The Breaking Point

by James Dale Davidson

  As Nelson Demille noted in his acknowledgments to Wild Fire, “There is a new trend among authors to thank very famous people for inspiration, non-existent assistance, and/or some casual reference to the author’s work. Authors do this to pump themselves up.” His clever note notwithstanding, I am resisting the temptation to thank the Queen of England for the ceremony and grace that helped punctuate my time at Oxford. I do thank Donald Trump for his ever-stimulating contribution to public dialogue. Before he became a presidential candidate, he was a gracious host in Palm Beach, where he frequently encouraged me and others to think about why “America doesn’t win anymore.”

  And finally, I want to thank my beautiful wife, Sabine, who fell in love with me and proved it by leaving her life in Europe to start anew with me in sunny Florida. She soon caught on precociously to remarkably many of the ills that beset us. She is smart and insightful and had the encouraging hugs—the vitamin S—I needed from time to time to function at full strength. My mother told me that “unless you love someone, nothing else makes sense.” Sabine is the proof of that. I thank her humbly and lovingly for putting up with me while I puzzled out which of the many drawbacks of the Fed’s zero interest rate policy (ZIRP) would prove more fatal to prosperity.

  And though almost every fiber of the Kardashian/Caitlyn Jenner culture inspires us to blame others for our shortcomings, I don’t. I accept full responsibility for errors and shortcomings of this book.

  Note

  1 See Rothbard, Murray, An Austrian Perspective on the History of Economic Thought (Northampton, MA: Edward Elgar, 1995), ch. 16.

