The title of our previous Gold This Week analysis was A Political Crisis Waiting To Happen. If you doubt that this situation really exists, may we suggest you carefully read the following two essays:
Senate Democrats to America: 'Shut Up!' - By Gary North on Lew Rockwell
Gonzales Questions Habeas Corpus - by Robert Parry on Truthout
In the first essay, Mr North documents proposed legislation which, if passed, would make it difficult if not impossible for voters to impose their will on "recalcitrant" politicians. The title of the second essay by Mr Parry speaks for itself.
As The Privateer has analysed in several of our recent issues, the issue facing the US today is one of political legitimacy. Since the advent of modern political parties, in the eighteenth century in Britain and the very early nineteenth century in the US, the legitimacy of the government has rested on the PERCEPTION of the "voters" that they were actually being presented with a choice when they cast their ballots at an election. On a secondary but hardly less important level, legitimacy rested on the fact that those who were elected to office actually represented the demonstrated wishes of those who put them there.
Right now, the onus on preserving the perception of political legitimacy in the US does not fall upon the Republicans. Up until November of last year, they were the party in power in BOTH the Executive and the Legislative branches of the US government. The Democrats were reduced to what in Britain is called "The Loyal Opposition", a role which they utterly failed to attain. They rubber stamped every piece of legislation presented to them, and the more draconian its nature, the more eagerly they wielded the stamp.
But now, the Democrats CONTROL the legislative branch of the US government. What is more, they were put in that position by a US electorate which voted against the only coherent platform of their Republican opponents. This was, and is, the actual war being waged in Iraq and Afghanistan. But even more important, it is the legitmacy of the DOMESTIC political power arrogated by the President of the United States and his Cabinet under the cover of those wars and the all-encompassing "war" declared on September 11. 2001 - the "Global War On Terror" or as it is euphemistically named, the "GWOT".
Every draconian piece of legislation, every new boot heel ground into the face of the US Constitution, every "signing statement" - has been "justified" because the US is "at war". The Democrats went along with the lot. They could afford to, they were in the minority in Washington. They couldn't actually do anything about it. Until November 2006. But now - THEY CAN.
The question is: WILL THEY? The Democrats are in a dilemma which horrifies them. They are fully aware of the horribly precarious financial and economic state of the nation they govern. They have contributed to it in full measure, just as have their Republican "opponents", for many decades. They know that the combination of entitlement programs, vote buying pork and totally over the top military spending has bankrupted the US.
They also know that to effectively "oppose" the Bush Administration, they are going to have to stand on principle. They are going to have to re-assert the Constitutional right of the Legislative (NOT the Executive) branch of the US government to propose law and to declare war. They know that to do so would be to endanger the power of the government OVER the people, a power which they have been assiduously working to expand for more than a century. Further, as a supposedly co-equal branch of the US political AND financial establishment, the Democrats know that a failure to do these things will bring into question their political legitimacy. And that would endanger the standing and legitimacy of the establishment itself, the entity which both the Republicans and the Democrats depend on for their patronage.
The early portents don't look good. So far, the Democrats have "contented" themselves with a series of "non-binding resolutions". To take a stand on PRINCIPLE is utterly foreign to the makeup of almost any modern politician, and the Democratic party in the US is no different.
The Democrats could stop the wars tomorrow, simply by cutting off funding. They actually did that to Richard Nixon, with an addition that threatened instant impeachment procedings if he vetoed the bill. He didn't. But that was an age in which the US truly was a powerful nation. It was also in an age in which cutting off one war didn't cut off all wars - the "cold war" was still going strong in the early 1970s.
Today, the US is a nation whose government has so squandered its substance that it needs a "cash infusion" of $US 3 Billion every day from foreigners in order to function at all. It is a nation which spends more on "defense" than all the rest of the world combined. It is a nation in the death throes of empire whose only remaining claim to world power is its military might. It is a nation which cannot afford to lose a war, unlike the nation which could afford to lose in Vietnam. This is partially because the "war on terror" is the only war the US has got. It is also because the loss of the war would inevitably lead to the loss of the global financial hegemony which is the last remnant of what was once a truly powerful nation.
The Democrats know all this, fully as well as do the Republicans. If there are Democratic Congressmen or Senatars who do not, the US establishment will be very quick to inform them of the facts of political life. The Democrats can't afford to go along with the Republicans. In that direction lies the destruction of their party. They can't afford to oppose the Republicans either. In that direction lies the fracturing of the patina of global power on which the US government relies. With that would come the potential destruction of BOTH major US political parties and an ensuing chaos as the very question of political legitimacy was thrown into doubt.
This is the source of the steam in the pressure cooker. It is affecting all aspects of US life, not least US markets. After the flurries at the beginning of the year, US stock and bond markets and the global currency markets are more or less running on the spot. US bond yields have inched up but remain essentially flat. This week, the Dow rose a grand total of 9 points or less than one-tenth of one percent. The US Dollar has hit a plateau after its comeback over the first week of the year. Even the official reporting of US Treasury debt has oscillated in a minuscule $US 10 Billion range since the beginning of the year.
About the only markets which are showing increased volatility are the commodity markets - and the precious metals markets. Over the past week, the volatility has eased in the commodity markets but has, if anything, increased in the precious metals markets. Gold closing prices have been moving up and down by increments of one percent or more on a daily basis. Silver closing prices have been bouncing around by 3 percent a day.
It could not be otherwise. Gold (and to a lesser extent Silver) is the POLITICAL metal. The growth of political power in any nation is absolutely dependent on Gold being progressively stripped of its role as the MONEY of that nation. Once Gold's role as money is stripped altogether, there is nothing to stop the growth of political power - EXCEPT the onset of the collapse of perceived political legitimacy. This is the situation which now confronts Washington DC, and BOTH parties know it. Expect the "lid" to be kept on the political pressure cooker as long as possible. But the longer it is kept on, the more explosive the situation once the pressure finally blows it off.
The US political establishment could and did weather the storm of a Gold "blow off" at the end of the 1970s. They could not do so today.
The next ratcheting up of this pressure will be President Bush's State of the Union address on Tuesday, January 23.