Tag Archives: Economic Collapse

A Smoldering Fuse

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By James Howard Kunstler

Source: Kunstler.com

We have pretty much burned our bridges at this point. Unless you’re prepared to mindfuck yourself, and gaslight yourself, and confess, and convert, there’s no going back to “normal” society (which we couldn’t go back to anyway, on account of how it doesn’t exist anymore) — CJ Hopkins

Thirty-seven billion more dollars for Ukraine? (That’s thirty-seven thousand millions of dollars, by the way.) Bringing the total this year to a click-or-two over ninety billion (ninety-thousand millions), on top of whatever Sam Bankman-Fried’s FTX company funneled through that sad-sack international money laundromat — soon to be the darkest backwater of a European failed state since Field Marshal Melchior von Hatzfeldt of Westphalia left Bohemia a corpse-strewn wasteland after the Battle of Jankau (1645).

    It really doesn’t matter how much more money we pound down that rat-hole, you understand, because by the time various parties — the weapons-makers, Volodymyr Zelensky, sundry members of the US House of Representatives, The Biden family, the World Economic Forum — are finished creaming off their fair shares, poor Ukraine won’t have enough cash-on-hand to replace six fuse-boxes in Zaporizhzhia.

    Against this backdrop, the USA enters a holiday season near-death spiral as unspooling scandals battle a collapsing economy for supremacy of the alt news sites. Case-in-point: the aforementioned FTX monkey business, a metastasizing tumor of the body politic. This complex fraud will smolder for a few weeks before it explodes into an extinction-grade event for the Democratic Party. The usual suspects among the mainstream media are trying to ignore it for the moment, but the shreds of this exploding money-borg are already sticking to guilty parties far and wide across the political landscape.

      FTX commander-in-chief Sam Bankman-Fried remains at large after steering the crypto-currency trading platform into a bankruptcy so hideously tangled that the assigned liquidator in court proceedings, one John Ray III, who oversaw the Enron aftermath years ago, was boggled by what he’s found so far (and it’s early in the game): Namely, a company run by a handful of twenty-something drug freaks with no idea what they were doing, no record-keeping, and a slime trail of misappropriated investor’s funds leading to Kiev and Geneva through various crooked American political action committees, and the halls of Congress — with echos in ballot harvesting shenanigans which shaped the outcome of this month’s US elections.

     Mr. Bankman-Fried is still scheduled as a main speaker for Accenture’s Nov. 30 DealBook Conference in New York ($2,499 for a ticket), along with Ukrainian President Volodymyr Zelensky and US Treasury Secretary Janet Yellen. Odds on him showing up? Or even being alive elsewhere on this planet then?

     The extended family Bankman-Fried is the quintessence of Woke aristocracy. Dad Joe Bankman and mom Barbara Fried are both law professors at Stanford. She also acted as a money-bundler for the Democratic Party and ran two non-profit “voter registration” orgs (against the IRS laws which only permit non-partisan organized voter registration). Brother Gabe Bankman-Fried headed a non-profit named Guarding Against Pandemics (funded by Sam), which lobbies Congress to construct new platforms for medical tyranny. Aunt Linda Fried is Dean of the Columbia U’s Public Health school, and is associated with Johns Hopkins, which ran the October 2019 Event 201 pandemic drill (sponsored by the Gates Foundation) months before the Covid-19 outbreak.

Sam’s girlfriend, Caroline Ellison, ran the Alameda Investments arm of the FTX empire (that is, FTX’s own money laundromat). Her dad, Glenn Ellison is chair of MIT’s Econ School. His former colleague on the MIT Econ faculty, Gary Gensler, who specialized in blockchains there, is now head of the Securities and Exchange Commission, an agency that Sam Bankman Fried was attempting to rope into a regulation scheme to eliminate FTX’s crypto-currency competitors. Caroline’s mom, Sara Fisher Ellison is an MIT econ prof specializing in the pharmaceutical industry (fancy that!). Caroline Ellison is currently on-the-run.

     The sum total of all this professional and academic accomplishment is also the quintessence of Woke-Jacobin turpitude in service to a political faction that seeks maximum moneygrubbing while acting to overthrow every norm of behavior in the conduct of elections, and perhaps in American life generally. That’s some accomplishment. It’s also a lesson in why the managerial elite of our country are no longer trustworthy. They have gotten away with crimes against the nation for years, which has only made them bolder and more reckless.

     Wait for the FTX bankruptcy to unwind, along with all the political ramifications it entails, not to mention the financial afterburn in the whole crypto market, very likely extending into and befouling the rest of the banking system. This is going to be a clusterfuck for the ages, and will propel the USA into a depression with no visible horizon.

How “Food Shortages” & Economic Collapse Protects the Status Quo

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Engineered Food & Poverty Crises Secure Continued US Dominance

By Colin Todhunter

Source: Off-Guardian

In March 2022, UN Secretary-General Antonio Guterres warned of a “hurricane of hunger and a meltdown of the global food system” in the wake of the crisis in Ukraine.

Guterres said food, fuel and fertiliser prices were skyrocketing with supply chains being disrupted and added this is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe.

According to the International Panel of Experts on Sustainable Food Systems, there is currently sufficient food and no risk of global food supply shortages.

We see an abundance of food but skyrocketing prices. The issue is not food shortage but speculation on food commodities and the manipulation of an inherently flawed global food system that serves the interests of corporate agribusiness traders and suppliers of inputs at the expense of people’s needs and genuine food security.

