Tag Archives: Debt

When the Butterfly Flaps Its Wings

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credit: Twitter/@caroleenarn

By James Howard Kunstler

Source: Kunstler.com

It remains to be seen what the impact will be from Mother Nature putting the nation’s fourth largest city out-of-business. And for how long? It’s possible that Houston will never entirely recover from Hurricane Harvey. The event may exceed the physical damage that Hurricane Katrina did to New Orleans. It may bankrupt large insurance companies and dramatically raise the risk of doing business anywhere along the Gulf and Atlantic coasts of the USA — or at least erase the perceived guarantee that losses are recoverable. It may even turn out to be the black swan that reveals the hyper-fragility of a US-driven financial system.

Houston also happens to be the center of the US oil industry. Offices can be moved elsewhere, of course, but not so easily the nine major oil refineries that sprawl between Buffalo Bayou over to Beaumont, Port Arthur, and then Lake Charles, Louisiana. Harvey is inching back out to the Gulf where it will inhale more energy over the warm ocean waters and then return inland in the direction of those refineries.

The economic damage could be epic. Much of the supply for the Colonial Pipeline system emanates from the region around Houston, running through Atlanta and clear up to Philadelphia and New York. There could be lines at the gas stations along the eastern seaboard in early September.

The event is converging with the US government running out of money this fall without new authority to borrow more by congress voting to raise the US debt ceiling. Perhaps the emergency of Hurricane Harvey and its costly aftermath will bludgeon congress into quickly raising the debt ceiling. If that doesn’t happen, and the debt ceiling is not raised, the federal government might have to pretend that it can pay for emergency assistance to Texas and Louisiana. That pretense can only go so far before government contractors balk and maybe even walk.

Ordinarily, failure to raise the debt ceiling would lead to a government shut-down, including hurricane recovery operations, unless the president invoked some kind of emergency powers. That would be decisive action, but it could also be the beginning of something that looks like a full-out dictatorship. Powers assumed are often not surrendered when the original emergency is over. And what would the president use for money if a substantial enough number of congresspersons and senators are prompted by their distaste for Mr. Trump to drag out the process of financially re-liquefying the government? (And nevermind even passing a budget.)

Meanwhile, two other major sources of aggravation are waiting off-stage: one is North Korea. Why wouldn’t Kim Jong-un use the opportunity of political disarray in the US to create more headaches for a distracted US government? Never let a crisis go to waste. Another potential irritant is the return of students to American college campuses. Imagine how the campus Antifa forces would react to Mr. Trump assuming emergency powers. It’s easy to foresee an acceleration of violence between the extreme Left and the Extreme right during what is shaping up to look like a major crisis in governing. If the campus Left had any tactical brains, they’d stop marching around in black uniforms and instead organize a mass renunciation of college loan debt.

Behind all this political strife will be wobbling financial markets. The message from the debt ceiling stalemate to the bond market would be that the US can no longer be relied on to pay its debts. Interest rates on US Treasury paper would have to go up as the long-lost concept of risk returned to the bond scene. People and institutions will not be induced to hold bonds unless the yield is recalibrated to the actual risk. Of course, in the mysterious world of bonds (i.e. securitized debt), the price of bonds goes down as interest rates rise. Meaning a lot of current holders of bonds would be hammered if they tried to sell. Rates rising would also spell big trouble for corporations and governments who have to make regular interest payments to bond-holders. A rate rise to as little as 3 percent on US Treasury bonds could spin the country into comprehensive bankruptcy.

How might stock markets and currency markets react to the scenario above? To me it would look like a drop of at least 1000 points on the S & P. The US dollar might actually rise initially as a whole lot of debt is renounced — which makes money actually disappear — but then you have the Federal Reserve waiting on another flank to roll out their own emergency response: Quantitative Easing No. 4, flooding the system with new “money” that has all the appearance and none of the mojo of value, tanking the dollar anew. As a wise correspondent of mine wrote a while back: “financialization is nothing more than money with its value removed.” (Graham Reinders.)

A lot can happen when a faraway butterfly flaps its wings and sets a slight current of air in motion.

Just Wait a Little While

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By James Howard Kunstler

Source: Kunstler.com

The trouble, of course, is that even after the Deep State (a.k.a. “The Swamp”) succeeds in quicksanding President Trump, America will be left with itself — adrift among the cypress stumps, drained of purpose, spirit, hope, credibility, and, worst of all, a collective grasp on reality, lost in the fog of collapse.

Here’s what you need to know about what’s going on and where we’re headed.

The United States is comprehensively bankrupt. The government is broke and the citizenry is trapped under inescapable debt burdens. We are never again going to generate the kinds and volumes of “growth” associated with techno-industrial expansion. That growth came out of energy flows, mainly fossil fuels, that paid for themselves and furnished a surplus for doing other useful things. It’s over. Shale oil, for instance, doesn’t pay for itself and the companies engaged in it will eventually run out of accounting hocus-pocus for pretending that it does, and they will go out of business.

The self-evident absence of growth means the end of borrowing money at all levels. When you can’t pay back old loans, it’s unlikely that you will be able to arrange new loans. The nation could pretend to be able to borrow more, since it can supposedly “create” money (loan it into existence, print it, add keystrokes to computer records), but eventually those tricks fail, too. Either the “non-performing” loans (loans not being paid off) cause money to disappear, or the authorities “create” so much new money from thin air (money not associated with real things of value like land, food, manufactured goods) that the “money” loses its mojo as a medium of exchange (for real things), as a store of value (over time), and as a reliable index of pricing — which is to say all the functions of money.

In other words, there are two ways of going broke in this situation: money can become scarce as it disappears so that few people have any; or everybody can have plenty of money that has no value and no credibility. I mention these monetary matters because the system of finance is the unifying link between all the systems we depend on for modern life, and none of them can run without it. So that’s where the real trouble is apt to start. That’s why I write about markets and banks on this blog.