  Index

  2 Thessalonians 3:10, 77

  3-D printer, 56–62

  A

  Abdussamatov, Habibullo, 181, 186, 222, 225–26, 228

  absurd tax, 296

  Accounting for Growth (Ayers and Warr), 342

  Adams, Bob, 150

  Adam Smith in Beijing (Arrighi), 102

  affordability crisis, 349

  Affordable Care Act. See Obamacare

  Afghanistan, 410, 465

  After Hegemony (Keohane), 117, 120–21

  Aftershock Investor Report, The (Wiedemer), 9

  Age of Spiritual Machines, The (Kurzweil), 63

  aging, 65–66

  agriculture, 77–78

  carrying capacity, 232

  fraction of GDP, 228–29

  waste products, 281

  Agüera y Arcas, Blaise, 75–76

  AIG, 163–64

  airlines, 45–46

  “Al Gore Has Thrived as Green Tech Investor” (Washington Post), 182

  “Al Gore’s Golden Years” (New York magazine), 182

  Allsopp, T., 496–98

  Alpha Natural Resources, 431–32

  al-Qaeda, 465–66

  Altarum Institute, 278

  alternative energy, 384–85

  Amash, Justin, 236

  American Academy of Pediatrics, 297

  American Challenge, The (Schreiber), 90

  American Economic Review, 296

  American Greed, 409

  American Heart Journal, 288

  American Indians, 475

  American Prospect, 98

  American Soybean Association (ASA), 279

  American Statistical Association, 3

  American Time Survey, 139

  Amerman, Daniel, 164

  ammunition, Department of Homeland Security purchase of, 169

  Amsterdam, 111–12

  amylos, 95

  Anabaptists, 79–80

  anarchy

  feudal system of, 31

  See also chaos

  “Anatomy of the Deep State” (Lofgren), 235

  Angell, Norman, ix–x

  Angola, 41–42

  Angwin, Julia, 156

  Anitschkow, Nikolaj Nikolajewitsch, 283

  Antarctica, 214

  antimarket, 5

  Applebaum, Jacob, 156–57

  appropriations process, 245–46

  Archer, Bill, 421

  Archives of Internal Medicine, 286

  Archives of Pediatrics and Adolescent Medicine, 297

  Argentina, 176

  arms, freedom to bear, 58

  Armstrong, Martin, 407

  Army Corps of Engineers, 267, 271

  Arrighi, Giovanni, 34, 102, 462

  Arthur Anderson, 426

  artificial intelligence (AI), 62

  Arunachal Pradesh, 230

  Asher, Lauren, 336

  assassination, 406–8

  Association of Americans Resident Overseas, 149

  Astrophysical Journal, 198

  asymmetric conflict, 410

  Atkins, Gavin, 223

  Atkinson, Robert, 373–74

  Atlantic phase, 192–93

  Atlas Shrugged (Rand), 96–97

  atolls, 205

  auditing firms, 426

  Audubon Society, 262

  Austin, Lloyd, 467

  Austin, Texas, 58

  Australia, 205, 285, 401, 433–34

  Austrian business cycle theory (ABCT), 89–90

  authoritarian practices, 127–30

  Avandia, 295

  Avery, Dennis T., 224

  Ayers, Robert, 342

  B

  Baby Boom, 93

  Bacon, Francis, 212–13

  Baghdad, 237

  bailouts, 338, 381

  Baker, John, 158

  Balakrishnan, Gopal, 356, 493

  balanced-budget requirement, 241

  bancus, 109

  Bank for International Settlements, 103–4, 164–65, 439

  Bank of America, 48

  Bank of Amsterdam, 111–12

  Bank of England, 112

  Bank of Saint George, 108–11

  Bank Restriction Period, 115

  banks, 400

  foreign, 165

  official, 107

  subsidy of foreign, 161–64

  system, 49

  warehouse banking, 112

  Barradas, Nuno Pessoa, 463–64

  Barrons, 150

  barycenter anomalies, 194–96

  basic rocks, 210–12

  Bass, Kyle, 398

  Batista, Fulgencio, 265–66

  battalions, big, 15–16, 33

  Battle of Phillippi, 469

  Battle of the Somme, x

  Baumol, William, 296

  Baumol’s Disease, 278, 296, 335

  “Bechtel Meets Goals on Fewer than Half of Its Iraqi Rebuilding Projects” (Glanz), 239