The war in Ukraine is a geopolitical trade and energy conflict. It is largely about the US engaging in a proxy war against Russia and Europe by attempting to separate Europe from Russia and imposing sanctions on Russia to harm Europe and make it further dependent on the US.

Economist Professor Michael Hudson recently stated that ultimately the war is against Europe and Germany. The purpose of the sanctions is to prevent Europe and other allies from increasing their trade and investment with Russia and China.

Neoliberal policies since the 1980s have hollowed out the US economy. With its productive base severely weakened, the only way for the US to maintain hegemony is to undermine China and Russia and weaken Europe.

Hudson says that, beginning a year ago, Biden and the US neocons attempted to block Nord Stream 2 and all (energy) trade with Russia so that the US could monopolise it itself.

Despite the ‘green agenda’ currently being pushed, the US still relies on fossil fuel-based energy to project its power abroad. Even as Russia and China move away from the dollar, the control and pricing of oil and gas (and resulting debt) in dollars remains key to US attempts to retain hegemony.

The US knew beforehand how sanctions on Russia would play out. They would serve to divide the world into two blocks and fuel a new cold war with the US and Europe on one side with China and Russia being the two main countries on the other.

US policymakers knew Europe would be devastated by higher energy and food prices and food importing countries in the Global South would suffer due to rising costs.

It is not the first time the US has engineered a major crisis to maintain global hegemony and a spike in key commodity prices that effectively trap countries into dependency and debt.

In 2009, Andrew Gavin Marshall described how in 1973 – not long after coming off the gold standard – Henry Kissinger was integral to manipulating events in the Middle East (the Arab-Israeli war and the ‘energy crisis’). This served to continue global hegemony for the US, which had virtually bankrupted itself due to its war in Vietnam and had been threatened by the economic rise of Germany and Japan.

Kissinger helped secure huge OPEC oil price rises and thus sufficient profits for Anglo-American oil companies that had over-leveraged themselves in North Sea oil. He also cemented the petrodollar system with the Saudis and subsequently placed African nations, which had embarked on a path of (oil-based) industrialisation, on a treadmill of dependency and debt due to the spike in oil prices.

It is widely believed that the high-priced oil policy was aimed at hurting Europe, Japan and the developing world.

Today, the US is again waging a war on vast swathes of humanity, whose impoverishment is intended to ensure they remain dependent on the US and the financial institutions it uses to create dependency and indebtedness – the World Bank and IMF.

Hundreds of millions will experience (are experiencing) poverty and hunger due to US policy. These people (the ones that the US and Pfizer et al supposedly cared so much about and wanted to get a jab into each of their arms) are regarded with contempt and collateral damage in the great geopolitical game.

Contrary to what many believe, the US has not miscalculated the outcome of the sanctions placed on Russia. Michael Hudson notes energy prices are increasing, benefiting US oil companies and US balance of payments as an energy exporter. Moreover, by sanctioning Russia, the aim is to curtail Russian exports (of wheat and gas used for fertiliser production) and for agricultural commodity prices to therefore increase. This too will also benefit the US as an agricultural exporter.

This is how the US seeks to maintain dominance over other countries.

Current policies are designed to create a food and debt crisis for poorer nations especially. The US can use this debt crisis to force countries to continue privatising and selling off their public assets in order to service the debts to pay for the higher oil and food imports.

This imperialist strategy comes on the back of ‘COVID relief’ loans which have served a similar purpose. In 2021, an Oxfam review of IMF COVID-19 loans showed that 33 African countries were encouraged to pursue austerity policies. The world’s poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports.

Oxfam and Development Finance International have also revealed that 43 out of 55 African Union member states face public expenditure cuts totalling $183 billion over the next five years.

The closure of the world economy in March 2020 (‘lockdown’) served to trigger an unprecedented process of global indebtedness.

Conditionalities mean national governments will have to capitulate to the demands of Western financial institutions. These debts are largely dollar-denominated, helping to strengthen the US dollar and US leverage over countries.

The US is creating a new world order and needs to ensure much of the Global South remains in its orbit of influence rather than ending up in the Russian and especially Chinese camp and its belt road initiative for economic prosperity.

Post-COVID, this is what the war in Ukraine, sanctions on Russia and the engineered food and energy crisis are really about.

Back in 2014, Michael Hudson stated that the US has been able to dominate most of the Global South through agriculture and control of the food supply. The World Bank’s geopolitical lending strategy has transformed countries into food deficit areas by convincing them to grow cash crops – plantation export crops – not to feed themselves with their own food crops.

The oil sector and agribusiness have been joined at the hip as part of US geopolitical strategy.

The dominant notion of ‘food security’ promoted by global agribusiness players like Cargill, Archer Daniel Midland, Bunge and Louis Dreyfus and supported by the World Bank is based on the ability of people and nations to purchase food. It has nothing to do with self-sufficiency and everything to do with global markets and supply chains controlled by giant agribusiness players.

Along with oil, the control of global agriculture has been a linchpin of US geopolitical strategy for many decades. The Green Revolution was exported courtesy of oil-rich interests and poorer nations adopted agri-capital’s chemical- and oil-dependent model of agriculture that required loans for inputs and related infrastructure development.

It entailed trapping nations into a globalised food system that relies on export commodity mono-cropping to earn foreign exchange linked to sovereign dollar-denominated debt repayment and World Bank/IMF ‘structural adjustment’ directives. What we have seen has been the transformation of many countries from food self-sufficiency into food deficit areas.