The authorities in this nation, including government, business, and academia, routinely lie about our national financial operations for a couple of reasons. One is that they know the situation is hopeless but the consequences are so awful to contemplate that resorting to accounting fraud and pretense is preferable to facing reality. Secondarily, they do it to protect their jobs and reputations — which they will lose anyway as collapse proceeds and their record of feckless dishonesty reveals itself naturally.

The underlying issue is the scale of human activity in our time. It has exceeded its limits and we have to tune back a lot of what we do. Anything organized at the giant scale is headed for failure, so it comes down to a choice between outright collapse or severe re-scaling, which you might think of as managed contraction. That goes for government programs, military adventures, corporate enterprise, education, transportation, health care, agriculture, urban design, basically everything. There is an unfortunate human inclination to not reform, revise, or re-scale familiar activities. We’ll use every kind of duct tape and baling wire we can find to keep the current systems operating, and we have, but we’re close to the point where that sort of cob-job maintenance won’t work anymore, especially where money is concerned.

Why this is so has been attributed to intrinsic human brain programming that supposedly evolved optimally for short-term planning. But obviously many people and institutions dedicate themselves to long-term thinking. So there must be a big emotional over-ride represented by the fear of letting go of what used to work that tends to disable long-term thinking. It’s hard to accept that our set-up is about to stop working — especially something as marvelous as techno-industrial society.

But that’s exactly what’s happening. If you want a chance at keeping on keeping on, you’ll have to get with reality’s program. Start by choosing a place to live that has some prospect of remaining civilized. This probably doesn’t include our big cities. But there are plenty of small cities and small towns out in America that are scaled for the resource realities of the future, waiting to be reinhabited and reactivated. A lot of these lie along the country’s inland waterways — the Ohio, Mississippi, Missouri river system, the Great Lakes, the Hudson and St. Lawrence corridors — and they also exist in regions of the country were food can be grown.

You’ll have to shift your energies into a trade or vocation that makes you useful to other people. This probably precludes jobs like developing phone apps, day-trading, and teaching gender studies. Think: carpentry, blacksmithing, basic medicine, mule-breeding, simplified small retail, and especially farming, along with the value-added activities entailed in farm production. The entire digital economy is going to fade away like a drug-induced hallucination, so beware the current narcissistic blandishments of computer technology. Keep in mind that being in this world actually entitles you to nothing. One way or another, you’ll have to earn everything worth having, including self-respect and your next meal.

Now, just wait a little while.

The Value of Everything

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By James Howard Kunstler

Source: Kunstler.com

We are looking more and more like France on the eve of its revolution in 1789. Our classes are distributed differently, but the inequity is just as sharp. America’s “aristocracy,” once based strictly on bank accounts, acts increasingly hereditary as the vapid offspring and relations of “stars” (in politics, showbiz, business, and the arts) assert their prerogatives to fame, power, and riches — think the voters didn’t grok the sinister import of Hillary’s “it’s my turn” message?

What’s especially striking in similarity to the court of the Bourbons is the utter cluelessness of America’s entitled power elite to the agony of the moiling masses below them and mainly away from the coastal cities. Just about everything meaningful has been taken away from them, even though many of the material trappings of existence remain: a roof, stuff that resembles food, cars, and screens of various sizes.

But the places they are supposed to call home are either wrecked — the original small towns and cities of America — or replaced by new “developments” so devoid of artistry, history, thought, care, and charm that they don’t add up to communities, and are so obviously unworthy of affection, that the very idea of “home” becomes a cruel joke.

These places were bad enough in the 1960s and 70s, when the people who lived in them at least were able to report to paying jobs assembling products and managing their distribution. Now those people don’t have that to give a little meaning to their existence, or cover the costs of it. Public space was never designed into the automobile suburbs, and the sad remnants of it were replaced by ersatz substitutes, like the now-dying malls. Everything else of a public and human associational nature has been shoved into some kind of computerized box with a screen on it.

The floundering non-elite masses have not learned the harsh lesson of our time that the virtual is not an adequate substitute for the authentic, while the elites who create all this vicious crap spend millions to consort face-to-face in the Hamptons and Martha’s Vineyard telling each other how wonderful they are for providing all the artificial social programming and glitzy hardware for their paying customers.

The effect of this dynamic relationship so far has been powerfully soporific. You can deprive people of a true home for a while, and give them virtual friends on TV to project their emotions onto, and arrange to give them cars via some financing scam or other to keep them moving mindlessly around an utterly desecrated landscape under the false impression that they’re going somewhere — but we’re now at the point where ordinary people can’t even carry the costs of keeping themselves hostage to these degrading conditions.

The next big entertainment for them will be the financial implosion of the elites themselves as the governing forces of physics finally overcome all the ruses and stratagems of the elites who have been playing games with money. Professional observers never tires of saying that the government can’t run out of money (because they can always print more of it) but they can certainly destroy the value of that money and shred the consensual confidence that allows it to operate as money.

That’s exactly what is about to commence at the end of the summer when the government runs out of cash-on-hand and congress finds itself utterly paralyzed by party animus to patch the debt ceiling problem that disables new borrowing. The elites may be home from the Hamptons and the Vineyard by then, but summers may never be the same for them again.

The Deep State may win its war against the pathetic President Trump, but it won’t win any war against the imperatives of the universe and the way that expresses itself in the true valuation of things. And when the moment of clarification arrives — the instant of cosmic price discovery — the clueless elites will have to really and truly worry about the value of their heads.

