Historically, the appearance of recursive exceptionalism is a highly predictive harbinger of republican (and, as it happens, imperial) decline, eventual fragmentation (typically violent in character) and collapse. It was no accident that the Roman Republic's decline followed hard upon the unspoken disposal of two-consul rule (no matter if you believe that this actually began with Pompey, Caesar or Octavian). Likewise, it is instructive that the progression towards The Principate after 400 some years of a Roman republic was also driven significantly by the conflict between the remnants of Roman monarchy, the aristocracy, and the plebes. If you find yourself a supporter of Ludwig von Mises, you might also note currency debasement, price controls, tariffs and restrictions on the free movement of labor and goods among the similarities to contemporary conditions. Self-inflicted economic wounds notwithstanding, once you stop following your own rules, "all bets are off," and it can only be a matter of time before you find that
rem ad Triarios redisse (or
rem ad Federal Reserve redisse, as the case may be).
In this connection, today we find it instructive to direct the modest beam of the Zero Hedge searchlight onto the boxy, greenroof-topped, marble facade of the Federal Deposit Insurance Corporation. This post marks the beginning of a week-long Zero Hedge series on the FDIC.
On September 28, 2009, Arthur J. Murton, Director of the FDIC's Division of Insurance and Research penned a memo to the Board of Directors on plans to prevent the Deposit Insurance Fund from total depletion (which threatens imminently even as we type this). That memo is actually most instructive primarily for its quick summary of the exceptions made to the general statutory requirement that the DIF maintain a minimum reserve ratio of 1.15%. In short, the memo noted that an October 2008 exception permitting the FDIC to take five years to return to statutory compliance was modified only four months later to grant seven years of extension only to be boosted three months later to an eight year respite. The prospect of almost a decade of non-compliance with the original (and clearly already insufficient) statutory reserve ratio is instructive.
If you are reminded of the now obviously useless national debt ceiling originally set in 1917, you are not alone. In 1919 that limit was $43 billion. By 2001 it stood at just under $6 trillion. Today, obviously, it floats just above $12 trillion (and just above the total debt figure as well).