And what we have also seen is countries being placed on commodity crop production treadmills. The need for foreign currency (US dollars) to buy oil and food entrenches the need to increase cash crop production for exports.

The World Trade Organization’s Agreement on Agriculture (AoA) set out the trade regime necessary for this type of corporate dependency that masquerades as ‘global food security’.

This is explained in a July 2022 report by Navdanya International – Sowing Hunger, Reaping Profits – A Food Crisis by Design – which notes international trade laws and trade liberalisation has benefited large agribusiness and continue to piggyback off the implementation of the Green Revolution.

The report states that US lobby and trade negotiations were headed by former Cargill Investors Service CEO and Goldman Sachs executive – Dan Amstutz – who in 1988 was appointed chief negotiator for the Uruguay round of GATT by Ronald Reagan. This helped to enshrine the interests of US agribusiness into the new rules that would govern the global trade of commodities and subsequent waves of industrial agriculture expansion.

The AoA removed protection of farmers from global market prices and fluctuations. At the same time, exceptions were made for the US and the EU to continue subsidising their agriculture to the advantage of large agribusiness.

Navdanya notes:

“With the removal of state tariff protections and subsidies, small farmers were left destitute. The result has been a disparity in what farmers earn for what they produce, versus what consumers pay, with farmers earning less and consumers paying more as agribusiness middlemen take the biggest cut.”

‘Food security’ has led to the dismantling of food sovereignty and food self-sufficiency for the sake of global market integration and corporate power.

We need look no further than India to see this in action. The now repealed recent farm legislation in India was aimed at giving the country the ‘shock therapy’ of neoliberalism that other countries have experienced.

The ‘liberalising’ legislation was in part aimed at benefiting US agribusiness interests and trapping India into food insecurity by compelling the country to eradicate its food buffer stocks – so vital to the nation’s food security – and then bid for food on a volatile global market from agribusiness traders with its foreign reserves.

The Indian government was only prevented from following this route by the massive, year-long farmer protest that occurred.

The current crisis is also being fuelled by speculation. Navdanya cites an investigation by Lighthouse Reports and The Wire to show how speculation by investment firms, banks and hedge funds on agricultural commodities are profiting off rising food prices. Commodity future prices are no longer linked to actual supply and demand in the market but are based purely on speculation.

Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus and investment funds like Black Rock and Vanguard continue to make huge financial killings, resulting in the price of bread almost doubling in some poorer countries.

The cynical ‘solution’ promoted by global agribusiness to the current food crisis is to urge farmers to produce more and seek better yields as if the crisis is that of underproduction. It means more chemical inputs, more genetic engineering techniques and suchlike, placing more farmers in debt and trapped in dependency.

It is the same old industry lie that the world will starve without its products and requires more of them. The reality is that the world is facing hunger and rising food prices because of the system big agribusiness has instituted.

And it is the same old story – pushing out new technologies in search of a problem and then using crises as justification for their rollout while ignoring the underlying reasons for such crises.

Navdanya sets out possible solutions to the current situation based on principles of agroecology, short supply lines, food sovereignty and economic democracy – policies that have been described at length in many articles and official reports over the years.

As for fighting back against the onslaught on ordinary people’s living standards, support is gathering among the labour movement in places like the UK. Rail union leader Mick Lynch is calling for a working class movement based on solidarity and class consciousness to fight back against a billionaire class that is acutely aware of its own class interests.

For too long, ‘class’ has been absent from mainstream political discourse. It is only through organised, united protest that ordinary people will have any chance of meaningful impact against the new world order of tyrannical authoritarianism and the devastating attacks on ordinary people’s rights, livelihoods and standards of living that we are witnessing.

Peering Into the Crystal Ball, We See… Instability Leading to Collapse

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By Charles Hugh Smith

Source: Of Two Minds

We can only choose one: open, dynamic stability (evolution) or autocracy (instability and collapse).

When the fundamentals of life change, every organism must evolve or die. This is equally true of human organizations, societies and economies.

Evolution requires conserving what still works and experimenting until something comes along that works better. We call the fundamentals changing selective pressure and the process of experimenting with mutations / variations natural selection.

In genetic and epigenetics, this process is automatic. In human organizations, those in power influence the choice of what is conserved or replaced and what it’s replaced with. Those who benefit from the current arrangement will fight to conserve it as is, while those being weakened by selective pressure and those hoping to gain advantages with a new arrangement will fight for replacing the old with the new.

Longtime correspondent Ron G. recently shared an insightful economic characterization of this dynamic: wealth defense vs wealth creation. Those holding the system’s wealth have few incentives to risk changing the system, as those changes could undermine or erode their wealth. They have incentives to limit evolutionary forces that threaten their wealth as a means of defending their wealth.

Those who have lost wealth and those with little wealth have incentives to change the system to favor wealth creation.

We can describe the first as orthodoxy–evolution threatens the stability of the status quo, so limit evolution to the margins–and heretics being the second option that tosses out the status quo in favor of a more advantageous variation.

This isn’t either / or, of course. As Ron points out, corporations have incentives to both conserve stability and embrace variations that increase revenues and profits by expanding the markets for the company’s products. In Ron’s words: “The function of orthodoxy or corporate policy / rigor is to mitigate variations that would decrease stability.”

In other words, there’s a danger of throwing the baby out with the bath water. Dynamic equilibrium is based on a constant flux of variations and experiments–that is, low-level instability–continually modifying the system to maintain core stability.

