It’s very difficult to find common ground that supports cooperation in the disintegrative stage of scarcities, rising prices, catastrophically centralized power and social discord.
Today’s topic echoes Peter Turchin’s 2016 book, Ages of Discord, which I have often referenced in blog posts.
Turchin proposes repeating cycles of history of social integration (people finding reasons to cooperate) and disintegration (people finding reasons to not cooperate).
Clearly, we’re in a disintegrative stage.
Fischer proposed a repeating cycle of history in which humans expand their numbers and economy to consume all available resources.
Once all the low-hanging fruit has been consumed, scarcities arise, pushing prices above what commoners can afford, and the result is economic stagnation and social/political revolution.
Either humans exploit a new energy source at scale to provide for the larger population and higher consumption per person, or the population and consumption decline to fit available resources.
Parker covers the mutually reinforcing climate, political, social and economic crises of the 17th century. A long cycle of cold, wet summers reduced crop yields, leading to hunger and strife.
Parker also identifies another cause of the tumultuous, war-plagued 1600s: political leaders had consolidated too much power, enabling them to pursue disastrous wars without any restraint from competing domestic social-political interests.
Clearly, we’re in Fischer’s stage of overshoot and resource scarcity and Parker’s extremes of centralized power free to pursue catastrophic wars of choice.
In the 1600s, those launching wars reckoned a clean, decisive victory was within easy reach. In every case, the wars dragged on inconclusively or generated even wider conflicts.
In the end, all the wars were settled diplomatically, not by military victory. The military gains were nil while the destruction was widespread and devastating.
Fischer details how poorly humans respond to scarcity and higher prices, also known as inflation or more. accurately, as the decline in purchasing power of money and labor. As scarcities and higher prices take their toll, society unravels: crime and social disorder accelerate.
What we’re seeing in real time is a “circle the wagons” mentality of weeding out everyone but the True Believers in every movement. Litmus tests are handy for this test: answer wrong on any question and you’re cast out: heretic!
It’s not enough to tick one “progressive” or “conservative” box; you have to tick them all or you’re a heretic who cannot be trusted. If you leave one box unticked, you might untick a few more in the days ahead.
This puts pressure on everyone to declare their loyalty to the “party” even if the loyalty is just for show. This dishonesty pleases those demanding every box be ticked but this forced loyalty creates an illusion of solidarity that unravels under pressure.
Exacerbating this is social media, which rewards those promoting the most extreme and divisive positions and deranges the populace by substituting recognition online, which encourages disintegration, for real-world engagement, which encourages moderation and cooperation.
Online, it’s easy to be all-or-nothing: there should be no restrictions on social media, or we should just pull the plug and shut the whole mess down.
In the real world, these are knotty, nuanced problems. The Founding Fathers would not have tolerated sedition under the guise of free speech. The social order can only be maintained if every participant adheres to standards of civility and the common good.
When put under stress, humans harden their positions as a defensive measure. They become more argumentative and less tolerant, more strident in insisting that the One True Thing is the answer to our problems.
This leads to magical thinking, for example, that we can replace hydrocarbons with fusion or wind and solar. When the physical and cost limits of minerals are presented as impassable obstacles, people respond with denial: there must be a way to keep everything the same.
Humans have an easy time expanding their population and consumption per person and a hard time consuming less.
It’s very difficult to find common ground that supports cooperation in the disintegrative stage of scarcities, rising prices, catastrophically centralized power and social discord.
This requires accepting that we can cooperate with people on one issue even though all the other boxes of our group/party/movement are left unticked.
History suggests the disintegrative stage will run its course and consumption will realign with available resources one way or another, and the best we can do is preserve our own sanity, community and willingness to nurture small patches of common ground that support productive cooperation.
In my 16 years as an alternative economist and political writer I have spent around half that time warning that the ultimate outcome of the Federal Reserve’s stimulus model would be a stagflationary collapse. Not a deflationary collapse, or an inflationary collapse, but a stagflationary collapse. The reasons for this were very specific – Mass debt creation was being countered with MORE debt creation while many central banks have been simultaneously devaluing their currencies through QE measures. On top of that, the US is in the unique position of relying on the world reserve status of the dollar and that status is diminishing.
“Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.
Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending. You might recognize this as the recipe that created the 1981-1982 recession, the third-worst in the 20th century.
In other words, the choice is stagflation, or deflationary depression.”
It’s clear today what the Fed has chosen. It’s important to remember that throughout 2020 and 2021 the mainstream media, the central bank and most government officials were telling the public that inflation was “transitory.” Suddenly in the past few months this has changed and now even Janet Yellen has admitted that she was “wrong” on inflation. This is a misdirection, however, because the Fed knows exactly what it is doing and always has. Yellen denied reality, but she knew she was denying reality. In other words, she was not mistaken about the economic crisis, she lied about it.
‘First and foremost, no, the Fed is not motivated by profits, at least not primarily. The Fed is able to print wealth at will, they don’t care about profits – They care about power and centralization. Would they sacrifice “the golden goose” of US markets in order to gain more power and full bore globalism? Absolutely. Would central bankers sacrifice the dollar and blow up the Fed as an institution in order to force a global currency system on the masses? There is no doubt; they’ve put the US economy at risk in the past in order to get more centralization.’
The Fed has known for years that the current path would lead to inflation and then market destruction, and here’s the proof – Fed Chairman Jerome Powell actually warned about this exact outcome in October of 2012:
“I have concerns about more purchases. As others have pointed out, the dealer community is now assuming close to a $4 trillion balance sheet and purchases through the first quarter of 2014. I admit that is a much stronger reaction than I anticipated, and I am uncomfortable with it for a couple of reasons.First, the question, why stop at $4 trillion? The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated. And we will be able to tell ourselves that market function is not impaired and that inflation expectations are under control. What is to stop us, other than much faster economic growth, which it is probably not in our power to produce?
When it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.”
As we all now know, the Fed waited until their balance sheet was far larger and until the economy was MUCH weaker than it was in 2012 to unleash tightening measures. They KNEW the whole time exactly what was going to happen.
It is no coincidence that the culmination of the Fed’s stimulus bonanza has arrived right after the incredible damage done to the economy and the global supply chain by the covid lockdowns. It is no coincidence that these two events work together to create the perfect stagflationary scenario. And, it’s no coincidence that the only people who benefit from these conditions are proponents of the “Great Reset” ideology at the World Economic Forum and other globalist institutions. This is an engineered collapse that has been in the works for many years.
The goal is to “reset” the world, to erase what’s left of free market systems, and to establish what they call the “Shared Economy” system. This system is one in which the people who survive the crash will be made utterly dependent on government through Universal Basic Income and one that will restrict all resource usage in the name of “carbon reduction.” According to the WEF, you will own nothing and you will like it.
The collapse is engineered to create crisis conditions so frightening that they expect the majority of the public to submit to a collectivist hive mind lifestyle with greatly reduced standards. This would be accomplished through UBI, digital currency models, carbon taxation, population reduction, rationing of all commodities and a social credit system. The goal, in other words, is complete control through technocratic authoritarianism.
All of this is dependent on the exploitation of crisis events to create fear in the population. Now that economic destabilization has arrived, what happens next? Here are my predictions…
The Fed Will Hike Interest Rates More Than Expected, But Not Enough To Stop Inflation
Today, we are witnessing the poisonous fruits of a decade-plus of massive fiat money creation and we are now at the stage where the Fed will reveal its true plan. Hiking interest rates fast, or hiking them slow. Fast hikes will mean an almost immediate crash in markets (beyond what we have already seen), slow hikes will mean a drawn out process of price inflation and general uncertainty.
I believe the Fed will hike more than expected, but not enough to actually slow inflation in necessities. There will be an overall decline in luxury items, recreation commerce and non-essentials, but most other goods will continue to climb in cost. It is to the advantage of globalists to keep the inflation train running for another year or longer.