 

3 Questions You’re Not Supposed to Ask About Life in a Sick Society

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By Sigmund Fraud

Source: Waking Times

“It is no measure of health to be well adjusted to a profoundly sick society.” ~J. Krishnamurti

Society is directed by a never-ending mainstream narrative which is always evolving, and always reaching new dramatic peaks in sensationalism and hype. They fill your mind with topics they select, they keep your attention on these topics, and they invite and encourage you to argue amongst each other about these topics. In this way our collective attention is permanently commandeered, preventing us from diving too deeply into matters which have more than a superficial impact on day-today life.

Free-thinking is the ability and willingness to explore of ideas and areas of the mind which are yet undiscovered or are off-limits. It is a vanishing art that is deliberately being stamped out by a control system which demands conformity, acquiescence and obedience of body, mind, and spirit.

For your consideration, here are three questions you’re not supposed to ask about life in our profoundly sick society.

1. Who owns the money supply, and the world’s debt?

Pretty much the entire world is in financial debt, an insidious form of slavery which enables the exploitation of human beings and of all things in nature. It’s maddening when you think about it. The United States alone supposedly owes some $20 trillion, while the world at large owes a shocking $215 trillion?

But to whom, precisely?

Money is just a medium of exchange which facilitates transactions between people. In and of itself it has no intrinsic value as we could just as easily use sea shells instead of dollar bills and still be able to get things done. But today’s money is the property of private third-parties who rent it out to national governments, who then use the labor of their citizens as collateral against these loans. This is a highly refined form of slavery, which has already put future unborn generations of human beings in debt.

But who, exactly does the human race owe? Who are our debt-slave masters?

2. Who owns your body?

Ownership means having the explicit right to use, control and dispose of something in the manner of your choosing. The one thing you are born with that you take with you to your death is your own body, but do you own it? If not you, then who does own your body?

If this question were already settled in our society then there wouldn’t be ever-increasing pressure on those who choose to refuse vaccines. Children battling cancer and other serious illnesses wouldn’t be forced to take chemo and radiation under penalty of law and under threat of being taken from their parents. Water wouldn’t be fluoridated without our consent. Natural medicines wouldn’t be outlawed under threat of fines and prison time.

We are rapidly approaching a time when people will be required by law to take psychotropic medications as citizens were in Aldous Huxley’s dystopian classic, Brave New World.

Do you own your body, or does it belong to the state?

 

 

It Is Bettter to Light One Candle than to Curse the Darkness

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By Harvey Lothian

Source: Dissident Voice

The world is in bad shape. Every reasonably intelligent, aware, objective person in the world knows, if only intuitively, that something is very, very wrong. There should not be this many armed conflicts, this much anger, this much violence, this much unemployment and underemployment, this much debt, this much homelessness, hunger, poverty, this ever widening gap between the income and wealth of the super rich and everyone else, and this much distrust in government and politicians. The future does not look good; a financial crisis and a socioeconomic collapse are just around the corner. Another World War or innumerable smaller wars seem almost certain.

Things are dark everywhere in the world, except in the offices and homes of the wealthy and highly connected people of the world. They control the world. There are no genuine democracies in the world, only oligarchies and dictatorships. The wealthy classes have never had it better. Never in recorded history has this class had higher income and wealth compared to the average working family. Oxfam reported that the richest 50% of the people own over 99% of the world’s wealth, the richest 1% of the world’s population hold over 50% of the world’s wealth, and the richest 62 people in the world has as much wealth as the poorest half of the global population, about 3.6 billion people.

Rich people’s insatiable greed has brought the world to this lamentable state. Make no mistake about it, the greed of the wealthy classes and their flunkies are responsible for the wretched state of the world today. We, the masses of the world, believed their lies because we are decent trusting people. We did not believe anyone would tell us such monstrous lies. The wealthy classes did, then they had us go to war against other innocent trusting people around the world while they looted the assets of our countries and stole our future. They have left us nothing but our confusion as to why our lives are going down the drain when we believed and tried our best to be patriotic citizens of our country. Our confusion is rapidly turning to anger as we learn more details about how the wealthy classes and leaders have deceived us, betrayed us, and ruined our lives. They have used us in the most despicable of ways; they used our trust, and naivety to rob and violate us to our very core, by destroying our lives and our hope and dreams for a better future for ourselves and our children.

To put this insanity in clear perspective, consider the following. Reliable U.N. agencies estimate that 32,000 children die around the world every day from hunger and hunger related diseases. They die because their parents do not have enough money to feed them a nourishing diet. Billions of people around the world live on one to three dollars a day, so we can safely say that if these 32,000 children’s parents earned $3 a day these children would not die. A tiny $96,000 a day given to these children’s parents, in wages for work performed, would save these children from what is apparently a painful death. That is $35,040,000 per year to save 32,000 innocent children, or, $1,095 per year to save one child. According to Forbes magazine there are 1,810 billionaires in the world worth a total of $6.5 trillion. Why do 32,000 children die every day from hunger and hunger related diseases, 224,000 every week, 11,648,000 every year when there is enough food to feed them and enough money to buy that food? Because we live in a totally insane world where accumulating wealth is more important to some that feeding hungry children.

There is no way out of the insane economic house of cards the rich have built except total collapse. The rich made that inevitable when they relentlessly incurred ever increasing amounts of federal debt, in our name, as they continually sent our well paying jobs to low wage countries making it impossible for us to reduce that debt through our taxes. They got super rich, we lost our good jobs and had enormous amounts of new debt piled on to us. This is not sustainable, the house of cards must eventually collapse. Or, our insane leaders will try to turn the world into one huge war zone.

We, the decent, sane people of the world now have an important decision to make; we can continue to curse the darkness the insane wealthy people of the world have created with their insane endless pursuit of more wealth, or, we can begin lighting candles by seeking and employing methods of solidly uniting us so we can defeat our common enemy and move us to a better way of living together. If we do not have a clear picture in our minds of how we want to live together in peace and harmony chaos will occur when the socio economic system collapses. We have to know where we are going, or we are lost.