Without this constant flux of low-level instability, sources of instability pile up, unnoticed and uncorrected, until they become consequential enough to destabilize the entire system. The system implodes, crashes, unravels, etc.

We can understand this flux of variations and experiments as evolutionary churn, and this churn requires two things: a steady flow of mutations / variations to feed the process of experimentation, and transparency so advantageous variations aren’t suppressed. In a transparent evolutionary system, data and information about each variation and experiment flows freely between all nodes in the system.

You see the problem. Those benefiting from the status quo are threatened by variations that could replace whatever is defending their wealth. Those in power benefit from the status quo, so their Job One is to suppress evolution by limiting transparency and variations, which include dissent.

Theoretically, those in power favor evolutionary advances that enhance their power and wealth, but anything that powerful is generally a two-edged sword: modified slightly, it could disrupt the entire status quo and fatally undermine their power.

So the safe bet is to suppress all evolutionary churn except those improvements which can be used to further cement their power. These are by definition autocratic.

You see the delicious irony: autocrats suppress evolutionary churn and transparency as threats, but evolutionary churn and transparency are the essential forces maintaining the system’s dynamic equilibrium. Once the system’s dynamic equilibrium decays, systemic instability builds up and eventually brings the entire system crashing down.

Because this process is obscured by authoritarian suppression of transparency, “nobody saw it coming.”

As those in power adopt ever stronger authoritarian measures to limit the potential threats of evolutionary churn and transparency, they accelerate the fatal instabilities building up within their self-serving, kleptocratic social, political and economic systems.

By suppressing the evolutionary churn and transparency that maintain the system’s dynamic equilibrium, they doom their regime to collapse.

The crystal ball isn’t cloudy, it’s crystal-clear: rising instability leading to collapse. “Nobody saw it coming” except those who understand evolution requires evolutionary churn and transparency.

Collapse is a perfectly good evolutionary solution. Stability is either dynamic or it’s not actually stable; it’s merely a simulacrum of stability sliding toward instability and ruin.

The better option is to embrace evolutionary churn and transparency and accept the trade-off: we can only choose one: open, dynamic stability (evolution) or autocracy (instability and collapse). Choose wisely, for once systems collapse there’s no turning back the clock.

It’s A Fact That Needs Repeating: The Federal Reserve Is A Suicide Bomber

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By Brandon Smith

Source: Alt-Market.us

For many years now I have been examining the policies and behaviors of the Federal Reserve because they are in fact the most powerful institution in the US, with far more influence over the fate of America than any single president or branch of government. They have the power to end the economic life of our country in a matter of moments. They hold their finger on the button of multiple financial nuclear bombs, and to this day there are people that still pretend as if they are a mere moderating presence subservient to the White House or Congress.

This is a fallacy proven by history and the admissions from central bankers own mouths. The Fed answers to no one in our government. They answer to a different set of masters, and the blame for the consequences of their policies falls to them and their cohorts.

Last year I published an article titled ‘The Fed’s Catch-22 Taper Is A Weapon, Not A Policy Error.’ In that article I predicted that the Fed would embark on a hiking spree on interest rates in response to inflationary/stagflationary events. I noted that:

“We are now at that stage again where price inflation tied to money printing is clashing with the stock market’s complete reliance on stimulus to stay afloat. There are some that continue to claim the Fed will never sacrifice the markets by tapering. I say the Fed does not actually care, it is only waiting for the right time to pull the plug on the US economy.”

At the time I received a lot of resistance to the idea. The usual argument was: “The fed will never raise rates and put stock markets at risk. Why would they destroy the golden goose?”

This position showcases a common misconception about the central bank and its purpose. You see, a lot of people think the Fed exists to keep the US economy afloat, and specifically to keep stock markets afloat. This is incorrect. Every single policy of the Fed since its inception has been a long train of abuses designed to slowly and scientifically whittle down the US economy and bring it to the point of extinction.

The next most common argument is: “Wouldn’t the fed sabotaging the economy eventually destroy them as well?”

The answer is YES, and they don’t care. If you have read my previous work on this issue then you know that the Fed is inexorably tied to the Bank for International Settlements (the “central bank of central banks”) and that they call the shots in terms of coordinated global banking initiatives. The BIS is a globalist institution, not an American one, and its agenda is ideologically globalist in nature. The Fed is a servant of globalism; and if the US economy or our currency need to be brought down through a controlled demolition in order to make the globalist dream of a one world socialist “Utopia” come true, that is exactly what the Fed will do.

I was able to predict that the Fed would continue onward with its interest rate hikes and hawkish position only because I acknowledge what the Fed really is: A suicide bomber. And, they have decided the time is ripe to hike interest rates into economic weakness, just like they did at the onset of the Great Depression.

At the beginning of the Depression the Fed increased interest rates after years of artificially stimulating markets with low cost debt. This prolonged the deflationary crash for many years after. It was not until decades later when former Fed chair Ben Bernanke gave a speech celebrating economist Milton Friedman’s 90th birthday that a central bank official finally admitted that the organization was culpable for the Depression debacle.

“In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” – Ben Bernanke, 2002

What Ben Bernanke did not admit to was that the engineered deflationary crisis greatly benefited the allies of the Fed – The international corporate bankers. Companies like JP Morgan and Chase National were suddenly in a prime position to seize unlimited power in the US.

So, they’ve done it before, why wouldn’t they do it again?