In the end, though, the central bank WILL declare that the pace of interest rates is not enough to stop inflation and they will revert to a Volcker-like strategy, pushing rates up so high that the economy simply stops functioning altogether.
Markets Will Crash And Unemployment Will Abruptly Spike
Stock markets are utterly dependent on Fed stimulus and easy money through low interest rate loans – This is a fact. Without low rates and QE, corporations cannot engage in stock buybacks. Meaning, the tools for artificially inflating equities are disappearing. We are already seeing the effects of this now with markets dropping 20% or more.
The Fed will not capitulate. They will continue to hike regardless of the market reaction.
As far as jobs are concerned, Biden and many mainstream economists constantly applaud the low unemployment rate as proof that the American economy is “strong,” but this is an illusion. Covid stimulus measures temporarily created a dynamic in which businesses needed increased staff to deal with excess retail spending. Now, the covid checks have stopped and Americans have maxed out their credit cards. There is nothing left to keep the system afloat.
Businesses will start making large job cuts throughout the last half of 2022.
Price Controls
I have no doubt that Joe Biden and Democrats will seek to enforce price controls on many goods as inflation continues, and there will be a handful of Republicans that will support the tactic. Price controls actually lead to a reduction in supply because they remove all profits and thus all incentive for manufacturers to keep producing goods. What usually happens at that point is government steps in to nationalize manufacturing, but this will be substandard production and at a much lower yield.
In the end, supplies are reduced even further and prices go even higher on the black market because no one can get their hands on most goods anyway.
Rationing
Yes, rationing at the manufacturing and distribution level is going to happen, so be sure to buy what you need now before it does. Rationing occurs in the wake of price controls or supply chain disruptions, and usually this coincides with a government propaganda campaign against “hoarders.”
They will hold up a few exaggerated examples of people who buy truckloads of merchandise to scalp prices on the black market. Then, not long after, they will accuse preppers and anyone who bought goods BEFORE the crisis of “hoarding” simply because they planned ahead.
Rationing is not only about controlling the supply of necessities and thus controlling the population by proxy; it is also about creating an atmosphere of blame and suspicion within the public and getting them to snitch on or attack anyone that is prepared. Prepared people represent a threat to the establishment, so expect to be demonized in the media and organize with other prepared people to protect yourself.
Be Ready, It Only Gets Worse From Here On
It might sound like I am predicting success of the Great Reset program, but I actually believe the globalists will fail in the end. That’s not going to stop them from making the attempt. Also, the above scenarios are only predictions for the near term (within the next couple of years). There will be many other problems that stem from these situations.
Naturally, food riots and other mob actions will become more commonplace, perhaps not this year, but by the end of 2023 they will definitely be a problem. This will coincide with the return of political unrest in the US as leftist factions, encouraged by globalist foundations, demand more government intervention in poverty. At the same time, conservatives will demand less government interference and less tyranny.
At bottom, the people who are prepared might be called a lot of mean names, but as long as we organize and work together, we will survive. Many unprepared people will NOT survive. Understand that the economic conditions ahead of us are historically destructive; there is no way that serious consequences can be avoided for a large part of the population, if only because they refuse to listen and to take proper steps to protect themselves.
The denial is over. The crash is here. Time to take action if you have not done so already.
What I am about to share with you is a developing situation, and I hope to share more once the facts become clearer. It appears that a very serious diesel crisis is coming in the months ahead, and that will have a dramatic impact on our economy. As you will see below, we are being warned that there will be shortages of diesel fuel, diesel exhaust fluid and diesel engine oil. Most diesel vehicles require all three in order to run, and so a serious shortage of any of them would be a major disaster. Needless to say, simultaneous shortages of all three could potentially be catastrophic. Most Americans don’t spend much time thinking about diesel, but without it our supply chains collapse and we don’t have a functioning economy. In a recent Time Magazine article discussing the coming diesel fuel shortage, we are told that “the U.S. economy runs on diesel”…
Though most consumers shake their heads at the cost of gasoline and complain about the cost of filling up their car tanks, what they really should be worried about is the price of diesel. The U.S. economy runs on diesel. It’s what powers the container ships that bring goods from Asia and the trucks that collect goods from the ports and bring them to warehouses and then to your home. The farmers who grow the food you eat put diesel in their tractors to plow the fields, and the workers that bring construction equipment to build your home put diesel in their trucks.
Since January, supplies of diesel fuel have been steadily getting tighter.
As supplies have gotten tighter, prices have skyrocketed. The average price of a gallon of diesel fuel hit $5.50 a gallon in early May, and it has remained above that level ever since.
One of the biggest reasons for the supply crunch is a serious lack of refining capacity. Back in 1980, the U.S. had twice as many refineries…
There are also fewer refineries, which process crude oil into diesel and other products, in the U.S. than were just a few years ago. There are just 124 now operating, down from twice as many in 1980, and down from 139 in 2016, according to the U.S. Energy Information Association. The northeast region is particularly spare, with just seven refineries today, down from 27 in 1982.
There have already been some temporary outages of diesel fuel at a few locations around the country, and we are being warned that disruptions are likely to intensify during the summer months.
But the good news is that we aren’t going to run out of diesel fuel. It may become a lot more expensive, and there may be painful temporary shortages, but we won’t run out of it.
Unfortunately, the crisis that we are facing with diesel exhaust fluid is potentially much more serious.
If you have just been skimming this article, this is the part where you need to start really paying attention.
Newsweek is telling us that the United States “could soon experience a severe shortage of diesel exhaust fluid”…
The U.S. could soon experience a severe shortage of diesel exhaust fluid (DEF), impacting U.S. drivers already hit with soaring fuel prices.
DEF is a solution made up of urea and de-ionized water that is needed for almost everything that runs on diesel. It reduces harmful gases being released into the atmosphere and works by converting nitrogen oxide produced by diesel engines into nitrogen and steam.
If you have a diesel vehicle that was sold in the United States after 2010, your vehicle could technically run without DEF, but in most cases your vehicle will simply not let you start it if the DEF tank is dry…
Can we call it a DEF jam? Everything is in short supply as supply chains continue to unlink. The latest commodity reportedly hit is DEF, or the blue diesel exhaust fluid that every diesel sold in the U.S. after 2010 needs to cut emissions. This means that every diesel truck, diesel RV, SUV, and car owner will likely have to look harder, and pay more for, DEF. A diesel engine can technically run without DEF, but your diesel vehicle likely won’t let you start it if the DEF tank is empty.
A lack of urea is the biggest reason for the growing shortage of DEF.
The United States is one of the largest importers of urea in the world, and Russia and China are two of the largest exporters. In previous years that wasn’t a problem, but now the war in Ukraine has dramatically changed things…
A major portion of our urea comes from Europe, and because of the war in Ukraine we’re seeing a shortage of it, according to Newsweek. Russia is one of the world’s major exporters of it. China, too, is a major exporter of it, and it has suspended exports. Weather, too, has caused supply chain disruptions. Since it’s also a major component in fertilizers, there’s intense competition for urea.
Without enough DEF, our economy is going to be in for a world of hurt.
Meanwhile, Mike Adams is reporting on the growing shortages of diesel engine oil that are starting to happen all over the nation…
Retailers, customers and distributors are all reporting shortages in diesel engine oil. This is not an imaginary problem, it is a real problem that is so far entirely ignored by the corporate media.
Apparently there are some diesel engine oil additives that are in extremely short supply, and one industry insider is telling us that this problem isn’t going to be resolved any time soon.
So what this means is that people are going to start running out of diesel engine oil.
In fact, it is already being reported that the trains in Sri Lanka will soon have to completely shut down because of a lack of diesel engine oil…
Sri Lanka Railways said that it will NOT be possible to operate trains in the future due to the lack of engine oil. A senior official at Sri Lanka Railways said that the current level of engine oil would only last for another two months.