  Beck, Johnny, 351, 416, 441

  Beer, Jurg, 193–94

  “Beginning of the End of the Fossil Fuel Revolution” (Grantham), 377

  Bellarmino, Cardinal, 183

  benchmark revisions, 367–68

  Benoit, David, 51

  Beria, Lavrentiy, 144, 158

  Bernanke, Benjamin, 136, 337

  Berra, Yogi, 94, 108

  Berry, Bryan J. L., 178, 186

  big government, 32–33, 411, 446, 477

  See also nation-states

  “Big Lie: Serial Downward Revisions Hide Ugly Truth, The” (Zero Hedge), 106

  Bilmes, Linda, 467

  Binney, Bill, 157

  biofuels, 308

  biophysical economics, 302

  biotechnologies, 71

  birthrate, declining, 93

  “Birth Rate Plummets” (Kavoussi), 93

  Bismarck, Otto von, 453

  Black Swan events, 397–417

  Bloomberg, 6–7, 399–400, 403–5

  Blueseed, 61, 479

  Blytt-Sernander sequence, 192–93

  Boettke, Peter, 9, 11, 493

  Bolton, John, 397

  bonds, 167–68, 399, 416

  Bonner, Bill, 253

  Boot, Max, 15

  Booz Allen Hamilton, 236, 253–54

  Bordeaux wine makers, 398

  Borio, Claudio, 121

  Botero, Giovanni, 176

  Boudreaux, Donald J., 43

>   Boulding, Kenneth, 321, 328, 346–47, 412, 495

  boundary forces, 3–5, 410

  Braose, Matilda (Maud) de, 124–25

  Braudel, Fernand, 5, 28

  Brazil, 42–43, 153–54

  Brazil Is the New America (Davidson), 311–12

  Breaking Point, 2, 6–8, 496

  Bretton Woods, 117, 344

  Brexit, 397–99, 402–5, 413–14

  bribes, 204

  Brinkley, David, 47

  British Thermal Units (BTUs), 20

  British Virgin Islands, 154

  Brittle Power (Lovins), 256

  Brookings Institution, 369–70

  Brooks, Mel, 440

  Broward, Napoleon Bonaparte, 263

  Brown, Roger K., 312, 352–53

  Brown University, 466–67

  Bruno, Giordano, 183

  Brynjolfsson, Erik, 72–73

  Buffet, Warren, 350

  Bureau of Economic Analyses (BEA), 137, 359–60

  Bureau of Labor Statistics, 74, 92, 135–36, 139, 370

  Burke, Edmund, 260

  Burns, Arthur, 118

  Bush, George H. W., 360, 389

  Bush, George W., 154, 237, 381, 389

  Business Cycles (Schumpeter), 174

  business dynamism, 369–71

  Business Economics, 339

  Business Insider, 167

  bust-boom cycle, 446

  Byzantine Republic, The (Kaldellis), 469

  C

  calendar, history of, 456–58

  Calico, 66

  Calvinist ethics, 75

  Cambridge Ancient History, The, 146–47

  Cambridge Economic History of Europe, 488

  Camillus, Marcus Furius, 471

  campaign finance, 42–44

  Canada, 106

  cancer, 292–93

  cannons, high compression, 15

  capacity, excess, 432

  Capetian cycle, 179

  capital expenditure (CapEx), 337, 341

  capital investment, 51–52

  capitalism

  and democracy, 477–78

  history of, 487–89

  in peace time, x

  unpopularity of, 40–41

  capital requirements, declining, 340

  Capitularies of Charlemagne, 485

  Capriglione, Giovanni, 475

  carbon billionaires, 182

  carbon dioxide, 184–85, 191–92, 206, 220, 224, 384

  cardiology, 291–92

  Carroll, Lewis, 386

  carry trade, 104, 427, 433

  cartelizing world energy supplies, 311

  cartels, 268

  cartels, 412–13

  Casey, Bob, 144

  Casey, John L., 180, 186

  Casey Foundation, 372

  cashless society, 436

  Cassidy, John, 40

  Castelli, William, 277, 286–87

  Castells, Manuel, 449

  Castro, Fidel, 264–65

  Catalan independence, 471

  catastrophes, bogus, 199

  Caterpillar, 341

  cement, 428–29

  Cempoala map, 454

  Census Bureau, 92, 186

  census contracts, 485–86

  Center for Science in the Public Interest (CSPI), 279

  Center for the Advancement of the Steady State Economy (CASSE), 334

  Centers for Disease Control and Prevention, 293–95

  central banks, 89, 100, 314–15

  Central Intelligence Agency (CIA), 82, 231–32, 479

  centralization, 33–34, 256, 474

  central planning, 134

  Central Romana Limited, 270

  Chacoans, 226

  Chamber of Commerce, US, 143

  Chanos, James, 424–26

  chaos

  high-dimensional, 458–59

  worldwide, 463

  See also anarchy

  Chapman, Bob, 85

  Chapwood Index, 376

  Charles II of England, 65

  Charles VIII of France, 15

  Charles V of Spain, 111

  Chartist, 149

  Charvatova, Ivanka, 196

  CHH Standard Federal Tax Reporter, 157

  Chile, 430

  China, 230, 250, 399, 427–32, 455

  credit bubble, 106

  end of communism, xi

  growth, 350–51

  hegemony, 462

  lower yuan, 398

  megapolitical driver, 178–82

  offshoring manufacturing to, 358–59

  sunspot records, 218

  cholesterol, 283–84, 288

  Churchill, Winston, 87

  citizenship, 143–44

  Citizens United, 460

  city-states, 152, 451–52, 478, 479–80, 497

  See also microsovereignties

  civic myth, 338

  civil society, 131

  Clark, C. E., 91

  class struggle, 38

  climate change. See global warming

  Climate Policy Initiative, 203

  climate refugees, 223

  climate research, 199

  “Climatic Fluctuations and Population Problems in Early Modern History” (Utterstrom), 28