The next argument that I hear constantly is that the Fed is “ignorant” and they don’t know what they are doing. This is nonsense. Jerome Powell knows EXACTLY what he is doing, and here is the proof – In October of 2012 the Fed held a meeting in which Powell warned that markets and corporations had become addicted to the Fed’s easy money policies. If they decided to taper their stimulus measures and raise rates, there would be potentially disastrous blowback. Powell argued that:

“…I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” – Jerome Powell

As he admitted, it is indeed their strategy. Powell was not the Fed chairman at the time, so he may not have been aware of the full agenda, but he is certainly aware now. Why would Powell undertake the exact policy action he once warned would result in a full spectrum implosion of the credit bubble? Probably because he was told to.

Powell knows the history of the Great Depression and he knows what will happen when the Fed raises rates into economic weakness and he is doing it anyway. He already tried a test run of rate hikes back in 2018 and the results were not hard to figure out; markets began to tank. We should never forget that the central banks are fully cognizant of the effects of their endeavors. As I stated back in February:

“The rate hikes of 2018 were a test run for a more aggressive and deliberately engineered crisis down the road. The Fed has its own agenda, it does not care about protecting U.S. markets, nor does it even care about protecting the U.S. economy in general.

I hold that the Fed is a weapon for social and political change within America and part of its job is to greatly reduce the standard of living of the population while making it appear as if this decline is a “natural” consequence of the U.S. System.”

This leads us to the final question – What happens next?

That’s easy to answer: The fed continues to hike rates well into next year and will not reverse course or capitulate and return to stimulus. The dovish predictions were wrong. The people that said the Fed would not raise rates were wrong. The people that said the Fed would never remove support from stock markets were wrong. This process is ongoing and the effects will grow as the months pass, but those that were hoping for a manic return to the days of bailouts and QE are going to be deeply disappointed.

This is a stagflationary crash, and as such we are going to experience the worst of both deflationary and inflationary worlds. Prices will remain high while GDP goes negative. Sales will decline and jobs will decline as we enter into the end of this year. There is no way around this. The Fed will have all kinds of theories and misdirections on why these things are happening, and they will try to distract the public as much as possible in the meantime.

What the Fed will never do is admit that a crash is happening until it is too late for people to act. They will never warn the populace of the dangers and they will never tell people to prepare. Watch as they tap dance and tell the public that all the pain is “transitory.” Then, watch as the dust settles and they tell people that “no one could have seen this coming.” It’s all very predictable, because it’s all been done before.

Billionaires, Bunkers and Brain Damage

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“The rich are not like us”

By Mickey Z.

Source: Dissident Voice

Douglas Rushkoff has an article (based on his latest book) called “The super-rich ‘preppers’ planning to save themselves from the apocalypse,” in The Observer.

This excerpt gives you an idea of how the barbaric brain of a billionaire operates:

Finally, the CEO of a brokerage house explained that he had nearly completed building his own underground bunker system, and asked: “How do I maintain authority over my security force after the event?” The event. That was their euphemism for the environmental collapse, social unrest, nuclear explosion, solar storm, unstoppable virus, or malicious computer hack that takes everything down.

This single question occupied us for the rest of the hour. They knew armed guards would be required to protect their compounds from raiders as well as angry mobs. One had already secured a dozen Navy Seals to make their way to his compound if he gave them the right cue. But how would he pay the guards once even his crypto was worthless? What would stop the guards from eventually choosing their own leader?

The billionaires considered using special combination locks on the food supply that only they knew. Or making guards wear disciplinary collars of some kind in return for their survival. Or maybe building robots to serve as guards and workers – if that technology could be developed “in time.” It’s as if they want to build a car that goes fast enough to escape from its own exhaust

I tried to reason with them. I made pro-social arguments for partnership and solidarity as the best approaches to our collective, long-term challenges. The way to get your guards to exhibit loyalty in the future was to treat them like friends right now, I explained. Don’t just invest in ammo and electric fences, invest in people and relationships. They rolled their eyes at what must have sounded to them like hippy philosophy.

After reading that, you may be wondering if the rich are brain-damaged. To which I reply: Why weren’t you thinking that all along and yes, they are brain-damaged. Some studies to consider:

There’s plenty more where that came from but, of course, all such “research” must be viewed with healthy skepticism. Personally, since I’m justifiably wary of “studies,” I’ll just look around to see — with my own three eyes — how the wealthiest humans on the planet have behaved since, well… forever.

Or consider the words of the immortal Dorothy Parker: “If you want to know what God thinks of money, just look at the people he gave it to.”

Translation: The billionaires are not going to save you — or ever help you. They’re running scared to get their brain-damaged butts into bunkers.

So, connect with your peers. Connect across “party” lines and ideological hive minds. Toss away your purity litmus tests and find common ground.

What will save us is what always saves us: community, resilience, compassion, open-mindedness, innovation, and imagination.

The Fourth Turn, Turn, Turn

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By Charles Hugh Smith

Source: Of Two Minds

The cycles of The Fourth Turning, Fischer and Turchin are all in alignment at this point in history..

The 1997 book The Fourth Turning: An American Prophecy proposed a cyclical pattern of four 20-year generations which culminate in a national crisis every 80 years. The book identifies these dates as Fourth Turnings: 1781 (Revolutionary War), 1861 (Civil War) and 1941 (global war). add 80 years and voila, 2021.

I use the term Fourth Turning generically to describe an existential crisis that decisively changes the course of national identity and history.