That’s in line with the warning we’re hearing in the states: About 8 weeks of diesel engine oil remaining in the pipeline.
Just solving one of the shortages that I have described in this article will not be enough.
As I noted in the opening paragraph, a diesel vehicle requires diesel fuel, diesel exhaust fluid and diesel engine oil in order to operate.
You need all three.
This is a story that I will be following very closely. Needless to say, there are enormous implications for our supply chains and for our economy as a whole if solutions cannot be found.
We haven’t seen anything like this in decades. Energy prices are soaring to unprecedented heights. Food shortages in some parts of the world are starting to become quite severe. Rampant inflation is out of control all over the globe. Meanwhile, economic activity is slowing down everywhere that you look. Some are comparing this current crisis to the “stagflation” of the 1970s, but I believe that is a far too optimistic assessment. Just about everyone can see that economic conditions are rapidly deteriorating, and there is a tremendous amount of alarm about what the months ahead will bring.
According to a brand new Wall Street Journal-NORC survey that was just released, the percentage of Americans that believe that the state of the U.S. economy is “poor or not so good” is 83 times larger than the percentage of Americans who believe that the state of the U.S. economy is “excellent”…
A severe pessimism grips the U.S. economy and Americans report the highest level of dissatisfaction with their financial situation in at least half a century, poll results released Monday show.
Eighty-three percent of Americans describe the state of the economy as poor or not so good, according to a Wall Street Journal-NORC Poll. Only one percent describe the economy as “excellent.”
I would like to talk to someone from the one percent of Americans who still believe that the U.S. economy is in “excellent shape”.
To me, it is always fascinating to find someone who can completely deny reality even when all of the evidence points in the other direction.
The same survey found that the percentage of Americans who are “not at all satisfied with their financial condition” is the highest in at least 50 years…
Thirty-five percent said they are not at all satisfied with their financial condition, the highest level of dissatisfaction since NORC began asking the question every few years starting in 1972.
Sixty-three percent of Americans say they are extremely or very concerned about the price of gas. Fifty-four percent say they are extremely or very concerned about the impact of high grocery prices on their household’s financial situation. Just 13 percent say they not very or not at all concerned about gas prices and 19 percent about grocery prices.
In other words, this is the gloomiest that Americans have been about their own personal finances in at least five decades.
Wow.
One of the big reasons why people feel this way is because the price of just about everything is going up.
In particular, the price of gasoline has been making national headlines just about every day. On Tuesday, it set another brand new record…
The national average price of gas is now $4.955, reflecting an over three-cent jump overnight, 28-cent rise in the last week, and nearly 64-cent rise in the last month. Diesel also hit another record on Tuesday, reaching $5.719.
Currently, 16 states are experiencing an average price of gas of $5.00 or more. That includes Maine ($5.023), Massachusetts ($5.21), New Jersey ($5.032), Pennsylvania ($5.031), Michigan ($5.214), Ohio ($5.061), Indiana ($5.234), Illinois ($5.532), Idaho ($5.025), Alaska ($5.469), Hawaii ($5.493), Washington ($5.489), Oregon ($5.485), Nevada ($5.564), Arizona ($5.181), and California ($6.390). California’s Mono County appears to be reporting the highest gas price average in the Golden State — $7.213.
Unfortunately, there is a growing consensus among the experts that this is just the beginning. Here is one example…
With the summer travel season just getting underway, demand for gasoline, coupled with the cut-off of Russian oil shipments due to the war in Ukraine, is sending oil prices higher on global markets.
The national average for gasoline could be close to $6 by later this summer according to Tom Kloza, global head of energy analysis for the OPIS, which tracks gas prices for AAA.
GasBuddy head of petroleum analysis Patrick De Haan provided insight into record-high gas prices, warning on Wednesday that “we’re going to be swimming in these high prices for a while.”
Speaking on “Varney & Co.” on Wednesday, De Haan also revealed his forecasts for how high prices at the pump will climb, arguing that they could reach a national average of $6 a gallon in the coming months, but “what seems like more of a guarantee is that $5 mark.”
Others are even more pessimistic. In fact, the head of commodity trading giant Trafigura just warned that the price of oil could actually make a “parabolic ” move in the months ahead.
Needless to say, energy prices have a domino effect throughout the entire economy. When commentator Anthony B. Sanders contacted moving companies about his coming move out of state, he could hardly believe the quotes that he was given…
As I line up my move from Fairfax VA to Columbus OH, I am getting a variety of quotes from moving companies. And wow! The cost of moving using a national moving company for a 4 bedroom house is $15,000 to $20,500. That includes International, North American and Bekins.
One of the reasons for the high cost of moving is the massive increase in diesel fuel used for trucking. Diesel fuel under Biden has risen 117%. And since it was revealed that natural gas often is used for electric charging stations, and NATGAS is up 281% under Biden (but there aren’t many electric moving trucks yet).
Could you imagine paying $20,000 to move from Virginia to Ohio?
In the old days, you could purchase your own new vehicle for that much money.
“Joining the parade of downsized products is cereal stalwart Honey Bunches of Oats, which has seen the weight of its standard box, previously 14.5 ounces, lessen to 12 ounces — a reduction of roughly 17 percent,” the U.K. paper said.
Angel Soft toilet paper has also reduced its size from 425 sheets per roll to 320, while Bounty paper towels have cut their rolls from 165 sheets per roll to 147 late last year. Gatorade also cut its bottle size from 32 ounces to 28 ounces.
Do they actually believe that we will not notice that the packages have changed?
And this isn’t just happening here in the United States. At this point, this is taking place all over the globe…
In the U.S., a small box of Kleenex now has 60 tissues; a few months ago, it had 65. Chobani Flips yogurts have shrunk from 5.3 ounces to 4.5 ounces. In the U.K., Nestle slimmed down its Nescafe Azera Americano coffee tins from 100 grams to 90 grams. In India, a bar of Vim dish soap has shrunk from 155 grams to 135 grams.
Our standard of living is falling with each passing day, and that process is only going to accelerate during the second half of this year.
In a desperate attempt to keep living the way that they always have, many Americans are turning to their credit cards at an alarming rate.
Needless to say, that is only a short-term solution.
A closely followed measurement from the Atlanta Federal Reserve Bank suggests the economy could be headed for a second-quarter decline in gross domestic product, the broadest measure of goods and services produced in a country. The GDPNow tracker shows the economy grew at an annualized pace of just 0.9% in the spring, a steep decline from its previous estimate of 1.3% on June 1.
If U.S. GDP is actually negative for the second quarter, that will be two quarters in a row, and that will mean that we are officially in a recession right now.
But what we are heading into in 2023 and beyond is not going to be just a “recession”.
The created food crisis, whether real or a smoke-and-mirrors psy-op, is all about tearing down the global food system and “building back better” – a new dystopian food system built by corporate monoliths and rigidly controlled in the name of the greater good.
The press has been predicting this for years, but up until now it always appeared to be nothing more than fearmongering, designed to worry or distract people, but the signs are there that this time, to quote Joe Biden, it “is going to be real”.
Nobody knows how bad it could get, except the people who are creating it.
Because the evidence is pretty clear, it is being deliberately & cold-bloodedly created. We’ve been documenting it for months.
We have Russia’s “special operation” in Ukraine driving up the price of staple foods, wheat and sunflower oil, as well as fertiliser.
We have the sudden “bird flu outbreak” driving up the price of poultry and eggs.
The soaring price of oil is driving up the cost of food distribution.
The inflation caused by huge influxes of fiat currency means families are spending more money on less food.
And as all this is happening, the US and UK (and maybe others, we don’t know) are literally paying farmers not to farm.