Where do we want to go? The answer is obvious; we are all human beings, we all sprang from the same source, we are all brothers and sisters and all have exactly the same innate needs for food, water, shelter, warmth, sleep, social order, safety, security, stability, employment, a sense of belonging and love, and the opportunity to develop to our fullest potential. Simply put. we want and need to live in a world where countries are at peace with each other while we live in peace and harmony with each other in our country and we have the opportunity to lead decent normal lives while developing to our fullest potential.

The only way out of the horrendous mess of the collapsing house cards the greedy people have erected is if a vast majority of people around the world solidly unite as brothers and sisters under the motto, “All for one, one for all.” After the collapse occurs no one must be left without the necessities of life. Brothers and sisters take care of each other.

No kind of violence can be tolerated after the house of cards collapses. Violence breeds violence and solves no important long term problems. Brothers and sisters are not violent with each other.

Can we, the people of the world, do this? Can we solidly unite, watch out for each other, protect each other and help those in need? The alternative is too awful to think about. So, we must try. If we try we may succeed. It would be a wonderful world if we cared about others as much as we cared about ourselves; if we were all brothers and sisters. It is time to start lighting candles and stop cursing the darkness. Love thy neighbour as thyself. Or, at least try to do it.

 

Harvey Lothian is a 79-year-old and living on the Sunshine Coast of BC, Canada. His passions since a teenager have been history, politics, economics, sociology, social psychology, learning, traveling and reading. In recent years he has come to understand what Plato meant when he said all dogs have the soul of a philosopher.

Deep State, shallow politics, dumb economics

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By Frank Scott

Source: Intrepid Report

In 1965, the USA had 780,000 people in prison, jail, on parole or on probation.

By 2010, that population had grown by more than nine times, to 7 million and the prison business was booming as never before, creating profits, jobs and unparalleled human misery.

In 1954, the integration of public schools was seen as a great victory for civil rights and Americans now designated as “people of color”*. Today more than 50% of the prison population is designated as “people of color” and the disintegration of the entire public school system continues for all Americans designated as people.

In 2015, there were 536 billionaires in the U.S.A. In a nation of more than 325 million people, that represents less than 2 millionths of one percent of the population. For the textually challenged, that looks like this:.000002%

Wow.

How hard those truly brilliant people must have worked to achieve those riches. And one of them was Donald Trump!

Imagine how many cases they had to plead in court, classes to teach in school, buses to drive, meals to prepare, floors to wash, crops to pick, mail to deliver and deals to make? Well, actually, they mostly made deals using their great wisdom and brilliance at investing wisely. You and I could do as well if we worked as hard and were as smart and industrious as they are, including Donald Trump!

And if we were paid a thousand dollars an hour for our hard work, and we worked twenty four hours a day, seven days a week, fifty two weeks a year, maybe if we stashed all that cash and didn’t spend any of it we might have a billion dollars.

Nope.

In fact, if you worked twenty four hours a day, seven days a week, fifty two weeks a year and did that for ten years, at one thousand dollars an hour, never stopped, never took any time off and never spent any of the money and just stashed it, you still wouldn’t have a billion dollars.

Is this a great democracy or what?

In that same year of 2015, America’s GDP for pets, which was $38.5 billion in 2006, had grown to $60.3 billion. Twelve companies insured 1.4 million pets owned by 79.6 million American families (65% of households) with premiums amounting to 660.5 million dollars.

163.8 million dogs and cats are comfortably housed in a political economy that has half a million of its people homeless and more than 20% of its children living in poverty. This is certainly reason enough for us to demand that Russia, North Korea, Syria and other nations adopt our democratically civilized way of living or suffer the consequences of our superior wrath. Right?

As of March1, 2017, our national debt was close to $20 trillion, which is more than our GDP, which is truly a gross domestic product. We the people of this great democracy pay more than $440 billion a year in interest on that debt.

Who do we pay it to?

Where’d they get the money to loan us?

Who prints and backs this money supply?

If you have any money among your plastic, look at one of the bills of any denomination and note that the power behind the cash is not the dead presidents or Rockefeller, Carnegie, Zuckerburg, Soros, Bezos, Visa or MasterCard but something called “The United States of America.”

That is not a private bank or a billionaire. That’s you. That’s us.

Remember, we, the public, print the money, in our name, and somehow it gets to a private source which loans it to us and charges us interest for the privilege. Would you like to buy a bridge?

Our personal debt, incurred to keep the economy going with our consuming and owed to the same market gods, was over $18 trillion. Almost as high as our public debt. Somehow, we owe it to the same people who loaned us our own money for public expenses. Wow.

Are they really smart?

Or are we really stupid?

Many Americans are treated as lower than scum for being working class and “uneducated.” Why are so many Americans so “uneducated”? Could it have anything to do with the fact that at some point they went through grammar and high schools taught by (drum roll) college-educated people**? And winding up with presidents like a truly brilliant rich guy with degrees from Yale and Harvard (wow!) who starts wars in the Middle East that have gone on longer than any in our history, with the consent of 534 out of 535 democratically (?) elected college graduates in congress?

Whether the organized crime lobby (Wall Street, banks, billionaires) supports guns for individuals, Israelis or the Military Industrial Complex, it remains in control of the political economics of American government. NRAIPAC and its ilk own, rent and control the White House, Congress and Corporate media. That was the case before Trump and still is the case now.

We need resistance to that system of minority control itself, and not simply the servants it hires, leases, rents or outright owns. As long as we allow a gallon of milk to cost more than a gallon of gasoline, as long as we tolerate an economics that will sustain a disease as long as profits for its treatment are greater than profits for its cure***, we not only face long range climate disaster but a much shorter range political economic calamity.

