'Ya Light a Match'
There are masterpieces of film-making that can help us make sense of the world we live in. Such is the case, with the story of the Bamboo Lounge.
“The lesson of the 1920’s is not that you can’t have a Gold standard, but that a country needs to get the price right.” - Jim Rickards
In the mob film Goodfellas, there is a marvelous scene where Bamboo Lounge nightclub owner Sonny Bunz asks neighborhood crime boss Paul Cicero for help. Sonny’s issue? Gangster Tommy DeVito - who was associated with Cicero - was causing problems for Sonny at his own establishment. Though he claimed he couldn’t control Tommy’s behavior, Cicero ‘reluctantly’ became an ownership partner of the Bamboo Lounge with Sonny.
Sonny, who I’m quite sure assumed Tommy’s nightclub shenanigans would stop if it was Cicero’s money on the line too, ended up losing his place entirely.
Why?
See for yourself:
After the mobsters parasitically sucked the life out of the Bamboo Lounge, the place was intentionally set on fire. Which might be good if you're the insurance policy holder of the property, perhaps less so if you’re an unsecured creditor to the business.
I believe absolutely everything there is to understand about politics and power can probably be learned from watching 2 or 3 classic mob movies. Here are my personal recommendations:
The Godfather, Part 2
Gotti (1996)
Goodfellas
In the second Godfather film, you’ll see Jeffrey Esptein’s white paper. Get the goods on a bribe-hungry US Senator and his sexual degeneracy, and you’ll be able to get him to do whatever you want with his political power. In Gotti, the hypocritical ‘rules for thee but not for me’ arrogance that we so often see from federal and local governments was perfectly depicted by Paul Castellano’s ruthless desire to whack John Gotti over a Mafia rule infraction. It mattered not that Castellano’s own crew was involved in drug trafficking - a La Cosa Nostra no-no.
And then there’s Goodfellas. Where the story of the Bamboo Lounge serves as a wonderful analogy for a monetary system built on credit. One where a perceived owner or manager siphons as much wealth out of a business as possible to the benefit of himself and his friends. In this tale, replace the Bamboo Lounge with the American economy and US Treasury bondholders and all of the matches being lit right now probably make a lot more sense.
Russia/Ukraine
Israel/Iran
Riots in LA
And that’s just the last week or so. We can’t have a proper fourth turning any other way. IYKYK.
Federal debt to GDP hit 120% in Q1-2025. US Debt Clock has the live estimate at 123%. It was 35% in 1971 when President Nixon defaulted on our obligations and ended dollar convertibility for the United States’ Gold stock. Currency units backed by nothing but an obligation to pay more currency units, you say?
We have gone on an absolute spending bender since. Fueled by monstrous deficits each and every year, we are careening toward $40 trillion in US national debt. By the time you’re reading this, we might already be there. It seems DOGE was always just a meme after all. Keep in mind, we puke over $7 trillion annually in federal spending while collecting a little over $5 trillion in tax receipts. It is apparently believed by enough people still that this funny money party has no end.
In the process of printing ourselves stupid, we hollowed out the middle class through outsourcing our manufacturing to other countries, we levered up Millennials and Gen-Z with student loan debt to be serviced with incomes that don’t exist, pumped up the housing market with cheap rates aided by a Federal Reserve buying mortgage-backed securities with dollars created out of thin air, and we built a ‘Giant Mindless Robot’ that buys Amazon AMZN 0.00%↑, Apple AAPL 0.00%↑, and Microsoft MSFT 0.00%↑ at any price regardless of the multiples… so long as there is a workforce feeding the robot every two weeks.
The land doesn’t change, it’s the denominator that moves.
All of this for the illusion of wealth. And to keep the system based on debt and faith going for as long as possible. So far, I’ve only referenced the financial situation of the United States. The fiat debt binge truly knows no borders.
Why is Gold at $3,500 per ounce, one might ask?
Perhaps because the jig is up and Gold is still the most trusted sanctuary in a global credit bust. I believe this is really just the start of a market repricing Gold where it should have been all along to justify all of the dollars in circulation. That price today? Only 9 stacks or so. But again, it isn’t just the US. There is absolutely no way these world governments can honor their obligations while preserving the purchasing power of their domestic units of account. And those in charge of the printing presses know it.
For the same reason that refinancing the debt has become un-affordable for the US Treasury Department, the 30 year fixed rate home mortgage is un-affordable for most first time homebuyers. Which is why we saw the median age of the homebuyers in 2024 hit fifty-effing-six.
The federal government’s lead on finances is apparently being followed by the filthy masses. Private citizens are levered up to the gills as well with $18.2 trillion in household debt as of Q1-25. $13.2 trillion of it is tied up in housing at fugazi money prices. We’ll see how it goes.
Can’t service your student loan as a barista, Zoomer? F*** you, Pay Me.
7% on a half million dollar cracker jack box too hard, Millennial? F*** you, Pay Me.
Property tax increase excessive on the home you’ve lived in for 25 years, Gen X-er? F*** you, Pay Me.
Tenant skipped out on your rental property, Boomer? F*** you, Pay Me.
Will these obligations actually be repaid? It perhaps boils down to which path the powers that be choose when this credit binge truly nukes.
“The lesson of the 1920’s is not that you can’t have a Gold standard, but that a country needs to get the price right.” - Jim Rickards
Churchill chose deflation in the 1920’s. That turned out to be very painful. I don’t think the US will do the same unless it actually wants to reset to a completely digital-only system managed directly by the Federal Reserve. But the desire for that from the populace is not strong enough yet as it seems well understood that the bureaucratic management of all wallets would surely lead to financial weaponization rarely seen outside of dystopia films.
It would likely take an enormous crisis to usher in such a system; one so bad that the populace would have to beg for it rather than fight it. A UBI-type instrument would likely help move the needle as well. So pick your crisis from the Bingo card:
Another lab-grown virus released to the public?
Nuclear war?
EMP?
Collapse of private banking?
Something completely different?
It can’t be known for sure in what form the match will be lit. But it seems like a mathematical certainty that there will be a match used to burn down what remains of the Bamboo Lounge. The voice from the idiot box will shriek about how unforeseen the crisis is and how we ‘have to do this’ horribly oppressive thing ‘to save everyone.’ That will be a lie. It will be an attempt to save the state’s control apparatus. In that scenario, we should say ‘no’ to the gangsters.
Or maybe there will be no crisis domestically at all.
Maybe the message is loud and clear already. The country is picking a price.
well put. faith in anything but a loving God will send us over the edge and into oblivion.
Great films and amazing analogy! That Goodfellas scene is eerily, chillingly comparable to the inexorable conclusion... 😕