It’s pretty clear this is The Great Reset: Food Edition. The lockdown melody with slightly different lyrics. A process of breaking down the structures already in place so we can “build back better” with a more controlled and more corporatised food system
Just as the Covid “pandemic” was said to highlight “weaknesses in the multilateral system”, so this food crisis will show that our “unstable food systems are in need of reform” and we need to ensure our “food security”…or a thousand variations on that theme.
That’s not supposition. They already started, over a year ago.
The Journal of Agriculture, Food Systems & Community Developments published a paper in February 2021 titled:
Dismantling and rebuilding the food system after COVID-19: Ten principles for redistribution and regeneration
In an interview from July last year, Ruth Richardson the Executive Director of the NGO Global Alliance for the Future of Food literally said:
Our Dominant Food System Needs to Be Dismantled and Rebuilt”
Later, in September 2021, the UN convened the first-ever “Food Systems Summit”, whose mission statement included the line:
Rebuilding the food systems of the world will also enable us to answer the UN Secretary-General’s call to “build back better” from COVID-19.
Writing in the Guardian two weeks ago, George Monbiot, weathervane for every deep state agenda, states with his trademark lack of subtlety:
The banks collapsed in 2008 – and our food system is about to do the same…The system has to change.
But what does “change” and “rebuilt” actually mean in this context?
Well, that’s no mystery, they’ve been talking it up for years.
Almost all of these are stories from just the past month or so, many of them talking points at the World Economic Forum’s Davos Conference.
As is almost always the case, the problem to which they’re currently “reacting” already has a series of pre-ordained solutions.
Just as we saw lockdowns break the economy to pieces whilst the billionaire class land record profits whilst corporate megaliths expanded their monopolies, so too will any proposed food security policies end up benefiting the already mega-rich or installing infrastructure for corporate control.
They just announced the building of the largest “cultured meat factory” in the world. Fake meat, of course, can’t be raised at home and is subject to patented processes of creation. Genetically edited or modified plants and animals are likewise subject to patents.
Supranational companies, with profits larger than the budget of some nations, are developing carbon footprint tracker apps which reward people for making the “right decisions”. That could easily be applied to food.
Let’s consider livelihood options in an unsustainable economy of extremes that are unraveling, an economy that is being forced to transition to Degrowth.
Nassim Taleb’s book Antifragile explains the differences between fragile systems (systems that cannot survive instability), resilient systems (systems that can survive instability and stay the same) and antifragile systems (systems that adapt and emerge stronger).
The ideal way of life is antifragile: resilient enough to survive adversity and adaptable enough to evolve solutions to whatever comes our way.
The key antifragile traits are adaptability and rapid, flexible evolution. Adversity puts selective pressure on organisms: only those organisms which adapt successfully survive.
The more antifragile our livelihood and way of life, the better prepared we will be to recognize and pursue opportunities.
An unsustainable, unstable economy puts a great deal of pressure on its participants. Only those with the skills and agency to move, adapt and experiment will emerge stronger.
Adaptability requires agency. Those without much control are stuck with the consequences of others’ decisions and actions.
In my experience, self-reliance is integral to an antifragile way of life.Self-reliance and self-sufficiency are similar but not identical.
Self-sufficiency means reducing our dependence on resources provided by others: growing our own food, doing our own repairs, etc. Self-sufficiency can also be understood as shortening dependency chains.
Compare being dependent on food shipped thousands of miles to relying mostly on food grown within 50 miles of home. There are so many ways long supply chains can break down because the entire system breaks down if even one link in the dependency chain breaks.
Total self-sufficiency isn’t practical. We all rely on industrial production of metals, tools, plastics, fertilizers, etc. But reducing our dependence on systems that are fragile by consuming less and wasting nothing increases our antifragility.
Self-reliance is being able to take care of oneself, being independent in thought and action, and maintaining control of decision-making–what I’ve been calling agency.
Self-reliance means being able to go against the crowd. This requires independence and confidence in one’s inner compass.
Being able to take care of oneself means drawing upon inner resources, being able to identify the essentials of a situation and coming up with solutions that are within reach.
Since households with multiple incomes are far more resilient than households with all their eggs in one basket, our goal is to develop income streams that we control. The ownership is more important than the scale of the income. A modest income we control is far more antifragile than a larger income we have little control over.
Developing income streams is easier if we approach the task with an entrepreneurial mindset.
This mindset looks at work in terms of markets, unmet demand, pricing power, networks of trustworthy peers, trial and error (experiments), optimizing new skills, seeking mentors, learning to make clear-eyed assessments of what’s working and what isn’t, and then acting decisively on the conclusions.
All these skills can be developed. They are very useful in navigating unstable conditions because they prepare us to act decisively rather than passively await others to decide what happens to us.
Some skills can be applied to virtually every field: project management, bookkeeping, working well with others, computer skills and communicating clearly. Being a fast learner is valuable in every field.
In my books and blog posts, I’ve covered the difference between tradable work–work that can be done anywhere–and untradable work, work that can only be done locally. Having skills that are untradable is advantageous, as the competition is local rather than global.
Skills that can’t be automated are also advantageous. Robots are optimized for repetitive tasks and factory / warehouse floors with sensors. They are not optimized for tasks that must be figured out on the fly and that require multiple skills.
Who fixes the robot when it fails out in the field? Another robot? Who replaces the dead battery in the drone? Another drone? The point is there are real-world limits on robotics, artificial intelligence, machine learning and automation that proponents gloss over or ignore.
Those with multiple skills who can problem-solve on the fly will continue to be valuable.
The models of work are changing, and this offers a wider range of options which is especially valuable to those emerging from burnout.
Combining various kinds and modes of work is called hybrid work. This could be mixing work from home (remote work) with occasional visits to an office, or it could be mixing a part-time job with self-employment.
I’ve written about one example in Japan called Half Farmer, Half X, where young urban knowledge workers move to the countryside to pursue small-scale farming while keeping a part-time, high-pay tech job they do online. Since the cost of living is so much lower in the countryside, these hybrid workers don’t need to work many hours remotely to cover their expenses, nor do they need their small-scale farming to be highly profitable.
Not all work is paid. Indeed, only a slice of human work globally is paid. The work that gives us the greatest fulfillment may well be unpaid or poorly paid. We may have to do some work to pay the bills while looking forward to the work we do that doesn’t earn much money.
Personally, I have always been drawn to both knowledge work and hands-on work. I worked my way through my university with a part-time job in construction. This was the ideal mix for my enthusiasms. Whenever I’ve been limited to one or the other, I feel dissatisfied. For me, hybrid work means having both knowledge work and hands-on physical labor, and having control of both.
Many people believe they need additional credentials to expand their opportunities. The alternative is to accredit yourself.
Since I’m enthusiastic about working with fruit trees and vegetable gardens, let’s say I decide to offer my services to potential customers.
One avenue is to spend money and time to get a certificate in horticulture. Alternatively, I could take photos of my own yard to document the trees I planted and how fast they’ve grown under my care. In other words, I could accredit myself, providing direct evidence of my skills and experience.
Employers have learned that completing a credential doesn’t mean the graduate will be productive. The diploma doesn’t prove the graduate learned much or has what it takes to work well with others.
The diploma actually tells us very little about the graduate. We learn much more from someone who accredits themselves by documenting projects they’ve completed.
The only real source of prosperity is improving productivity: doing more with fewer resources and labor. Economists expected the adoption of computers and the Internet to boost productivity. Instead, productivity gains have been extremely modest, 1% or 2% per year, far lower than the 10% annual gains achieved during industrialization.
This productivity paradox has puzzled economists for decades. One reason why the productivity of knowledge work ((white-collar work) has barely improved when compared to factory productivity (blue-collar work) is the methodical optimization of tasks is more difficult to apply to knowledge work. Much of this work is done by rule of thumb and what was passed down by senior workers.
