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The Mexican civil war

Providence directed that I be in Mexico in 1982 at the height of that nation’s ruinous episode of hyperinflation.  Just before I arrived, the old peso was replaced with the “mil,” or 1,000 pesos.  It was their basic currency, something like our dollar bill. To put this in perspective, let’s say you had 401k savings worth $100,000.  At the end of their hyperinflationary period, it was worth $100.  A lifetime of savings would buy your wife a dress.  People were ruined, literally unable to put food on the table.

Mexicans were desperate for stable currency so they could buy the necessities of life.  Dollars were accepted everywhere, and I didn’t need to swap money.  The old one-peso notes and coins were worth 1/8000 of a dollar — worthless.  Street beggars would not even bother to pick up discarded cash.  Many armloads of cash would not buy a meal.

It was out of this situation that Mexico’s narcotics civil war grew.  People who were desperate for money could get it by servicing people who were desperate for drugs.  Once lawlessness gains a sturdy foothold, as we now know, it’s awfully hard to get rid of it.  Mexico finds itself with a significant subculture that has lived outside the law for a generation and is willing to commit ghastly crimes against people who resist them.  Nothing will stop the drug lords short of killing them, and they’re famously targeting non-corrupted public officials for assassination, kidnapping, beheadings of their children, and so on.

And this got started because the Mexican government made promises it could not keep, then tried to fund its obligations by printing quadrillions in fiat money.  The end result was a serious subversion of their social order.  Recent headlines put the death toll at 60,000 in Mexico’s drug civil war, and the pace is only increasing.

This has portents for America.  A potential hyperinflationary period in America is a grave threat.  It’s not just the end of Social Security and Medicare.  It’s the end of America as you’ve always known it, and the policies of the Democrats virtually guarantee this will happen.  There are many conservative commentators who have begun to argue that Mr. Obama actually wants this to occur.  I don’t know what his intentions are, and it actually doesn’t matter.  What matters is the direction of the ship, and that’s not good.

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