The War Racket

We went down to the town of Cafayate last week from the family ranch: a three-hour drive, mostly over unpaved roads. There, old friends Doug Casey and John Mauldin were holding forth. The “deep state,” among other things, was their topic.


“The term comes from Turkey,” Doug explained. “People noticed that there was the government – you know the government that they teach you about in school. And there was a deeper, more important and more powerful government. It was not described in any constitution. The newspapers didn’t report on it. To most people it was largely invisible. But it was how the country was really governed.”


In a nutshell, Doug – along with many others – believes a “deep state” has taken over the US.

“The War Between the States was the largest and bloodiest war the US has ever had,” Doug continued. “Practically the entire country was mobilized, with a greater proportion of men in uniform than ever before or ever since. But after the war was over the soldiers went home. The army was minuscule. And things went back to normal. Same thing after World War I.


“But after World War II things started to change. Gradually, more and more of America’s resources were going to the military on a permanent basis, even though there really wasn’t any war worth talking about.”


The Deep State Takes Over

To look at it another way, after World War II the return on investment in the military sector fell. Why?

Because there was no one worth fighting. There were no real challenges to the US… except the Soviet Union, which turned out to be a hollow threat. Then in 1989, the Soviet Union disappeared. But US spending on “security” hardly slowed down at all.

After the 1980s, the US was taken over by “deep state” interests, which used “security” to justify huge transfers of power and money from the public to themselves.

“You know, France had a deep state experience too,” Elizabeth volunteered on our drive home. “During the Revolution, it had secret political committees, a parallel army and a whole apparatus for controlling people. The revolutionaries used terror … including the idea that the country was full of spies … to keep the public alarmed and afraid. It was a bit like what we see in the US with all its secret agencies and Code Red alarms … and the ‘see something, say something’ campaign. They’re all designed to keep the public worried … and keep it lined up behind the state.”

It did not come up in our conversation in Cafayate, but there’s more to the deep state than the military. Informal, largely hidden power arrangements exist in all major industries – particularly health, education and finance. Every detail in these industries is closely regulated to prevent innovation and competition.

We’ve reported on the high percentage of retired generals who take up cushy jobs in the defense industry. But health-care researchers, “educators” and Wall Street’s hot shots routinely pass between government, think tanks and private enterprises… trading information, favors and pay-offs. Witness Tim Geithner. He bailed out Wall Street. (The total cost is now estimated at $10 trillion, including the Fed’s assistance.) Surprise, surprise! Now, he is a partner in one of Wall Street’s private equity firms.

In all these industries, the return on investment approaches zero… or is already negative. Still, the deep state insists that more and more resources go to them.


The Great Deformation

David Stockman knows this better than anyone. He was part of the federal apparatus, as President Reagan’s budget director. Then he went to Wall Street… where he, too, was a partner in a private equity firm. He watched as the country was taken over by deep-state institutions… financed with borrowed money and with one major goal: to look out for themselves.

Stockman calls the transformation of US society the “Great Deformation.” It’s what happens when capitalism is corrupted by the government… and is perverted by deep-state institutions.

“The deep state,” Doug elaborated, “includes dozens and dozens of agencies that we’re not supposed to know anything about. It includes a million people with CIA security clearances. There are people at the lowest level who frisk you at airports… and at the highest levels who make millions of dollars by providing contract services to the government.”

Armed with intimate details about everyone’s personal life, the deep state protects itself. What politician will challenge the NSA budget, knowing that the agency could wreck his career? Who is above reproach? And who is so saintly that a devil couldn’t touch him?

“Americans, for the most part, submit willingly,” Doug went on. “That is the most astonishing thing. Americans have become a slave race, ready to go along with anything the deep state asks for.”


The above article is from Diary of a Rogue Economist originally written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.




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5 Responses to “Americans Have Become a “Slave Race””

  • DougM:

    There are parallels in Gibbon’s ‘Decline and Fall’ — he doesn’t use the term “deep state” but he well notes the simulacra of freedom that the autocracy adopted and fostered. Of course it is from the Roman era that we get the choice phrase “bread and circuses” — indeed, though if we were all cats we wouldn’t be so slavishly enamored. Dogs are the better example: loyal, easily trained. Dogs have owners; cats have staff.

    • snowiegeorgie:

      Of course you are right about cats and dogs ! Good counterpoint.

      I was thinking after my post, that (in my example) the ones that provide the food for my cats, are not currently enslaved, as they sell to me voluntarily, and I buy from them voluntarily. Almost capitalism.

      In the real world (back here in the USA) the 47% Mitt Romney identified as being “on the take” have in some very real sense enslaved those who provide for them. The Productive half of our society. The producers, as it were.

      Right now the Producers have no choice but to support those who are “on the take”.

      “I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for mine.” ― Ayn Rand, Atlas Shrugged

      When Atlas finally shrugs, what then ?

      • DougM:

        Yes, those who can produce are taxed for those who can’t, which isn’t charity, as charity is voluntary. Besides, taxation is the enforcement of a currency monopoly among other redistributive schemes. As noted by B. Ruml, taxes for revenue are obsolete (American Affairs, Jan. 1946).

  • Calculus:

    Recently read about how the deep state will hang Wall Street out to dry if/when there’s another tank in the markets due to wall street speculation. The wall streeters will again want to be bailed out but the population will be outraged.

    The deep state will therefore have to chose, wall street and serious riots or dump wall street and the people are somewhat placated. They will no doubt choose the latter which means if you’re a top dog on Wall Street and have made a fortune, time to pack your bags.

    However, wall street will still have a big ace up its sleeve inthat they’re the ones whose job it is to sell the government debt and without debt the government AND the deep state can’t survive.

    Whatever the case things will get very interesting when the markets tank again, and they always do…

  • snowiegeorgie:

    Come on. Too easy. I feed my cats. They get free medical care, and enough entertainment to keep them happy.

    They never leave the house. I constrain their movements, and limit their scope of action. One of them is sitting next to me as I type this post, purring up a hurricane, and content as a creature can be.

    As I said, he is fed, dry, warm, medically cared for, and well entertained. And has no freedom of action beyond the constraints I have set for him. Such a happy cat !

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