There are a number of reasons for this. One is it’s easier to study the assembly of products than it is to break down the production of services.
Another is that many fields of knowledge work are so new that it’s difficult to optimize tasks because they’re constantly changing.
A third factor is that we’ve been wealthy enough to waste labor and capital on unproductive bureaucratic friction. Just as we waste water when it’s abundant and free, we also waste energy and money when they’re abundant.
In Global Crisis, National Renewal I describe the changes in the process of obtaining a building permit in the past 40 years.
In the early 1980s, I could submit a set of plans for a modest house in the morning and pick up the approved plans and building permit that afternoon. Now the process takes many months, even though the house being built hasn’t changed much at all. What changed was the permit approval process became terribly inefficient.
Since there’s few incentives to improve efficiencies in bureaucracies, it now takes a decade or longer to approve a bridge or landfill While the number of professors and doctors has increased modestly, the number of university and hospital administrators has soared.
Now that energy will no longer be cheap over the long term, incentives to improve the productivity of knowledge work will increase.
Unsustainable economies are prone to sudden changes in finance and the availability of essentials. We’re accustomed to predictable stability, and so few are prepared to respond effectively to instability.
If our lives only work when things are stable, our way of life is fragile. Recall Sun Tzu’s advice: “If a battle cannot be won, do not fight it.” If we’re only prepared for everything to stay the same, we’re fighting a battle we can’t win. We want to be prepared for sudden changes and scarcities by planning ahead and being flexible, nimble and responsive.
One facet of being antifragile is having a buffer or cushion against sudden shocks. In a 2018 interview, Nassim Taleb said, “Money can’t buy happiness, but the absence of money can cause unhappiness. Money buys freedom… to choose what you want to do professionally.”
Taleb went on to note that it takes great discipline to keep enough money stashed to give us the freedom to maintain our agency when faced with adversity. Self-reliance requires a buffer so we have time to figure out solutions and the means to pursue them.
In my experience, our willingness to consider all options, our ability to make careful decisions and take decisive action are just as important as a cushion of cash. Cash widens our options, but if we’re frozen by inexperience and fear then our options are severely limited.
The wider our range of skills, the greater our opportunities to add value. The basic needs of human life must be met and so those who can meet those needs will always be valued. This range of skills is also a buffer because it gives us more options in adversity.
How much money do we need as a cushion? The less we need, the lighter our expenses and the more options we have. If we need $10,000 a month just to pay our basic expenses, that demands a large cushion. If we’ve simplified and downsized our way of life so $1,000 a month is enough to keep us going, our cushion can be much smaller.
In other words, frugality, self-reliance and simplicity are key parts of antifragility, for they lower the cost of freedom. Money can lose its value in crisis, but our buffer of skills and self-reliance cannot be taken from us or devalued by a global crisis.
One final consideration is timing. The sooner we start preparing for degrowth, the better off we’ll be. A Chinese proverb captures this succinctly: By the time you’re thirsty, it’s too late to dig a well.
Are we heading into another real estate bubble / crash? Those who say “no” see the housing shortage as real, while those who say “yes” see the demand as a reflection of the Federal Reserve’s artificial goosing of the housing market via its unprecedented purchases of mortgage-backed securities and “easy money” financial conditions.
My colleague CH at econimica.blogspot.com recently posted charts calling this assumption into question. The first chart (below) shows the U.S. population growth rate plummeting as housing starts soar, and the second chart shows housing unit per capita, which has just reached the same extreme as the 2008 housing bubble.
Demographics and housing do not reflect a housing shortage nationally, though there could be scarcities locally, of course, and other factors such as thousands of units being held off the market as short-term rentals or investments by overseas buyers who have no interest in renting their investment dwellings.
On a per capita basis, housing has reached previous bubble levels. That suggests housing shortages are artificial or local, not structural.
Next, let’s consider how the current housing bubble differs from previous bubbles in the late 1970s and 2000s. In my view, the previous bubbles were driven by demographics, inflation and monetary policy: in the late 70s, the 65 million-strong Baby Boom generation began buying their first homes, pushing demand higher while inflation soared, making real-world assets such as housing more desirable.
Once the Federal Reserve pushed interest rates to 18%, mortgage rates rose in lockstep and housing crashed as few could afford sky-high housing prices at sky-high mortgage rates.
The housing bubble of 2007-08 was largely driven by declines in mortgage rates (as the Fed pursued an “easy money” policy to escape the negative effects of the Dot-Com stock market bubble crash) and a loosening of credit/mortgage standards. These fueled a bubble that morphed into a speculative free-for-all of no-down payment and no-document loans.
This decline in the cost of borrowing money (mortgage rates) enabled a sharp rise in the price of housing, a speculative boom that was greatly accelerated by “innovations” in the mortgage market such as zero down payments loans, interest-only loans, home equity loans, and no-document “liar loans”–mortgages underwritten without the usual documentation of income and net worth.
These forces generated a speculative frenzy of house-flipping, leveraging the equity in the family home to buy two or three homes under construction and selling them before they were even completed for fat profits, and so on.
Needless to say, the pool of potential buyers expanded tremendously when people earning $25,000 a year could buy $500,000 houses on speculation.
Once the bubble popped, the pool of buyers shrank along with the home equity.
If we study this chart below of new home prices (courtesy of Mac10), we can see that the 21st century’s Bubble #2 rose as the Federal Reserve pushed mortgage rates far below historic norms. Once rates reached a bottom, the 7-year inflation of home prices (from 2011 to 2018) began rolling over.
This deflation of home prices was reversed by the pandemic recession, as the Fed’s vast expansion of credit and mortgage-buying, which pushed mortgage rates to new lows. Trillions of dollars in new credit and cash stimulus ignited a speculative frenzy in stocks, bonds and real estate, a frenzy which drove bubble #3 to extraordinary heights.
All this unprecedented fiscal and monetary stimulus also ignited inflation, and so rates are rising in response. Bubble #3 is already deflating, at least by the measure of new home prices.
But the current bubble has a number of dynamics that weren’t big factors in previous bubbles.
One is the rise of remote work. Many people have been working remotely since the late 1990s enabled Internet-based work, but the pandemic greatly increased the pool of employers willing to accept remote work as a permanent feature of employment.
This trend has been well documented, but the consequences are still unfolding: remote workers are no longer trapped in unaffordable, congested cities and suburbs.
Several other trends have attracted much less attention, but I see them as equally consequential.
1. Housing in many urban zones are out of reach of all but the top 10% without extraordinary sacrifice, and now that employment isn’t necessarily tied to urban zones, the bottom 90% of young people without family wealth or high incomes are coming to realize the benefits of urban living are not worth the extreme sacrifices needed to buy an overvalued house.
A middle-class life–home ownership, financial security, leisure and surplus income to invest in one’s family and well-being–is no longer affordable for the majority of young Americans.
Few are willing to concede this because it reveals the neofeudal nature of American life. Those who bought homes in coastal urban zones 20+ years ago are wealthy due to soaring housing valuations while young people can’t even afford the rent, much less buying a house.
If you’re not making $250,000 or more a year as a couple, the only hope for a middle-class life that includes leisure and some surplus income to invest is top move to some place with much lower housing and other costs. That place is rural America.
2. The benefits of urban living are deteriorating while the sacrifices and downsides are increasing. Urban living is fun if you’re wealthy, not so fun if you don’t have plenty of surplus income to spend.
Urban problems such as homelessness, traffic congestion and crime are endemic and unresolvable, though few are willing to state the obvious. Americans are expected to be optimistic and to count on some new whiz-bang technology to solve all problems.
Unfortunately, problems generated by dysfunctional, overly complex institutions, corruption and unaffordable costs can’t be solved by some new technology, and so the decay of cities will only gather momentum.