  Clinton, Bill, 266, 389

  Clinton, Hillary, 204

  ClubOrlov, 484

  CNBC, 181, 409, 414

  CNN, 48, 268, 269–70

  CNN Money, 142

  coal, 329–331, 432

  beginning of industry, 378

  desulfurization, 358

  replacing wood, 307

  Coal Question, The (Jevons), 322, 332–33, 344

  Codelco, 430

  Cohn, Norman, 79

  Coinage Act of 1857, 110

  colder climate, 28, 146, 181, 226–28

  Cold War, xi

  collapse, 29, 140, 391–94

  clock, 495–96

  long-term process, 410, 494

  multidimensional, 357

  threat of global, 402–4

  Collapse of Complex Societies, The (Tainter), 140, 168–69, 226, 299, 446, 496

  collateralized debt obligations (CDOs), 439

  college attendance, 336

  Columbus, Christopher, 111

  commercial moral syndrome, 132–33

  commercial paper, 435–36

  commodification of labor, 79, 248

  Commodity Exchange, Inc. (COMEX), 441

  commodity prices, 189, 389, 430, 433, 441

  Communist Manifesto (Marx), 53, 248

  comparative advantage, 70–71

  compera, 109

  competition

  among elites, 247–49, 250–54

  reduction of, 45–46

  complaints interpreted as terrorism, 159

  complexity

  rapid decline in, 29

  of understanding, 298

  complex societies, 140

  compound interest, 303, 319, 352

  Comprehensive Everglades Restoration Plan (CERP), 271–72

  computers, 373–74

  consensus, 248

  Consumer Price Index (CPI), 85, 315

  Consumer Protection Act, 164

  “Continuity and Transformation in World Polity” (Ruggie), 31

  continuous liquid interface production (CLIP), 59

  Contra Corner, 384

  cooperation, 77

  copper, 430, 433

  coral reefs, 205

  Corbyn, Piers, 221–22, 225–26

  corn farmers, 273, 308

  cosmic ray intensity, 194–96

  Cosmos nickel mine, 433–34

  Costa Rica, 151–53

  cost of living, 85

  Couric, Katie, 201

  Cox, Chris, 421

  Cox, Helen Joanne “Jo,” 406–8

  Crawley, David, 244

  Creation of Inequality, The (Flannery and Marcus), 78–79

  creative destruction, 54, 67, 90, 174, 462, 476

  credentials, value of, 19

/>   credit

  bubbles, 106, 427–32

  demand fueled by, 351

  elastic supply of, 318

  expansion, 89–90, 107–8, 437

  credit cards, 92

  credit default swaps, 432–33, 437

  Credit Suisse, 17–18

  “Criminalizing Journalism” (Milbank), 129

  Crisco, 282, 284

  crisis, response to, 338

  Cronkite, Walter, 47

  crony capitalism, 17, 41, 116–17, 182, 267, 412

  Cuba, 263–65

  currencies

  debased, 111

  hyperinflation, 437

  international, 100

  realignment, 398

  customized production, 57

  cyber realm, 463–64

  cyberspace, 459, 467

  cyberwar program, 254

  Czech Republic, 206

  D

  dairy industry, 289

  Daiwa, 431

  Dalio, Ray, 122

  Dallas Morning News, 472

  Daniel, Caroline, 65

  Dark Ages, 227–28

  Dark Winter (Casey), 180

  Darwin, Charles, 204–5

  Darwinian economics, 75–76

  data, fraudulent, 23

  Day After Tomorrow, The (movie), 201

  death, transcendence of, 65–71

  Death of the Dollar (Rickenbacker), 101–2

  debt

  collapse, 350–53

  compounding, 385

  credit card, 92

  crises, 107

  growth of, 103–4

  as mathematical abstraction, 319

  national, 91, 120, 245, 337–38, 415, 490–91

  public, 109

  service, 245

  servitude, 138

  student loans, 336

  supercycle, 16, 349–50

  wealth converted to, 302

  decentralization, 38, 256, 412, 474

  decivilizing forces, 69–70

  Decline of the West, The (Spengler), 460–61

  declining state, 327–30, 335

  Deep State, 235–57

  defense contractors, 119–20, 243–44, 253, 410, 492

  Defense One, 466

  deficits, 7, 87–88, 137–38, 338, 491

  deflation, 88–89, 104–5, 115–19, 217–18, 350, 389, 416, 421–27, 436–42

  Degner, Randy, 375

  deindustrialization, 343

  demand

  credit-fueled, 351

  increase in, 388

  dematerialized growth, 352–53

  democracy

  and capitalism, 477–78

  unpopularity of, 26–27

  DeMuth, Phil, 252

  Deng Tsaoping, xi

  Denning, Alfred, 125

  Department of Agriculture (USDA), 93, 279

  Department of Commerce, 272, 360

  Department of Education, 19–20, 269

  Department of Energy, 182

  Department of Health and Human Services (HHS), 279

  Department of Homeland Security, US, 169

  derivatives, 162–70, 350, 399, 432, 437

  Der Spiegel, 218

  Desch, Steve, 198

  DeSimone, Joseph, 59