of the national vote in 1992, leading to the election of Bill Clinton. Pessimism and gridlock marked the 1990's. With a Republican Congress and a Democratic President, virtually no major legislation was passes between 1994 and 2000. This restricted government spending while tax revenue soared in the late 1990s with the dot.com stock bubble. The result was budget surpluses. Individual self interest dominated personal life, and intractable national problems like Social Security and Medicare didn't demand immediate action, so they were pushed off to the distant future. The public became disillusioned as the two parties degenerated into name calling, accusations and shrill rhetoric. Incivility in public discourse, a widening chasm between the haves and have nots, all-encompassing distrust of financial and governmental institutions and leaders, and a debased media and public culture led to a national pessimism.
George W. Bush assumed the Presidency in a Supreme Court contested election in 2000. His mandate was smaller government and a no nation building foreign policy. When he took office, the U.S. had a budget surplus, was involved in no wars, and had a National Debt of $5.7 trillion. Today, the country has budget deficits approaching $2 trillion, is still involved in two wars of choice that have cost $900 billion to wage, and the National Debt stands at $11.9 trillion.
Source: Treasury Dept.
In the last nine years the politicians running the United States have managed to increase our National Debt by $6.2 trillion dollars, when it took 211 years to accumulate $5.7 trillion of debt. This may explain why Congress' approval rating is 21%, an all-time low. The 9/11 terrorist attack marked the beginning of the end of the Unraveling period. It set in motion the over-reactions that would insure a future Crisis of epic proportions. The combination of easy money from the Fed, complete lack of enforcement of existing rules and regulations on the financial industry, reckless and fraudulent lending by the financial industry, waging of two wars of choice in the Middle East, the President urging citizens to borrow, spend and buy houses, multiple tax rebates, the addition of trillions in unfunded Medicare liabilities, trillion dollar bank bailouts, trillion dollar stimulus programs, national healthcare, and complete lack of energy strategy have created a perfect storm that has only just begun. The country grows more pessimistic by the day as intractable problems that have been ignored or shunned for decades now must be addressed. Strauss and Howe describe the mood:
"Cynical alienation has hardened into a brooding pessimism. During a High, obliging individuals serve a purposeful society, and even bad people get harnessed to socially constructive tasks; during an Unraveling, an obliging society serves purposeful individuals, and even good people find it hard to connect with their community. The approaching specter of public disaster ultimately elicits a mix of paralysis and apathy that would have been unthinkable half a saeculum earlier. People can now feel, but collectively can no longer do. Think-tank luminaries have exulted over the history-bending changes of the Information Age, while the public has glazed at expertise, cynically disregarded the good news, and dwelled on the negative."
The rock band Green Day captures the angst of the Unraveling era. We have been waging a war and losing the fight.
Sing us a song of the century
That's louder than bombs
And eternity
The era of static and contraband
That's leading us to the promised land
Tell us a story that's by candlelight
Waging a war and losing the fight
They're playing the song of the century
Of panic and promise and prosperity
Tell me a story into that goodnight
Sing us a song for me
Green Day -- Song of the Century
Millennial Crisis -- The Fourth Turning Has Arrived
"A Crisis arises in response to sudden threats that previously would have been ignored or deferred, but which are now perceived as dire. Great worldly perils boil off the clutter and complexity of life, leaving behind one simple imperative: The society must prevail. This requires a solid public consensus, aggressive institutions, and personal sacrifice."
Strauss & Howe -- The Fourth Turning
The current Crisis era began with the housing bubble that peaked in 2005 and the subsequent collapse of the financial system in 2008. The government response to a Crisis caused by thirty years of debt accumulation by consumers has been to spectacularly increase the amount of debt in the financial system. Since consumers won't spend and banks won't lend, the Federal Government and the Federal Reserve have decided to spend our grandchildren's money today to prop up a corrupt evil empire. As White House lackeys and Federal Reserve shysters parade on TV day after day assuring the American public that the crisis is over and crowing that their wisdom prevented a 2nd Great Depression, the truth is they have planted the seeds of a far worse Crisis. The government actions taken so far, along with legislation chugging along in Congress will add $13 trillion to the National Debt by 2019. That would put the National Debt at $25 trillion in 2019. If interest rates are 5% in 2019, the interest on the debt would be $1.25 trillion per year. Realistically, interest rates would likely by 10% or higher in 2019. At that rate, the interest bill would be $2.5 trillion per year. The United States generated $2.1 trillion of total revenue in 2009.