The hope that billions of federal stimulus funding would solve these problems is about to encounter reality as the funds dry up and all the problems remain or have actually expanded despite massive “investments” in solutions.
Few analysts have looked at the finances of high-cost cities. The decline in bricks-and-mortar retail, rising crime, soaring junk fees, rents and property taxes have all made urban small business insanely costly and therefore risky.
Small businesses are the core sources of employment and taxes. As high costs, crime, etc. choke small businesses, employment and tax revenues drop and commercial real estate sits empty, generating decay and defaults.
Once office and retail space is no longer affordable or necessary, commercial real estate crashes in value as owners who bought at the top default and go bankrupt.
People need shelter but they don’t need office space or to start a bricks-and-mortar retail business.
As urban finances unravel, cities won’t have the funding to run their bloated, inefficient, overly complex and unaccountable bureaucracies.
3. In geopolitics, we speak of the core and the periphery. Empires have a core (Rome and central Italy in the Roman Empire) and a periphery (Britain, North Africa, Egypt, the Levant).
As finances and trade decay and costs soar, the periphery is surrendered to maintain the core.
In urban zones, the same dynamic will become increasingly visible: the peripheral neighborhoods will be underfunded to continue protecting the wealthy enclaves.
Crime will skyrocket in the periphery even as residents of the wealthy enclaves see little decay in their neighborhoods.
This asymmetry–already extreme–will drive social unrest and disorder. This is a self-reinforcing feedback: as the periphery neighborhoods deteriorate, the remaining businesses flee and the smart money sells and moves away.
Tax revenues plummet and city services decay even further, persuading hangers-on to move before it gets even worse. Cities compensate for the lower revenues by increasing taxes on the remaining residents and cutting services.
Each turn of the screw triggers more closures and selling and fewer tax revenues.
4. Dependency chains will become increasingly consequential: the greater a city’s dependency on essentials trucked/shipped from hundreds or thousands of of kilometers/miles away, the more prone that city will be to disruptions of essentials: food, energy, materials and infrastructure.
Though few are willing to dwell on such vulnerabilities, most cities are totally dependent on diesel fueled fleets of trucks, rail and jet fuel for luxuries flown in from afar for virtually all goods. Cities produce very little in the way of essentials such as food and energy.
The past reliability of long supply chains has instilled a confidence that these supply chains stretching thousands of kilometers and miles are unbreakable and forever. They aren’t, and the initial disruptions will be a great shock to Americans who believe full gas tanks and fully stocked store shelves are their birthright.
5. As I’ve explained in my new book Global Crisis, National Renewal, the era of cheap, reliable abundance has drawn to a close and now we are entering an era of scarcity in essentials.
Another reality few discuss is the relative stability of global weather over the past 40 years. As weather becomes less reliable, so too do crop yields and food supplies.
Globalization has poured capital into expanding acreage under cultivation to the point that the planet’s forests are being decimated to grow more soy to feed animals to be slaughtered for human consumption.
On the margins, land that was once productive has been lost to desertification. Fresh water aquifers have been drained and glaciers feeding rivers are melting away. Soil fertility has declined even as fertilizer use has expanded.
The low-hanging fruit of GMO seeds, fertilizers, insecticides, herbicides and Green Revolution hybrids have all been plucked. The gains have been reaped but now the downsides of these dependencies are becoming increasingly consequential: fertilizer costs are rising fast, insects and diseases are evading chemicals and vaccines, and the vulnerabilities of mono-crop, industrialized agriculture and animal husbandry threaten to cascade into crop failures, soaring prices and shortages.
6. This will have two consequences: rural incomes which have been falling for decades due to globalization (i.e. bringing in cheap food from places with no environmental standards, cheap labor and few taxes / social costs) will start rising sharply, fueling a reversal in the long decline of rural communities based on agricultural income.
The soaring costs of essentials will reduce the disposable income of the bottom 90%, reducing the money they’ll have to spend on eating out, retail shopping, etc.–all the surplus spending that drives cities’ economies and tax revenues.
Few (if any) commentators forecast a cyclical reversal of the demographic trend of people moving from rural locales to cities. I think this trend has already reversed and will gather momentum as cities become increasingly unlivable, disposable incomes decline as scarcities push prices higher and people flee for lower cost, more secure environs.
7. As I often note, following what the super-wealthy are doing is a pretty sound investment strategy because the super-wealthy spend freely to buy the best advice and are highly motivated to protect their wealth.
People who live in well-known, highly desirable rural towns (Telluride, Jackson Hole, Lake Tahoe, etc.) are describing a feeding frenzy of wealthy urbanites buying multi-million dollar homes. Small cities such as Bozeman, MT and Ashville, NC are experiencing a flood of new residents that is straining infrastructure and pushing housing prices out of reach for local residents with average wages.
8. Rural towns in the U.S., Italy, Japan and even Switzerland are trying to attract new residents with offers of free land, subsidized rent, low cost homes, etc. This shows that the trends are global and not limited to any one nation. Would you take free land in rural America?
The decay of urban life isn’t yet consequential enough to push people into making a major move, but once someone has been robbed, repeatedly found human feces on their doorstep or experienced scarcities that trigger the madness of crowds, the decision to leave becomes much, much easier.
Some cities will manage the decline of employment and tax revenues more gracefully than others. Most will suffer from the dynamic I’ve often described on the blog: the Ratchet Effect. Costs move effortlessly higher as tax revenues have increased in one speculative bubble after another, but once revenues drop, cities have no mechanisms or political constituency to manage a sharp, long-term decline in revenues.
They then become prone to the other dynamic I’ve described, the Rising Wedge Breakdown (see chart below): as agencies and institutions become sclerotic, unaccountable and self-serving, even a relatively modest cut in revenues triggers institutional collapse, as the system requires 100% funding to function. A 10% reduction doesn’t cause a 10% decline in service, it causes an 50% decline in service, on the way to complete dysfunction.
Few believe cities can unravel, but remote work, geographic arbitrage (discussed below), tightening credit, rising crime, the decline of commercial real estate, end of massive stimulus, scarcities, the madness of crowds, the decline of civic services and amenities and an insanely high cost of living all have consequences and second-order effects.
What were beneficial synergies become fatal synergies as dynamics reverse and begin reinforcing each other.
So let’s put all this together.
A. The cycle of declining interest rates and inflation has ended and a cycle of much higher interest and mortgage rates and inflation is beginning. Higher mortgages rates will depress housing prices as only the highest income households will be able to afford today’s prices once mortgage rates rise.
B. The decay of urban finances and quality of life will accelerate as stimulus ends, credit dries up and inflation decimates disposable income.
C. The stress of trying to make enough money to afford the high costs of city/suburban living as the real estate bubble pops and the benefits of city living decline will burn out increasing numbers of people who will have no choice but to find more affordable, more secure and more livable places.
D. While the wealthy have already secured second or third homes in the toniest desirable towns, there are still opportunities for lower cost, more secure residences in rural areas.
E. This migration, even at the margins, will further depress urban housing prices and push prices in desirable rural locales higher.
F. This migration will have regional, ethnic and cultural variations. For example, some African-Americans leaving the upper Midwest are finding favor with communities in the South where family, church and cultural ties beckon.
G. Correspondent John F. used the phrase geographic arbitrage which means earning money remotely in high-wage sectors while living some place that’s low cost and secure.
I wrote about this many years ago in my post about young Japanese maintaining a part-time remote-work gig while pursuing farming in rural communities: Degrowth Solutions: Half-Farmer, Half-X (July 19, 2014).
H. Though monetary / inflationary forces will pop housing prices based solely on low mortgage rates, this doesn’t mean housing everywhere will decline: as burned out urbanites seek lower cost, more secure and livable places in rural locales, homes in desirable towns and small cities could rise sharply because they’re starting from such low levels.