In other words, we don’t have to accept the book’s theory of generational dynamics to accept an 80-year cycle. There are other causal dynamics in play that also tend to cycle: the credit (Kondratieff) cycle, for example.

While each of the previous existential crises were resolved positively, positive outcomes are not guaranteed: dissolution and collapse are also potential outcomes.

David Hackett Fischer’s book The Great Wave: Price Revolutions and the Rhythm of History proposes another cycle: humans expand their numbers and consumption until they’ve exploited and depleted all available resources.

As resources become scarce, societies and economies unravel as humans do not respond well to rising prices generated by scarcities.

The unraveling continues until consumption is realigned with the resources available. In the past this meant either a mass die-off that drastically reduced human numbers and consumption (for example, The Black Plague), a decline in fertility that slowly reduced population to fit resources, mass migration to locales with more resources or the discovery and exploitation of a new scalable energy source that enabled a new cycle of rising consumption.

The 14th century Black Death reduce Europe’s population by roughly 40%, enabling depleted forests to regrow and depleted agricultural land to restore fertility.

Once the human population regained its numbers and consumption in the 17th century, wood was once again under pressure as the key source of energy, shipbuilding, housing, etc.

The development of steam power and the technologies of mining enabled the exploitation of coal, which soon replaced wood as the primary energy source.

Oil and natural gas added to the energy humans could tap, followed (at a much more modest level) by nuclear power. Despite gargantuan investments, the recent push to develop solar and wind energy has yielded very modest results, as globally these sources provide about 5% of total energy consumption. (See chart below)

It’s self-evident that despite breezy claims of endless expansion of consumption, the global human population has now exceeded the resources available for practical extraction. Energy, fresh water, wild fisheries and fertile soils have all been exploited and the easy/cheap-to-extract resources have been depleted.

(The chart below of global CO2 emissions is a proxy for energy / resource consumption.)

So once again it’s crunch-time: either we proactively reduce consumption to align with available resources, or Nature will do it for us via scarcities.

Peter Turchin proposed another socio-economic cycle of 50 years in his book Ages of Discord: in the integrative stage, people find reasons to cooperate. In the disintegrative stage at the end of the cycle, people no longer find much common ground or reasons to cooperate. Political, social and financial extremes proliferate, culminating in a rolling crisis.

In Turchin’s analysis, the previous 50-year age of discord began around 1970, and the current era of discord began in 2020. Those who lived through the domestic terrorism, urban decay, stagflation and political/social/legal crises of the 1970s recall how inter-related crises dominated the decade.

In my analysis, the last period of discord in the 1970s was “saved” by the supergiant oil fields discovered in the 60s coming online in the late 1970s and early 1980s. That oil enabled a 40-year boom which is now ending, with no new scalable source of energy available to replace oil, much less enable an expansion of consumption.

In other words, the cycles of The Fourth Turning, Fischer and Turchin are all in alignment at this point in history. We have proliferating political, social and financial extremes and a forced transition to lower consumption to align with declining energy.

Turn, turn, turn. Right when we need to cooperate on transforming a high-consumption, bubble-dependent “waste is growth” Landfill Economy to declining consumption / Degrowth, we’re beset by discord and demographic pressures, as the promises made to the elderly back when it was expected that there would always be 5 workers per retiree cannot possibly be kept now that the worker-retiree ratio is 2-to-1 and there are no limits on healthcare spending for the elderly.

Humans are happy to expand their numbers and consumption and much less happy to consume less. They tend to start revolutions and wars in vain attempts to secure enough resources to maintain their profligate consumption and expansion.

Today’s extremes of wealth and income inequality are optimized to spark political discord and revolts. The wealthiest 20% will be able to pay higher prices, but the bottom 40% will not. The middle 40% will find their disposable income, i.e. their income left over after paying for essentials, will drop to near-zero.

When 80% of the populace are crunched financially, revolutions and the overthrow of governments follow.

As I’ve outlined in previous posts, global inequalities are widening as the Core exploits its built-in advantages at the expense of the vulnerable Periphery.

Core nations will be much better able to maintain their consumption at the expense of the Periphery nations, which will experience sharp declines in purchasing power and consumption.

Previous Fourth Turnings have been resolved one way or another within 5 to 7 years. If this Turning began in 2020, we can expect resolution by 2025 – 2027.

As I explained in my book Global Crisis, National Renewal, those nations that embrace Degrowth will manage the transition, while those that cling to the endless-expansion, bubble-dependent Waste Is Growth model will fail.

This is why I keep talking about making Plans A, B and C to preserve optionality and reduce financial commitments and consumption now rather than passively await crises over which we will have little direct control.

As I’ve endeavored to explain, those anticipating decades of time to adjust are overlooking the systemic fragilities of the current global financial/supply systems. Tightly bound systems of interconnected dependency chains have been optimized to work perfectly in an era of expansion. They’re not optimized to gradually adjust to contraction; they’re optimized to break and trigger domino-like breakdowns in interconnected chains.

We don’t control these macro-trends, we only control our response.

Escalation: Recent Events Suggest Mounting Economic Danger

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By Brandon Smith

Source: Alt-Market.us

A common refrain from people who are critical of alternative economists is that we have been predicting crisis for so long that “eventually we will be right.” These are generally people who don’t understand the nature of economic decline – It’s like an avalanche that builds over time, then breaks and quickly escalates as it flows down the mountain. What they don’t grasp is that they are in the middle of an economic collapse RIGHT NOW, and they just can’t see it because they have been acclimated to the presence of the snow and cold.