Global capitalism threatens immediate and growing poverty, war, human misery and planetary destruction no matter which political pinhead, pimp or ho lives in the subsidized residency we call the white house. As long as we allow the richest and smallest minority in our history to put only their servants up for our votes, calling this a democracy reduces us to the best-dressed peasants on the Titanic. We need to end the fundamentalist religion of private profit marketing that is becoming a greater menace by the minute and begin democratic action in a social revolution that expresses majority public interest, desire and need. Fast.

 

Notes

*All members of the human race are “of color” save for a small group called albinos. Some of us have darker or lighter skin but skin tone is of no more racial significance than brown hair, green eyes or long legs. Innocents, the ignorant and morons who still believe otherwise are science deniers at best, and anti-human at worst, no matter their skin tone.

**Those with a stake in maintaining their incomes & consumption are unlikely to participate in efforts to bring about radical change”—Michael D. Yates

***Check cancer, for starters; a multi-multi billion-dollar industry

Accelerating Capital: Completed Nihilism and The Indebted Man

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By S.C. Hickman

Source: Southern Nights

In his book Data Trash (1993), Arthur Kroker writes that in the field of digital acceleration, more information means less meaning, because meaning slows info circulation. In the sphere of the digital economy, the faster information circulates, the faster value is accumulated. But meaning slows down this process, as meaning needs time to be produced and to be elaborated and understood. So the acceleration of the info-flow implies the elimination of meaning.

—Franco Berardi, And: Phenomenology of the End

The pursuit of profit is the engine of Capital, accumulation is its outcome. Profit is from the Latin profectus, meaning  “advance, increase, success, progress,” out of which the need to benefit or provide income derived. This sense that progress and success drive the need for profit, that the goal of capitalism is this abstract movement toward increasing and advancing one’s success in the world has always been at the heart of the competitive spirit. To compete or strive against others for the foremost place, this sense of the competitive spirit that has been with us at least since the first Greek Olympics. The term itself “compete” is etymologically to enter or be put in rivalry with an other,” from Middle French compéter “be in rivalry with” (14c.), or directly from Late Latin competere “strive in common,” in classical Latin “to come together, agree, to be qualified,” later, “strive together,” from com “with, together” (com-) + petere “to strive, seek, fall upon, rush at, attack”.  A sense of violent taking and war against all comers for the top prize, the best or foremost place in the Sun.

As Berardi reminds us in the old industrial economy described by Marx, the goal of production was already the valorization of capital, through the extraction of surplus- -value from labour. But, in order to produce value, the capitalist was still obliged to exchange useful things, so he was obliged to produce cars and books and bread.

When the referent is cancelled, when profit is made possible by the mere circulation of money, the production of cars, books and bread become superfluous. The accumulation of abstract value is made possible through the subjection of human beings to debt, and through predation on existing resources. The destruction of the real world starts from this emancipation of valorization from the production of useful things, and from the self-replication of value in the financial field. The emancipation of value from the referent leads to the destruction of the existing world. This is exactly what is happening under the cover of the so-called financial crisis, which is not a crisis at all, but the transition to the self-referential financial capitalism. (A: 125-126)

Financial capitalism is no longer the pursuit of profit in the Greek or Latin sense I described. No longer is there a sense of the old value of the pursuit of excellence or an ill-defined sense of virtue. Rather there is no value at all in the outward sense, but rather value has itself lost its luster and only the sheer accumulation of abstract value in the form of debt remains. But what is debt? What exactly is this debt economy of financial capitalism. And, most of all, how does the spirit of capitalism in itself bring about the death of meaning (i.e., nihilism). If as many suspect we are in the moment when Capital is completing this process of nihilism, what does that entail for humanity?

As Berardi said in a recent essay,

The colonization of time has been a fundamental issue in the modern history of capitalist development: the anthropological mutation that capitalism produced in the human mind and in daily life has, above all, transformed the perception of time. But we are now leaping into the unknown—digital technologies have enabled absolute acceleration, and the short-circuiting of attention time. As info-workers are exposed to a growing mass of stimuli that cannot be dealt with according to the intensive modalities of pleasure and knowledge, acceleration leads to an impoverishment of experience. More information, less meaning. More information, less pleasure.

This sense that there is a connection between time, language, and capitalism that is playing out the endgame of nihilism in our generation is foremost in this equation. At the forefront of this is the notion of debt, and that we are entering an era of a new Guilt Culture based on an infinite and unpayable debt. A future imploding into a black hole of guilt and shame that will leave us and our planet bankrupt and without sense or value.

I’ve written of debt in other essays: here and here in which I follow Deleuze and Guattari down the rabbit hole. Alberto Toscano in an excellent essay on Maurizio Lazzarato’s book The Making of the Indebted Man talks of the indebted this way:

Artificially kept alive until they repay outstanding debts, they stalk the landscape of commodity refuse, scavenging, salvaging, recycling to shave off infinitesimal portions of their liabilities, living-dead labour both unproductive and profitable. Telescoping hi-tech financial expropriation and the lo-tech labour in the breakers yards of global capital, the indeadted embody a moment in which subjection to capitalist imperatives subsumes life to the point that it trespasses into death…2

Thanatropic capitalism feeding off the living dead, the zombies of a system that has become total predation on human life and the planet.

