We first came to London a half-century ago. Back then, the city was tired and drab.
We stayed in a hotel, where we had to put coins in a heater to get any warmth and use the bathroom down the hall.
Now, London is a different city, full of young people, energy, and money.
Streams of people flood across Blackfriars Bridge in the morning — heading for one of the many daring new office buildings. As TS Eliot put it, we did not think death had undone so many.
Then, in the evening, the tide reverses; people return to the train stations…or wash up in one of the thousands of chic restaurants or trendy bars throughout the city.
‘There is nothing like this in any other city in the Western world,’ said a friend. ‘Paris is a museum. New York and San Francisco are tired and pale by comparison. This place is so dynamic.
‘There are so many new buildings…so many people coming in from all over the world…and so much money pouring in, too.’
Where the money comes from is the dot we’re looking at today.
But before we get to that, we pass along a provocative suggestion from a dear reader:
‘Bill, you’re right about how capitalism is supposed to work. But you don’t work that way. You don’t give your customers what they want. You give them what you think they should have. As many of my fellow readers have pointed out, you’d make a lot more money if you got on the Donald Trump bandwagon and stopped annoying us by criticising him.’
We’re going to think about that overnight…
Hellish economic catastrophe
In the meantime…whence cometh London’s amazing wealth? And who cares?
Approaching the issue from the other end…let’s look at a place that has made itself desperately poor.
The New York Times is on the case:
‘Zimbabwe’s collapse under Robert Mugabe. The fall of the Soviet Union. Cuba’s disastrous unravelling in the 1990s.
‘The crumbling of Venezuela’s economy has now outpaced them all.
‘Venezuela’s fall is the single largest economic collapse outside of war in at least 45 years, economists say.’
In the last five years, Venezuela’s GDP has fallen by nearly two-thirds. Inflation is running over 10,000,000%.
And today’s Financial Times tells us that ‘Venezuelans queue up for petrol, despite sitting on huge oil reserves.’ Motorists are waiting in line for up to 20 hours to fill their tanks.
Venezuelans are living…or dying…through the most hellish economic catastrophe of the 21st century.
But the century has 81 more years to go. Our guess is that there are bigger disasters ahead.
Succumbed to cronyism
There is nothing particularly novel about the Venezuelan debacle. It’s the kind of thing you can get when you mix bad politics with bad money.
Venezuela, we remind readers, was recently the richest country in Latin America, with vast reserves of the world’s No.1 resource — energy.
So, what went wrong?
There are many plots and subplots in the story. The Chavistas nationalised key industries, replacing capitalists and capable engineers with party loyalists and cronies. Output declined.
But the country had oil revenues. Then, oil production declined. From 3.5 million barrels per day in 2000, output fell below one million barrels per day. The oil industry — nationalised since 1976 — succumbed to cronyism, too.
All of this alone would have been bad enough. But then, there was the money. Or rather, the fake money. The same kind of money that Americans borrow…and that American tourists spend in London.
As far as we know, no disaster of this sort has ever occurred without fake money being involved.
You can have wars without fake money, though the two often go together.
You can have inflation without fake money, but it is rare and much less destructive.
You can have a depression, too. Even in the case of a depression, it usually ends quickly…unless the feds step in and block the correction, as they did in the 1930s.
You can have bad food, bad public policies, bad breath, and even bad weather.
But if you want a real financial catastrophe — France 1790-1797, Weimar Germany, Argentina, Brazil, Zimbabwe — you need fake money.
Teenage boys should never be given a fifth of whisky and the keys to the family car. Adults should never be authorised to counterfeit money.
Inevitably, in both cases, it goes to their heads.
Not only has fake money been an essential part of every financial disaster, it always leads to some sort of societal disaster, too.
Which is why we suspect a bigger disaster is coming later in the century…and why we suspect it will be centred in the Fake Money Capital of the World — the USA.
Fake money is as old as the hills. But it usually only takes a few years before the fakeness of it is exposed…the financial system blows up…and real money is brought back.
But what makes fake money bad? And why, if it’s such a bad thing, does nobody notice but us?
Not the Trumpistas, not the Sanderistas, not the Bidenistas — nobody.
And why do we annoy our readers — who might prefer to hear that the Chinese are stealing their technology…the Mexicans are stealing their jobs…and the Russians are stealing their elections — by insisting that the real thieves are in Washington, not overseas?