Quote of the Day: Cronyism depends on the credit bubble

Capitalism takes you into the future… with innovation, failure, and surprise. You invest, you lose your money, you try something different, and you stumble forward. Capitalism is constantly burying its mistakes and discovering tomorrow. 

Cronyism, on the other hand, keeps you in the past. It is today and yesterday trying to stop tomorrow from happening. By bribing public officials (they are remarkably cheap; in terms of return on investment nothing else comes close)… restricting… regulating… controlling… central planning… bailing out well-established businesses… rewarding stockholders… paying off voters, lobbyists, and special interests… and distorting the political establishment, with its geriatric candidates and tired themes. 

And guess what? Cronyism depends on the credit bubble. The future is where new wealth is created. When you try to stop or twist the future into the shape want, you prevent this wealth from ever happening. 

So, you switch from creating wealth now to taking wealth from the future, so you can consume it now. That’s how the credit bubble got so big. And that’s why almost nobody wants to see it pop. 

Cronies owe money. They borrow money. They depend on borrowed money for their budgets, their spending, their bonuses, their portfolios, their welfare checks, and their special privileges. They all depend so heavily on borrowing that few of them – whether in academia, media, business, finance, or government – can see the truth… let alone speak it. 

They are all paid not to see it. And if they do see it, they keep their mouths shut.

This excerpt is from Agora Publishing head Bill Bonner at his website Bonner & Partners