In Anti-Oedipus Deleuze and Guattari explain their sense of our current debt regimes:

Society is not exchangist, the socious is inscriptive: not exchanging but marking bodies, which are part of the earth. We have seen that the regime of debt is the unit of alliance, and alliance is representation itself. It is alliance that codes the flows of desire and that, by means of debt, creates for man a memory of words (paroles). It is alliance that represses the great, intense, mute filiative memory, the germinal influx as the representative of the noncoded flows of desire capable of submerging everything. It is debt that articulates the alliances with the filiations that have become extended, in order to form and to forge a system in extension (representation) based on the repression of nocturnal intensities. The alliance-debt answers to what Nietzsche described as humanity’s prehistoric labor: the use of the cruelest mnemotechnics, in naked flesh, to impose a memory of words founded on the ancient biocosmic memory. That is why it is so important to see debt as a direct consequence of the primitive inscription process, instead of making it – and the inscriptions themselves – into an indirect means of universal exchange. (p. 185)

For Deleuze and Guattari it is Nietzsche’s On the Genealogy of Morals that teaches us the truth of debt. In fact it was Nietzsche, and Nietzsche alone who provided the first hint of a theory that the “primitive socious” was inherently a “problem of inscription, of coding, of marking…” (p. 190). As they’ll state it:

Man must constitute himself through repression of the intense germinal influx, the great biocosmic memory that threatens to deluge every attempt at collectivity. But at the same time, how is a new memory to be created for man – a collective memory of the spoken word and of alliances that declines alliances with the extended filiations, that endows him with faculties of resonance and retention, of selection and detachment, and that effects this way of coding the flow of desire as a condition of the socious? The answer is simple – debt – open, mobile, and finite blocks of debt: the extraordinary composite of the spoken voice, the marked body, and the enjoying eye.” (AO: 190)

This sense that in financial capitalism is enforcing a cruel mimetic experiment of instilling and inscribing the Word of Capital upon the body socious; and, that we have reverted to the primitive tattooing systems by inscribing of the social body through the cruelest measures, imposing the harshest words of power over the flesh and blood of millions of indebted humans to suck every last ounce of desire from their zombie lives. This is the outcome of our completed nihilism. Capital as a machine of death and consumption, feeding off the desires of the indebted. If capitalism is defined by social production that passes through axioms of abstract quantities, flows of money and labor that are the real relations of alliance and filiation, rather than codes. Codes have become private matters, searches for meaning. This split between production and reproduction constitutes a very particular affective relation as well, which Deleuze and Guattari summarize as, “the age of cynicism, accompanied by a strange piety. These two affects, cynicism and piety, correspond to the division of social production and reproduction. In the first, in the axioms of capital, we have a social order that reproduces itself without meaning or code. Axioms merely set up a relation between two quantities, a flow of labor and a flow of money. One does believe in, or justify, the rate at which labor is exchanged for money—it simply is. Cynicism is an affect attuned to the indifference of the axioms that produce and reproduce social life, the recognition that the flows of the market mean nothing, have no justification, than their brute effectivity. (AO)

As Nietzsche would say,

All the stupidity and the arbitrariness of the laws, all the pain of initiations, the whole perverse apparatus of repression and education, the red-hot irons, and the atrocious procedures have only this meaning: to breed man, to mark him in his flesh, to render him capable of alliance, to form him within the debtor-credit relation, which both sides turns out to be a matter of memory – a memory straining toward the future. (On the Genealogy of Morals, p. 190)

This sense of debt binding us to a system of mnemonics and cruelty, an organized and ritualistic memory system based on marking and pain – inscription of the collective socious as a system of obligation and guilt, debt and the endless deferral of payment into the future. The ancestors require sacrifice and payment, blood and guts. Alliances against this filiation must be formed, struggles against the dead, defensive gestures: the infinite deferral of debt beyond the vampirism of the dead. This whole triangular process of voice – inscription – eye becomes in our time the “spectacle of punishment”: “as primitive justice, territorial representation has foreseen everything” (p. 191).

Even while we are punished and inscribed, ritually sacrificed to the modern Moloch and his retinue of High Priests and Financiers, the Oligarchs of the World we discover that Capital no longer needs to produce visible commodities, no longer needs to produce useful goods for its wage slaves, it can now bypass us, bypass our needs, our desires, our dreams for its own infinite and digital accelerated world of pure circulation and profit. As Berardi attests,

In the sphere of the financial economy, the acceleration of financial circulation and valorization imply the elimination of the concrete usefulness of products (no matter if material or immaterial, industrial or semiotic). The process of realization of capital, namely the exchange of goods with money, was obviously slowing the pace of monetary accumulation. The virtual technology has created the possibility of skipping this slow passage through concrete meaningful useful goods. (A: 126)

Invisible, immaterial, the new financial economy runs at the speed of light in an absolute timeworld, where profit is based on the virtual circulation of abstract value (not even money, but algorithms, electronic impulses) that has been accelerated and sped up to the point of totally escaping the possibility of human understanding and— obviously—of political control.(A: 126)

Value does not emerge from a physical relationship between work and things, but rather from infinite self-replication of virtual exchanges of nothing with nothing, whose outcome is more money. Digital abstraction leads to the virtualization of the physical act of meeting, and the manipulation of things. These new levels of abstraction do not only concern the labour process, they tend to encompass every space of social life. Therefore, digitalization and financialization are transforming the very fabric of the social body, and inducing mutations in it. (A: 127)

Berardi tells us to look at the reality of debt, look at the awful effects of submission, impoverishment and exploitation that debt is provoking in the body of society. Debt is a weapon against social autonomy, a transformation of money into a blackmail. Young people are obliged to borrow money from the bank in order to pay for their studies, as the public system of education has been destroyed by the Neoliberal fanatics, and private school is costing more and more. As soon as they come out from the university they have to start paying back their debt, and they are obliged to accept any kind of precarious job, and to suffer any kind of blackmail. (A: 128)

For such creatures the future can only be bleak and full of misery and endless years of untold grief as they strive to pay their debt. Many forgo such a Sisyphean project and commit suicide. Others mentally and spiritual die inside and live out the remainder of their lives as zombies under this terrible debt system. In our time whole nations have been blackmailed into this system of debt as we ponder the EU. This same process has already happened to much of the Third World nations for years under a predatory capitalism well documented by Naomi Kline in The Shock Doctrine among other works of like caliber.