I. If urban areas decay rapidly, housing prices could plummet much faster than most people think possible.
When cities lose employment, tax revenues and desirability, they can go down fast. Property values can fall in half and then by 90%.
How is this possible? Supply and demand: if demand falls off a cliff, there won’t be buyers for thousands of homes that come on the market all at once. This is just like a stock market in which buyers disappear, as no one wants to buy an asset that’s rapidly losing value.
As I’ve noted many times, prices for assets are set on the margins: the last sale of a house resets the price for the entire neighborhood.
The stock market is easily manipulated by the big players, who can stop a slide in prices by buying huge chunks of stocks and call options. There are no equivalent forces which can stop a decline in housing prices.
And since rates will rise regardless of what the Federal Reserve does because global capital is demanding a real return above inflation, then the hope for lower mortgage rates to support bubble-level housing prices will be in vain.
How low could housing go? As explained above, there will likely be very asymmetric declines and increases in housing valuations going forward. But on a technical-analysis level, we can anticipate a general decline to previous lows, first to the 2019 lows and then to the 2011 lows.
Some analysts believe inflation will funnel capital into housing as investors seek assets that will go up with inflation, but this is a murky forecast: the bottom 90% of American households are already priced out of coastal housing, so inflation only robs their wages of purchasing power. They don’t have any hope of buying a house anywhere near current prices.
Corporations are buying thousands of houses for the rental income, but once all the stimulus runs out and the excesses of speculation reverse, they’ll find few renters can afford their sky-high rents. At that point corporate buyers become corporate sellers, but they won’t find buyers willing or able to pay their asking prices, which are based on bubble pricing, not reality.
All these swirling currents will affect housing valuations in different places differently. Some areas could see 50% declines while others see 50% increases, regardless of mortgage rates or Fed policy.
What will become most desirable is a low cost of living, security and livability, which includes community, reduced dependency on long supply chains and local production of essentials.
We are all prone to believing the recent past is a reliable guide to the future. But in times of dynamic reversals, the past is an anchor thwarting our progress, not a forecast.
Permanent war has cannibalized the country. It has created a social, political, and economic morass. Each new military debacle is another nail in the coffin of Pax Americana.
The United States, as the near unanimous vote to provide nearly $40 billion in aid to Ukraine illustrates, is trapped in the death spiral of unchecked militarism. No high speed trains. No universal health care. No viable Covid relief program. No respite from 8.3 percent inflation. No infrastructure programs to repair decaying roads and bridges, which require $41.8 billion to fix the 43,586 structurally deficient bridges, on average 68 years old. No forgiveness of $1.7 trillion in student debt. No addressing income inequality. No program to feed the 17 million children who go to bed each night hungry. No rational gun control or curbing of the epidemic of nihilistic violence and mass shootings. No help for the 100,000 Americans who die each year of drug overdoses. No minimum wage of $15 an hour to counter 44 years of wage stagnation. No respite from gas prices that are projected to hit $6 a gallon.
The permanent war economy, implanted since the end of World War II, has destroyed the private economy, bankrupted the nation, and squandered trillions of dollars of taxpayer money. The monopolization of capital by the military has driven the US debt to $30 trillion, $ 6 trillion more than the US GDP of $ 24 trillion. Servicing this debt costs $300 billion a year. We spent more on the military, $ 813 billion for fiscal year 2023, than the next nine countries, including China and Russia, combined.
We are paying a heavy social, political, and economic cost for our militarism. Washington watches passively as the U.S. rots, morally, politically, economically, and physically, while China, Russia, Saudi Arabia, India, and other countries extract themselves from the tyranny of the U.S. dollar and the international Society for Worldwide Interbank Financial Telecommunication (SWIFT), a messaging network banks and other financial institutions use to send and receive information, such as money transfer instructions. Once the U.S. dollar is no longer the world’s reserve currency, once there is an alternative to SWIFT, it will precipitate an internal economic collapse. It will force the immediate contraction of the U.S. empire shuttering most of its nearly 800 overseas military installations. It will signal the death of Pax Americana.
Democrat or Republican. It does not matter. War is the raison d’état of the state. Extravagant military expenditures are justified in the name of “national security.” The nearly $40 billion allocated for Ukraine, most of it going into the hands of weapons manufacturers such as Raytheon Technologies, General Dynamics, Northrop Grumman, BAE Systems, Lockheed Martin, and Boeing, is only the beginning. Military strategists, who say the war will be long and protracted, are talking about infusions of $4 or $5 billion in military aid a month to Ukraine. We face existential threats. But these do not count. The proposed budget for the Centers for Disease Control and Prevention (CDC) in fiscal year 2023 is $10.675 billion. The proposed budget for the Environmental Protection Agency (EPA) is $11.881 billion. Ukraine alone gets more than double that amount. Pandemics and the climate emergency are afterthoughts. War is all that matters. This is a recipe for collective suicide.
There were three restraints to the avarice and bloodlust of the permanent war economy that no longer exist. The first was the old liberal wing of the Democratic Party, led by politicians such as Senator George McGovern, Senator Eugene McCarthy, and Senator J. William Fulbright, who wrote The Pentagon Propaganda Machine. The self-identified progressives, a pitiful minority, in Congress today, from Barbara Lee, who was the single vote in the House and the Senate opposing a broad, open-ended authorization allowing the president to wage war in Afghanistan or anywhere else, to Ilhan Omar now dutifully line up to fund the latest proxy war. The second restraint was an independent media and academia, including journalists such as I.F Stone and Neil Sheehan along with scholars such as Seymour Melman, author of The Permanent War Economy and Pentagon Capitalism: The Political Economy of War. Third, and perhaps most important, was an organized anti-war movement, led by religious leaders such as Dorothy Day, Martin Luther King Jr. and Phil and Dan Berrigan as well as groups such as Students for a Democratic Society (SDS). They understood that unchecked militarism was a fatal disease.
None of these opposition forces, which did not reverse the permanent war economy but curbed its excesses, now exist. The two ruling parties have been bought by corporations, especially military contractors. The press is anemic and obsequious to the war industry. Propagandists for permanent war, largely from right-wing think tanks lavishly funded by the war industry, along with former military and intelligence officials, are exclusively quoted or interviewed as military experts. NBC’s “Meet the Press” aired a segment May 13 where officials from Center for a New American Security (CNAS) simulated what a war with China over Taiwan might look like. The co-founder of CNAS, Michèle Flournoy, who appeared in the “Meet the Press” war games segment and was considered by Biden to run the Pentagon, wrote in 2020 in Foreign Affairs that the U.S. needs to develop “the capability to credibly threaten to sink all of China’s military vessels, submarines and merchant ships in the South China Sea within 72 hours.”
The handful of anti-militarists and critics of empire from the left, such as Noam Chomsky, and the right, such as Ron Paul, have been declared persona non grata by a compliant media. The liberal class has retreated into boutique activism where issues of class, capitalism and militarism are jettisoned for “cancel culture,” multiculturalism and identity politics. Liberals are cheerleading the war in Ukraine. At least the inception of the war with Iraq saw them join significant street protests. Ukraine is embraced as the latest crusade for freedom and democracy against the new Hitler. There is little hope, I fear, of rolling back or restraining the disasters being orchestrated on a national and global level. The neoconservatives and liberal interventionists chant in unison for war. Biden has appointed these war mongers, whose attitude to nuclear war is terrifyingly cavalier, to run the Pentagon, the National Security Council, and the State Department.
Since all we do is war, all proposed solutions are military. This military adventurism accelerates the decline, as the defeat in Vietnam and the squandering of $8 trillion in the futile wars in the Middle East illustrate. War and sanctions, it is believed, will cripple Russia, rich in gas and natural resources. War, or the threat of war, will curb the growing economic and military clout of China.
These are demented and dangerous fantasies, perpetrated by a ruling class that has severed itself from reality. No longer able to salvage their own society and economy, they seek to destroy those of their global competitors, especially Russia and China. Once the militarists cripple Russia, the plan goes, they will focus military aggression on the Indo-Pacific, dominating what Hillary Clinton as secretary of state, referring to the Pacific, called “the American Sea.”
You cannot talk about war without talking about markets. The U.S., whose growth rate has fallen to below 2 percent, while China’s growth rate is 8.1 percent, has turned to military aggression to bolster its sagging economy. If the U.S. can sever Russian gas supplies to Europe, it will force Europeans to buy from the United States. U.S. firms, at the same time, would be happy to replace the Chinese Communist Party, even if they must do it through the threat of war, to open unfettered access to Chinese markets. War, if it did break out with China, would devastate the Chinese, American, and global economies, destroying free trade between countries as in World War I. But that doesn’t mean it won’t happen.
Washington is desperately trying to build military and economic alliances to ward off a rising China, whose economy is expected by 2028 to overtake that of the United States, according to the UK’s Centre for Economics and Business Research (CEBR). The White House has said Biden’s current visit to Asia is about sending a “powerful message” to Beijing and others about what the world could look like if democracies “stand together to shape the rules of the road.” The Biden administration has invited South Korea and Japan to attend the NATO summit in Madrid.
But fewer and fewer nations, even among European allies, are willing to be dominated by the United States. Washington’s veneer of democracy and supposed respect for human rights and civil liberties is so badly tarnished as to be irrecoverable. Its economic decline, with China’s manufacturing 70 percent higher than that of the U.S., is irreversible. War is a desperate Hail Mary, one employed by dying empires throughout history with catastrophic consequences. “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable,” Thucydides noted in the History of the Peloponnesian War.
A key component to the sustenance of the permanent war state was the creation of the All-Volunteer Force. Without conscripts, the burden of fighting wars falls to the poor, the working class, and military families. This All-Volunteer Force allows the children of the middle class, who led the Vietnam anti-war movement, to avoid service. It protects the military from internal revolts, carried out by troops during the Vietnam War, which jeopardized the cohesion of the armed forces.
The All-Volunteer Force, by limiting the pool of available troops, also makes the global ambitions of the militarists impossible. Desperate to maintain or increase troop levels in Iraq and Afghanistan, the military instituted the stop-loss policy that arbitrarily extended active-duty contracts. Its slang term was the backdoor draft. The effort to bolster the number of troops by hiring private military contractors, as well, had a negligible effect. Increased troop levels would not have won the wars in Iraq and Afghanistan but the tiny percentage of those willing to serve in the military (only 7 percent of the U.S. population are veterans) is an unacknowledged Achilles heel for the militarists.
“As a consequence, the problem of too much war and too few soldiers eludes serious scrutiny,” writes historian and retired Army Colonel Andrew Bacevich in After the Apocalypse: America’s Role in a World Transformed. “Expectations of technology bridging that gap provide an excuse to avoid asking the most fundamental questions: Does the United States possess the military wherewithal to oblige adversaries to endorse its claim of being history’s indispensable nation? And if the answer is no, as the post-9/11 wars in Afghanistan and Iraq suggest, wouldn’t it make sense for Washington to temper its ambitions accordingly?”
This question, as Bacevich points out, is “anathema.” The military strategists work from the supposition that the coming wars won’t look anything like past wars. They invest in imaginary theories of future wars that ignore the lessons of the past, ensuring more fiascos.
The political class is as self-deluded as the generals. It refuses to accept the emergence of a multi-polar world and the palpable decline of American power. It speaks in the outdated language of American exceptionalism and triumphalism, believing it has the right to impose its will as the leader of the “free world.” In his 1992 Defense Planning Guidance memorandum, U.S. Under Secretary of Defense Paul Wolfowitz argued that the U.S. must ensure no rival superpower again arises. The U.S. should project its military strength to dominate a unipolar world in perpetuity. On February 19, 1998, on NBC’s “TodayShow”, Secretary of State Madeleine Albright gave the Democratic version of this doctrine of unipolarity. “If we have to use force it is because we are Americans; we are the indispensable nation,” she said. “We stand tall, and we see further than other countries into the future.”
This demented vision of unrivaled U.S. global supremacy, not to mention unrivaled goodness and virtue, blinds the establishment Republicans and Democrats. The military strikes they casually used to assert the doctrine of unipolarity, especially in the Middle East, swiftly spawned jihadist terror and prolonged warfare. None of them saw it coming until the hijacked jets slammed into the World Trade Center twin towers. That they cling to this absurd hallucination is the triumph of hope over experience.
There is a deep loathing among the public for these elitist Ivy League architects of American imperialism. Imperialism was tolerated when it was able to project power abroad and produce rising living standards at home. It was tolerated when it restrained itself to covert interventions in countries such as Iran, Guatemala, and Indonesia. It went off the rails in Vietnam. The military defeats that followed accompanied a steady decline in living standards, wage stagnation, a crumbling infrastructure and eventually a series of economic policies and trade deals, orchestrated by the same ruling class, which deindustrialized and impoverished the country.
The establishment oligarchs, now united in the Democratic Party, distrust Donald Trump. He commits the heresy of questioning the sanctity of the American empire. Trump derided the invasion of Iraq as a “big, fat mistake.” He promised “to keep us out of endless war.” Trump was repeatedly questioned about his relationship with Vladimir Putin. Putin was “a killer,” one interviewer told him. “There are a lot of killers,” Trump retorted. “You think our country’s so innocent?” Trump dared to speak a truth that was to be forever unspoken, the militarists had sold out the American people.
Noam Chomsky took some heat for pointing out, correctly, that Trumpis the “one statesman” who has laid out a “sensible” proposition to resolve the Russia-Ukraine crisis. The proposed solution included “facilitating negotiations instead of undermining them and moving toward establishing some kind of accommodation in Europe…in which there are no military alliances but just mutual accommodation.”
Trump is too unfocused and mercurial to offer serious policy solutions. He did set a timetable to withdraw from Afghanistan, but he also ratcheted up the economic war against Venezuela and reinstituted crushing sanctions against Cuba and Iran, which the Obama administration had ended. He increased the military budget. He apparently flirted with carrying out a missile strike on Mexico to “destroy the drug labs.” But he acknowledges a distaste for imperial mismanagement that resonates with the public, one that has every right to loath the smug mandarins that plunge us into one war after another. Trump lies like he breathes. But so do they.
The 57 Republicans who refused to support the $40 billion aid package to Ukraine, along with many of the 19 bills that included an earlier $13.6 billion in aid for Ukraine, come out of the kooky conspiratorial world of Trump. They, like Trump, repeat this heresy. They too are attacked and censored. But the longer Biden and the ruling class continue to pour resources into war at our expense, the more these proto fascists, already set to wipe out Democratic gains in the House and the Senate this fall, will be ascendant. Marjorie Taylor Greene, during the debate on the aid package to Ukraine, which most members were not given time to closely examine, said: “$40 billion dollars but there’s no baby formula for American mothers and babies.”
“An unknown amount of money to the CIA and Ukraine supplemental bill but there’s no formula for American babies,” she added. “Stop funding regime change and money laundering scams. A US politician covers up their crimes in countries like Ukraine.”
Democrat Jamie Raskin immediately attacked Greene for parroting the propaganda of Russian president Vladimir Putin.
Greene, like Trump, spoke a truth that resonates with a beleaguered public. The opposition to permanent war should have come from the tiny progressive wing of the Democratic Party, which unfortunately sold out to the craven Democratic Party leadership to save their political careers. Greene is demented, but Raskin and the Democrats peddle their own brand of lunacy. We are going to pay a very steep price for this burlesque.
After the Crash 