Economic decline is a process that takes many years, and while you might get an event like the market crash of 1929 or the crash of 2008, these moments of panic are nothing more than the wreckage left behind by the great wave of tumbling ice that everyone should have seen coming far in advance, but they refused.

In 2022 the job of warning people is far easier than it used to be because we are well past the midpoint of the process of decline. But, believe it or not, I still get people today who claim that we analysts are “doom mongers.” The power of willful ignorance is truly amazing. It’s enough to make a person blind to stagflationary crisis, supply chain disruptions, quickly inflating prices, stock market carnage, bond market instability, record consumer debt, and international conflict.

At this point, I think if a person can’t see the dangers ahead they are probably a waste of time and space and are destined to be buried in the ice; there’s nothing that can be done for them. Yes, there are some people out there that don’t get exposed to the information and we have to take them into account, but my priority will be people that are awake and aware and try to give them a sense of what point in the collapse process we find ourselves.

In the past month there has been a considerable uptick in economic and geopolitical activity that suggests we are entering a new phase, and not surprisingly it’s all accumulating right before we hit October. Here are the events that I find most concerning:

The European Energy Crisis

This is an event that I have been predicting since the Russian invasion of Ukraine and now it is upon us. I wrote about it extensively in my recent article ‘Europe Is Facing Energy Disaster And It’s Going To Bleed Over Into The US’ so I won’t rehash all that information here. What I do want to point out is the complete lack of planning on the part of European officials to deal with the threat. It is as if they WANT a full spectrum disaster.

Russia has now completely cut off natural gas supplies to Europe, which represent around 40% of all EU energy resources. Europe’s benchmark natural gas prices spiked by 28% a week ago, on top of already existing inflation. Oil supplies are also in steep decline for Europe and the EU government has pledged to cut what’s left of Russian oil imports by sea at the end of the year. Sadly, they have offered very little in the way of solutions to the supply-side problem.

There has been talk of increasing imports of alternative resources from other nations, but the EU is already buying up around 75% of all liquid natural gas from the US. OPEC oil producers have indicated they will not be attempting to increase production anytime soon (probably because they can’t due to inflation in operation costs). There is NO backup energy resource for Europe; it doesn’t exist right now. They will try to buy up whatever coal, oil and gas they can find on the market while driving up prices even more for other countries. They will still come up short, which means people are going to freeze this winter.

Best case scenario is that there are mostly mild temps and people barely scrape buy with minimum heating. But EU industry is going to suffer and many manufacturers are going to cut production (which mean more stress on the global supply chain).

Core Inflation Is Still Rising

As I warned last week in my article ‘It’s A Fact That Needs Repeating: The Federal Reserve Is A Suicide Bomber,’ inflation is continuing to rise despite the Fed’s continued interest rate hikes, giving the central bank even more ammunition to justify higher rates into extreme economic weakness.

The latest CPI print showed an increase to 8.3% and was a shock to markets which universally expected a drop. This is the nature of stagflation – Even with falling demand prices continue to climb or remain high for extended periods. The stagflation event of the 1970s lasted for a decade until the Fed jacked rates to 21% and then employment crumbled in the early 1980s.

This doesn’t mean that rates will go to 21% this time; they don’t need to. All it would take is a Federal Funds Rate of around 4% – 5% to crash our current QE addicted system. A 75 bps rate hike is now widely expected at the next Fed meeting this month, with some predicting a 100 bps hike. This would put us close to crash territory for markets and for employment, though I think we still have well into 2023 before unemployment really starts to spike.

Putin’s Meeting With Xi

As I write this, Vladimir Putin is set to meet with China’s Xi Jinping and the nature of the conference is not clear. There are the obvious points of agreement such as China’s continued purchases of Russian oil and other commodities, as well as the ongoing plan to build a pipeline to China by 2025. There is also strategic cooperation which is evident in the recent naval exercises between the two nations around Japan and Taiwan.

The timing of the meeting is concerning to me, because the prime season for a potential Chinese invasion of Taiwan is fast approaching (October is the best month for naval movements to avoid typhoons). China would not necessarily need to commit to a ground invasion, either. They could simply cut off all import/export trade from any source other than China and starve Taiwan until they accept unification.

There is also the issue of Ukraine and arms sales. With the amount of propaganda coming from Ukrainian Intelligence and NATO, it’s hard to say what is actually happening, but I suspect Russia is changing strategies and repositioning to deploy missile and artillery bombardment of infrastructure, including power grids and water. This is a tactic that Russia has avoided for months (until this week), which is surprising because one of the first measures usually taken by the US during an invasion is to eliminate most key infrastructure (as we did in Iraq). You would think Russia would have done the same, but perhaps they were saving that scenario for winter when it is harder for Ukraine to cope.

This would make Ukraine essentially unlivable in the coming winter for most of the population. Putin may be seeking to ensure China remains a steady economic partner should geopolitical pressures increase. They may even be making a deal of mutual support: China takes Taiwan while Russia makes Ukraine a resource wasteland and they each support the other economically when NATO counties try to impose sanctions on China. We probably won’t know until October, but the timing of the meeting should raise eyebrows.

If the manure is about to hit the fan in Taiwan along with Ukraine, then diplomatic and economic ties will be severed and western access to China’s manufacturing will be cut. This is a problem for China’s economy, certainly, which may be why they have continued their mass covid lockdowns well after every other government has abandoned them. Could this be practice for civil controls in an impending war environment?