Commenting on this dark scenario Berardi says “Money, which was supposed to be the measure of value, has been turned into a tool for psychic and social subjugation. The metaphysical debt is linking money, language and guilt. Debt is guilt, and as guilt it is entering the domain of unconscious, and shapes language according to structures of power and submission.” (A: 128)

The notion that our age old systems of power and coercion have migrated into the digital age and brought about a new guilt culture to subdue and channel the desires of nations into the profit bins of a minority of Oligarchs seems ludicrous at first glance as if this were some nefarious planned and intentional affair. But is it? Is anyone or anything behind such a sinister system of slavery and control? Is this a conspiracy of madness against the human species? Berardi will liken this process not to some power behind the scenes, but rather to the inherent power of language itself and how we for two hundred years have obliterated the hold language had on the referent:

This process of de-referentialization of language—emancipation of the linguistic sign from the referent—which has been the mark of poetic and artistic experimentation with language during the twentieth century, shows an interesting similarity with the transformation in the relation between economy and monetary exchange.

On August 15, 1971, President Nixon announced dramatic changes in economic policy. Particularly he ended the Bretton Woods international monetary system. The Bretton Woods system, created at the end of World War II, involved fixed exchange rates with the US dollar as the key currency—but also a role for gold linked to the dollar at $35/ounce. The system began to falter in the ‘60s because of an excess of dollars flowing out of the US which foreign central banks had to absorb. All of this was ended unilaterally by Nixon’s decision. After a brief attempt to create a modified fixed exchange rate system, the world moved to flexible rates.

Breaking the Bretton Woods’s agreements, the American President declared that the dollar has no referent, and its value is decided by an act of language. This was the starting point of the long lasting process of financialization of the economy, based on the emancipation of the financial dynamic from any conventional standard and from any economic reality. The Neoliberal offensive started in that very moment of arbitrary assertion of the value of the dollar outside the conventional standard. The neoliberal school of the Chicago Boys said “money is creating reality” like the Symbolist poets had said: “words are creating reality”. (A: 128-130)

Words had lost touch with their referent, the natural world and environment within which we all live and have our habitus. The disappearance of the natural and the virtualization of language produced the effects we see in the world today. We are the product of a process that undermined the ancient metaphysical systems of the world that guided primitive, feudal and early modern societies. In our bid to overcome the religious and metaphysical systems that held us in their clutches we also lost the world, our world. We lost the natural in life and ourselves, lost touch with the signs that kept us anchored to the natural environment that our brain had been tied to for sex and survival from the beginnings of the human. We ourselves in our bid to transcend the animal and inhuman in ourselves became non-human. We have brought upon ourselves the semantic apocalypse we see all around us. This is the guilt we bare and the debt we will have to pay, not the tributary debt to those few dark controllers who seek to lord it over us.

It was Jean Baudrillard who wrote in the Symbolic Exchange and Death, where he announces that the economy has abandoned the old law of determination of value, and that the referent for linguistic and economic exchange was dissolved:

“The reality principle coincided with a determinate phase of the law of value. Today the entire system is fluctuating in indeterminacy, all of reality absorbed by the hyperreality of the code and of simulation. It is now a principle of simulation, and not of reality, that regulates social life. The finalities have disappeared; we are now engendered by models… The entire strategy of the system lies in this hyperreality of floating values. It is the same for money and theory as for the unconscious. Value rules according to an ungraspable order: the generation of models, the indefinite chaining of simulation.” (Baudrillard 1976)

We have become mere simulacra of our former selves, simulated creatures in a simulated world. Bound and ensnared in a world of debt, controlled by an algorithmic system of digital hypersystems we live out our lives under the guilt of a system we ourselves helped create. We have no one to blame but ourselves. We know this. We deny this. We seek solace in escape and fantasy worlds of mediatainment that even further suck dry our desires and channel our hopes and dreams into a fantasia of tomorrows that will never come.

For Deleuze & Guattari this primitive system of memory and pain will enter the stage of religion as a debt to be paid ending in the death of Christ as the payer of all debts; and, yet, it will not end there, for debt can never be repaid, so it forms the kernel of the modern State: “the new machine, and the new apparatus of repression” (AO: 192). This system of endless debt: “that finds itself taken into an immense machinery that renders the debt infinite and no longer forms anything but one and the same crushing fate: the aim now is to preclude pessimistically, once and for all, the prospect of discharge; the aim now is to make the glance recoil disconsolately from an iron impossibility. The Earth becomes a madhouse.” (AO: 192)

  1. Berardi, Franco “Bifo”. And: Phenomenology of the End. Semiotext(e) (November 6, 2015) (A) (Page 126).
  2. Toscano, Alberto. Alien Mediations: Critical Remarks on The Making of the Indebted Man. The New Reader #1, 2017

Reimagining Money

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What if markets were designed to build trust instead of wealth?

By Douglas Rushkoff

(The Atlantic)

Bitcoin was conceived as a modern solution to an ages-old problem: How can two parties agree on and verify an exchange of value? In this sense, Bitcoin is an effective technology, in that it trains the massive processing power of distributed personal computers on the same situation that paper currency was built to resolve. But in important ways, Bitcoin transposes some of the shortcomings of traditional currency onto the digital realm. It ignores a whole host of questions about the potential to reimagine what money can be designed to emphasize: What sorts of money will encourage admirable human behavior? What sorts of money systems will encourage trust, reenergize local commerce, favor peer-to-peer value exchange, and transcend the growth requirement? In short, how can money be less an extractor of value and more a utility for its exchange?Around the world, people have proposed experimental, tentative answers to these questions. What follows are three ways that people have toyed with rearranging the priorities of transactions—all of which would encourage a radical reimagination of what money is and can do.