China’s global dominance in imports/exports gives them considerable economic leverage in trade, however. Many nations would not support sanctions against them. Also, their vast holdings of US dollars and Treasuries could be used as a weapon to damage or destroy the dollar’s world reserve status. If China invades Taiwan this year, then all bets are off – The economic decline will move swiftly from that point on.

There are many other trends which factor into the crash environment but the above factors are the most recent and hold the biggest potential for causing a domino effect globally. The question that always arises is “what can we do about it?” Not much in terms of prevention. What we can do, though, is prepare locally to weather the storm. This means stocking necessities before they rise even further in price or become non-existent. Become a producer and learn a valuable skill for survival in a depleted economy Organize with people locally who are on the same page to create security and alternative trade opportunities.

Hopefully, the aware citizenry will rise to the challenge and organization will be extensive, because the worst case scenario would be great masses of completely isolated people all vying against each other rather than working towards mutual security. Even in a slow collapse scenario this is a problem in terms of rising crime; so plan on working with others if you want to avoid inevitable third world conditions.

A Most Peculiar Recession

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By Charles Hugh Smith

Source: Of Two Minds

So what are conventional pundits missing today? I would start with three dynamics.

Only old people experienced real recessions–those in 1973-74 and 1980-82. Recessions since then have been shorter and less systemic.

In the good old days, a recession laid waste to entire industries which never recovered their previous employment. People who were laid off couldn’t find another job. Major sectors of the economy dried up and blew away. Jobs were scarce and there was an oversupply of people looking for work.

We’re told consumer confidence is in the dumps and everyone expects the worst: recession! Oh Lordy. Interestingly, there isn’t much evidence of this near-panic behaviorally. Everyone’s tightening their belts and battening down the hatches, but it’s not the cliff-dive we see in a real recession.

There’s certainly a lot of froth to be scraped off the latte, but what I’m curious about are the armatures of the economy and what I’m seeing is the crowd ignoring key dynamics because they’re so busy pushing the Recessionary Play-Doh into the old playboard.

The entire notion that there is a hard and fast line indicating “recession” is not realistic or useful. The economy dropped 1% for two quarters in a row, quick hit the alarm, go to DefCon 1. Uh, OK, right.

The more useful approach is to look at data points as mostly signal noise that fail to reflect or illuminate the core dynamics of the economy. Here’s an example: the stagflation of the 1970s is a hot topic as the financial punditry compares then to now, seeking evidence of similarities strong enough to predict a Lost Decade ahead.

One key factor that’s rarely (if ever) mentioned was the staggering cost of cleaning up America’s industrial sector and polluted skies and waterways at the same time that the Cold War required the U.S. to strengthen its allies by allowing them unfettered access to the U.S. marketplace–exports to the U.S. that had a price advantage due to the dominance of the dollar and the relative weakness of allies’ currencies.

1972 exchange rates indicate that the Japanese yen was 302 to $1–an enormous advantage when compared to recent exchange rates of around 110 yen to the USD.

What few current pundits seem to grasp is the dominant dynamic of the entire era of 1945-1992 was the Cold War with the Soviet Union and its client states and allies. Strengthening allies’ economies was a core goal and so the costs to the domestic economy had to be absorbed: there was no choice.

The costs of cleaning up the nation and its vast industrial base was an enormous drag on the economy. The value of the trillions of dollars (in current dollars) invested was not in boosting profits, it was in restoring what had been heedlessly destroyed and damaged by rampant dumping of waste and pollutants and improving the health and well-being of the citizenry.

Check out the smog in early 1970s TV series filmed in Los Angeles for a taste of what was cleaned up.

But in a mind-boggling failure of conventional economics, our financial punditry is blind to the impact of the most consequential economic realities of the 1970s–the Cold War and the lengthy, painful, costly clean-up of the nation and its industrial base–on stagflation.

One reason for this abject failure is these dynamics were difficult to measure, so they weren’t measured.We only manage what we measure and so if we don’t measure it, it doesn’t exist. If we measure things in a no-longer-relevant manner, for example GDP, we continue to act as if this misguided measure is of supreme importance when the reality is it’s dangerously misleading.

So what are conventional pundits missing today? I would start with three dynamics:

1. For the first time in multiple generations, there is a structural scarcity of labor. For a variety of reasons, there are fewer people willing to do the work at the offered wage than there are jobs. This is not temporary, it is demographic and social, not simply economic. All the supposedly easy fixes– automate everything, etc.–are not that easy.

2. The strength of the U.S. dollar is exporting inflation, to the benefit of the domestic economy. After offshoring critical supply chains–a disaster that will take years to reverse–now the U.S. is offshoring inflation and the resulting demand destruction.

3. Global capital flows are reversing. capital flowed from the Core to the Periphery to reap the gains of globalization. Now the flow is reversing and capital is flowing from the Periphery to the Core to preserve capital and lock in lower-risk returns. What looks expensive to those earning U.S. dollars may look cheap and secure to those fleeing depreciating currencies and assets.

In my analysis, these are consequential dynamics that merit little attention in conventional financial analysis.

There is much more to say but glance at these two charts: real (i.e. adjusted for official inflation) median household income and real Broad U.S. Dollar Index.

If we’re not measuring or pondering the core structural dynamics of the economy, we’re not going to make sense of no-longer-relevant data. This is a most peculiar recession, and few seem to be asking if the reason is we’re missing what’s changed structurally.

Charts courtesy of St. Louis Federal Reserve Database (FRED))