The simplest approach to limiting the delocalizing, extractive power of central currency is for communities to adopt their own local currencies, pegged or tied in some way to a central currency. One of the first and most successful contemporary efforts is the Massachusetts BerkShare, which was developed to help keep money from flowing out of the Berkshire region.

One hundred BerkShares cost $95 and are available at local banks throughout the region. Participating local merchants then accept them as if they were dollars—offering their customers what amounts to a 5-percent discount for using the local money. Although it amounts to selling goods at a perpetual discount, merchants can in turn spend their local currency at other local businesses and receive the same discounted rate. Nonlocals and tourists purchase goods with dollars at full price, and those who bother to purchase items with BerkShares presumably leave town with a bit of unspent local money in their pockets.

The 5-percent local discount may seem like a huge disadvantage to take on—but only if businesses think of themselves as competing individuals. In the long term, the discount is more than compensated for by the fact that BerkShares can circulate only locally. They remain in the region and come back to the same stores again and again. Even if nonlocal stores, such as Walmart, agree to accept the local currency, they can’t deliver it up to their shareholders or trap it in static savings. The best Walmart can do is use it to pay their local workers or purchase supplies and services from local merchants.

* * *

Unlike local discount currencies, cooperative community currencies don’t need to be pegged to the dollar at all. They are not purchased into existence but are worked into circulation. They are best thought of less like money than like exchanges.

The simplest form of cooperative currency is a favor bank, such as those founded in Greece and other parts of southern Europe during the Euro crisis. Incapable of finding work or sourcing Euros, people in many places lost the ability to transact. Even though a majority of what they needed could be produced locally, they had no cash with which to trade. So they built simple, secure trading websites—mini-eBays—where people offered their goods and services to others in return for the goods and services they needed. The sites did not record value amounts so much as keep general track of who was providing what to the community and coordinate fair exchanges. This casual, transparent solution works particularly well in a community where people already know one another and freeloaders can be pressured to contribute.

Larger communities have been using “time dollars,” a currency system that keeps track of how many hours people contribute to one another. Again, a simple exchange is set up on a website, where people list what they need and what they can contribute. The bigger and more anonymous a community, the more security and verification is required. Luckily, dozens of startups and nonprofit organizations have been developing apps and website kits via which local or even nonlocal communities can establish and run their own currencies.

Time exchanges tend to work best when everybody values their time the same way or is providing the same service. Time dollars are extremely egalitarian, valuing each person’s time the same as anyone else’s. An “hour” is worth one hour of work, whether it is performed by a plumber or a psychotherapist.

The Japanese recession gave rise to one of the most successful time exchanges yet, called Fureai Kippu, or “Caring Relationship Tickets.” People no longer had enough cash to pay for their parents’ or grandparents’ health-care services—but because they had moved far away from home to find jobs, they couldn’t take care of their relatives themselves either. The Fureai Kippu exchange gave people the ability to bank hours of eldercare by taking care of old people in their communities, which they could then spend to get care for their own relatives far away. So one person might provide an hour of bathing services for an elder in her neighborhood in return for someone preparing meals for her grandfather who lives in another city. As the Caring Relationship Tickets became accepted things of value, people began using them for a variety of services.

Although a person can do a bunch of work in order to bank enough hours to get a whole bunch of services, most time exchanges put a limit on how many hours members can accumulate. They also put a limit on how many hours a person can owe. This way a freeloader can be removed from the system, and the entire community can absorb the cost of the unearned hours pretty easily.

* * *

How might traditional banks participate effectively in the financial rehabilitation of the communities they serve? Here’s just one possibility:

Sam’s Pizzeria is thriving as a local business, and Sam needs $200,000 to expand the dining room and build a second restroom. Normally, the bank would evaluate his business and credit and then either reject his loan request or give him the money at around 8 percent interest. The risk is that he won’t get enough new business to fill the new space, won’t be able to pay back the loan, and will go out of business. Indeed, part of the cost of the loan is that speculative risk.

In another approach, the banker could make Sam a different offer. The bank could agree to put up $100,000 toward the expansion project at 8 percent if Sam is able to raise the other $100,000 from his community in the form of market money: Sam is to sell digital coupons for $120 worth of pizza at the expanded restaurant at a cost of $100 per coupon. The bank can supply the software and administrate the escrow. If Sam can’t raise the money, then it proves the community wasn’t ready, and the bank can return everyone’s money.

If he does raise the money, then the bank has gained the security of a terrific community buy-in. Sam got his money more cheaply than if he borrowed the whole sum from the bank, because he can pay back the interest in retail-priced pizza. The community lenders have earned a fast 20 percent on their money—far more than they could earn in a bank or mutual fund. And it’s an investment that pays all sorts of other dividends: a more thriving downtown, more customers for other local businesses, better real-estate values, a higher tax base, better public schools, and so on. These are benefits one can’t see when buying stocks or abstract derivatives. Meanwhile, all the local “investors” now have a stake in the restaurant’s staying open at least long enough for them to cash in all their coupons. That’s good motivation to publicize it, take friends out to eat there, and contribute to its success.

For its part, the bank has diversified its range of services, bet on the possibility that community currencies will gain traction, and demonstrated a willingness to do something other than extract value from a community. The bank becomes a community partner, helping a local region invest in itself. The approach also provides the bank with a great hedge against continued deflation, hyperinflation, or growing consumer dissatisfaction with Wall Street and centrally issued money. If capital lending continues to contract as a business sector, the bank has already positioned itself to function as more of a service company—providing the authentication and financial expertise small businesses still need to thrive.

The bank transforms itself from an agent of debt to a catalyst for distribution and circulation. Like money in a digital age, it becomes less a thing of value in itself than a way of fostering the value creation and exchange of others.

This article has been adapted from Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity.