We live in a peculiar juncture of history in which truth has been banished as a threat to the maximization of private gain, i.e. the hyper-pursuit of self-interest. Evidence that supports a causal chain has been replaced by cherry-picked data that supports a self-serving narrative: both the evidence and narrative are manufactured to serve the interests of the few at the expense of the many.
In this juncture of history, evidence is easily disputed because the process of manufacturing self-serving evidence has been perfected. Indeed, self-serving evidence is now a commodity which can be purchased wholesale: rig the sample size, massage the data statistically, conjure up a context that serves to frame the evidence in a slippery self-interested fashion, omit disinterested evidence and contexts, top with arcane math and voila, evidence and narrative are presented as “facts” rather than what they really are, an elaborate, well-staged con designed to maximize the private gains of the few by exploiting the many.
Organizing the entire system to serve the pathological greed of the few is best served by devaluing truth to mere opinion and causal chains to mere narratives. In this juncture of history, truth has been revealed as a chimera; there is only opinion, and all opinions are equal. Opinions are beliefs, and all beliefs are equal. All narratives are equal. All questions boil down to values: values are all equally detached, free-floating and of the same value: zero.
This con has reached perfection in our financial system, which is now optimized for exploitation and sociopaths. As Nassim Taleb has explained (referencing Adam Smith), markets only function if there are rules which are imposed equally on all participants. In our financial system, there are two sets of rules: one which we can summarize as anything goes for the super-wealthy and the well-connected, and another set for everyone else.
Shear the sheep of billions, pay a modest fine–and if all your bets go bad, get bailed out because you’re too important to fail. Sneak a few thousand out of the credit union, go to prison. Sell a financial product that’s designed to go bust as low-risk, oh well, buyer beware, haha, that’s just the free market at work. Sell a nickel bag of drugs, get a tenner in the Gulag.
Two sets of rules: one simulacrum of rules for the rich–just another con, really–and punitive rules for everyone else.
Since evidence, causal chains and values have all been devalued, there is no longer any recognition that the desire for gain–greed–can be either exploitive or beneficial to the many. If your greed drives you to make a product that is faster, better, cheaper, more durable and efficient than what’s currently available, your gain is the result of an advance that serves the interests of the many.
If your desire for gain leads you to misrepresent a shoddy product designed to fail (subprime mortgages, Landfill Economy products) or you raise the price because you can, your greed serves your interests at the expense of the many. This is the acme of exploitation. Kleptocrats and sociopaths, rejoice!
This system is optimized for exploitation, as the exploiters can exploit the many without the many even recognizing they’ve been stripmined. We no longer have the means to differentiate fraud from fact or exploitation from rules-based markets.
This landscape of wide-open exploitation and debauchery is Heaven on Earth for sociopaths who not only do not see any difference between gains skimmed at others’ expense and gains earned by providing a superior product / service, they revel in exploiting the system and every participant: employees, partners, suppliers, depositors, borrowers and customers.
But in this desert of exploitation and the supremacy of self-interest, some things remain true and others remain false. Some truths remain self-evident. As I have shown here many times, we can look at the hourly wages and cost of essentials in 1980, 1990, 2000, 2010 and the present and calculate how many hours of labor it took to pay for essentials such as rent, property taxes, healthcare, childcare, taxes, education, etc. These calculations reveal that the purchasing power of wages has declined for decades. This evidence cannot be made to vanish by declaring it opinion, belief or a “different set of values”–it is fact.
If we measure prosperity by how much labor can buy, all but the top few wage earners are less prosperous today. The evidence and causal chain are self-evident. The self-interested few who have reaped the vast majority of the economy’s gains can hire shills to argue that since TVs now require fewer hours of labor to buy, we’re all better off, but these obfuscations are nothing more than distractions designed to divert our attention from the mechanisms of exploitation that are operating 24/7 beneath the ceaseless churn of “news” and “market action.”
Let’s call this financial system what it really is: the MetaPerverse, a conjured world of self-serving cons that is optimized for exploitation, the perversion of justice, infinite inequality and the stripmining of the many to the benefit of the few, all securely protected by a cloud of confusion in which everything is equally valueless and truth no longer exists. All that remains is a babble of competing cons.
From a systems perspective, nation-states and empires arise when they are superior solutions to security compared to whatever arrangement they replace: feudalism, warlords, tribal confederations, etc.
States and empires fail when they are no longer the solution, they are the problem. As the book The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization explains, when the dissolution of the state / empire becomes the pain-reducing solution, the inhabitants withdraw their support and the empire loses its grip and expires.
As I explain in my new book, Global Crisis, National Renewal, states and markets are problem-solving structures. These structures solve problems by optimizing adaptability and beneficial synergies that reinforce one another as evolutionary advances.
The rise of the middle class is an example of beneficial synergies: as this new class gains access to credit, expertise, trade, enterprise and pricing power for their labor, they have the means to transform their labor into capital by saving earnings and investing the capital in assets, new enterprises, etc. which then generate income from capital which fuels synergistic increases in credit, expertise, assets and income from investments.
States / empires fail and expire when they elevate the fatal synergies created by self-serving elites. Rather than encourage the dynamics of adaptation–competition, transparency, accountability, experimentation and dissent– the elites suppresses these forces as threats to their monopolies, cartels and wealth.
Stripped of adaptability and beneficial synergies, the state / empire is no longer able to solve problems. It becomes the problem which cannot be resolved.
A key dynamic fueling fatal synergies is the hubristic confidence that low-cost abundance is a birthright bestowed by the state /empire, so resources can be endlessly squandered on excess and extremes of consumption and waste. The state / empire no longer focuses on securing the material sources of security (food, energy, etc.) or the accountability, competition, dissent and transparency required to solve systemic problems.
Instead, the state / empire dissolves into divisive camps seeking to protect their petty fiefdoms and expanding their wealth at the expense of the populace. The super-wealthy build $500 million yachts and palaces, politicians trade on their positions to accumulate fortunes, and corruption replaces governance.
Markets spiral into fatal synergies as low quality products and services, speculative excess, extremes of grotesque consumption and blood-soaked entertainment become “growth industries” while blackouts dim electrical grids and store shelves empty of essentials.
The market solution to everyone already owning everything is to engineer planned obsolescence into every product and form service-sector cartels that then strip services to the bone to juice profits, a.k.a. the crapification of all goods and services.
The state / empire also fails to maintain basic security and functions such as tax collection and a fair enforcement. Petty crimes are exploited by those in power (civil forfeiture) while resistance to the state is severely punished. There are two legal systems, one for the commoners and another for the elite.
The state / empire protects those profiting from the status quo and then calls this profiteering a “solution.” But this profiteering doesn’t solve any problems; it is the problem, as self-serving profiteering protects its privileges by corrupting the state, finance and the economy.
For its part, the market seeks to maximize profits in excesses of consumption, predatory lending (student loans), the wholesale destruction of quality by monopolies and cartels and extremes of speculation.Maximizing profits by any means available has no moral foundation; predatory student loans are profitable, obscure medical billing is profitable, selling products designed to fail is profitable, declaring software outdated is profitable, deceiving consumers is profitable, and so on, in an endless array of shoddy, unhealthy products, rapacious services, fraudulent overcharges, etc.
Since problems go unresolved, things fall apart and the masses veer into extremes of derangement and magical thinking: fanaticism is substituted for friendship, cults abound, common ground vanishes and all the failures of the system are papered over with Bread and Circuses, free money, gaudy entertainments and lifeless displays of conspicuous consumption that reveal the decay and degradation.
Protecting the few stripmining the system at the expense of the many is not problem-solving. It adds a layer of problems that the state /empire is incapable of resolving. Ossified, sclerotic, self-serving, corrupt, focused on virtue-signaling and the appearance of tackling problems rather than actually solving problems because some sacred cow would lose its privileges and income stream, the state / empire is the problem, not the solution.
When the state / empire loses the ability to recognize and solve core problems of security and fairness, it will be replaced by another arrangement that is more adaptable and adept at solving problems. Artifice, fantasy, magical thinking, excuses and absurd cover stories are not part of problem-solving. Problems can only be solved if reality is faced directly.
When reality is unacceptable because it negatively impacts those stripmining the system for private gain, the state / empire is already on its fatal spiral to collapse.
Economists focus on what can be easily measured: sales, profits, prices, tax revenues, etc. Since the decay and failure of institutions isn’t easily quantified, this decay doesn’t register in the realm of economics. Since it isn’t measured, it doesn’t exist.
But institutional decay and failure is all too real, and it begs the question: how can a society and economy thrive if its core institutions fail? The short answer is they cannot thrive, as institutions are the foundations of the social and economic orders.
As I explain in my new book, Global Crisis, National Renewal, the conventional view has a naive faith that “great leaders” can reverse institutional rot. This faith overlooks the systemic sources of institutional decay and failure which are outlined in the graphic below, The Lifecycle of Bureaucracy, a.k.a. institutions.
Leaders are constrained by the nature of centralized organizations and the incentive structure that slowly shifts from rewarding efforts to further the institution’s core mission to self-service and protecting an ossified, failing institution from outside scrutiny and reform.
As Samo Burja explains in his insightful essay, Why Civilizations Collapse, those inside institutions are by design so compartmentalized that few (if any) even recognize the institution is failing. As long as everything is glued together in each little compartment, no one grasps the entire institution has lost its way. And since no one recognizes it, no one attempts to save it.
Institutions end up advancing caretaker managers who excel at the political game of rising to the top of a sprawling institution. When the decay (or budget cuts) finally trigger a crisis, the institution has been stripped of visionaries with a bold grasp of what’s needed to restore the focus on the core mission and institute new incentives. The bold leaders quit in disgust or were sent to bureaucratic Siberia as potential threats to the status quo.
The problem is institutions fail by the very nature of their centralized design. The organization is centralized so directives flow down the chain of command, and every branch is compartmentalized to limit the power of each department and employee to disrupt the orderly flow of top-down directives.
Within this compartmentalized, top-down structure, the incentives are to follow procedures rather than get results. The rewards go to those who dutifully follow procedures rather than to those who raise the alarm about the loss of transparency, effectiveness and focus on fulfilling the mission.
The path of least resistance is to protect the existing structure and add more compartments, i.e. “mission creep.” Rather than focus on the dissipation of resources and the decline of the core mission, leaders add “feel good” missions and PR promotions of phony reforms and initiatives that bleed more resources from the core mission.
Consider the institution of democracy, which has been corrupted into an invitation-only auction of state favors and rentier skims. Democracies have another fatal flaw: politicians win re-election by promising virtually everyone something for nothing: more benefits and entitlements and lower taxes. The gap between higher costs and declining revenues will be filled by government borrowing.
All this additional borrowing will supposedly be paid by the magic of “growth”, which will expand tax revenues at a rate that exceeds the cost of borrowing.
But demographics, resource depletion and the diminishing returns of a consumer economy fueled by rapidly expanding public and private debt have sapped “growth” in fundamental ways. Ironically, borrowing and spending more to spur “growth” only hastens the diminishing returns of increasing debt to fund consumption today.
Democracies are thus optimized for rapid “growth” and are ill-suited to transition to DeGrowth, i.e. less of everything for the vast majority of the citizenry as resources become scarce and debt eats the economy alive. (DeGrowth could work to everyone’s benefit, which is the point of Global Crisis, National Renewal.)
Central banking is another failing institution. When faced with fiscal crises, central states/banks inevitably succumb to the temptation to print/borrow currency in whatever sums are needed to fill the shortfall of the moment, i.e. political expediency. This profligate creation of currency seems to be magic at first; everyone accepts the “new money” at the current value. But eventually gravity takes hold and the currency’s purchasing power declines, as the real economy (the production of goods and services) grows at rates far below the expansion of credit and currency.
Even the greatest empires in human history have been unable to resist the “easy” solution of devaluing currency as the means of fulfilling all the promises that were made in more prosperous times.
The progression of centralized power slowly but surely replaces the self-organizing, resilient, decentralized structures of civil society with tightly bound hierarchical centralized structures that are increasingly ineffective, increasingly costly and increasingly fragile, i.e. increasingly prone to failure or collapse.
The irony of institutional decay and failure is everyone inside is so busy following procedures that nobody notices the decay until the whole worm-eaten structure collapses. Look no farther than financialized asset bubbles, healthcare and education for examples of institutions in run-to-failure decline.
We are in effect so busy arranging the beach umbrellas per our instructions that we don’t notice the approaching tsunami. Can a nation prosper as its institutions decay and collapse? Only in the fantasies and magical thinking of the delusional.
I don’t think I can overstate the danger that the U.S. economy is in right now as we enter 2022. While most people are caught up in the ongoing drama of Covid-19, a REAL threat looms over the nation in the form of a stagflationary tidal wave. The mainstream media is attempting to place the blame on “supply chain disruptions,” but this is a misrepresentation of the issue.
The two factors are indeed intertwined, but the reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions. If we look at the underlying stats for price rises in essential products we can get a clearer picture.
Before I get into my argument, I really want to stress that this is a precarious time and I suggest that people prepare accordingly. In just the past few months I have seen personal expenses rise at least 20% overall, and I’m sure it’s the same or worse for most of you. Stocking necessities and safe-haven investments with intrinsic value like physical precious metals are a good choice for protecting whatever buying power your dollars have left…
Higher prices everywhere
The Consumer Price Index (CPI) is officially at the highest levels in 40 years. CPI measurements often diminish the scale of the problem because they do not include things like food, energy and housing which are core expenses for the public. CPI calculations have also been “adjusted” over the past few decades by the government to express a more positive view on inflation. If we look at the inflation numbers at Shadowstats, calculated according to the same methods they used in the 1980’s, we see a dramatic increase in CPI which paints a more dire (but more accurate) picture.
U.S. food prices have spiked to levels not seen since 2008 at the onset of the credit and derivatives collapse that brought about tens of trillions of dollars in Federal Reserve bailouts.
If we look beyond the 2008 crisis, food costs do not see a similar jump until the 1980s. Rising food prices in the US are often obscured by creative accounting and “shrinkflation” (shrinking packages and rising prices), but if we look at global food prices the average is a 30% jump in the past year.
Rental and home prices have also gone into the stratosphere. Rental costs went up around 18% in 2021, and this is an extension of a trend that has been prevalent for the past decade. Prices have been rising for a while, it’s just that now the avalanche has accelerated.
Home prices are currently out of the range of most new potential home buyers. Values jumped 16% in the past year alone, with the average property costing $408,000. Home sales continue to remain elevated compared to two years ago despite inflating prices for one reason and one reason only – the mass migration of Americans away from the draconian mandates and bureaucracy of blue states into more conservative states.
I live in Montana, a primary destination for people relocating, and from my experience the majority of these people are conservatives seeking to escape the vaccine and lockdown mandates in places like California, New York and Illinois. They see the writing on the wall and they are trying to get ahead of the economic and social calamity that will surely befall such states.
I would also note that home sales have finally begun to flatten in the past six months but prices are not dropping, which is a trend that I think needs to be explored further because it illustrates the larger issue of stagflation.
When inflation becomes stagflation
Understand that prices are not just rising because of increased demand (demand is starting to fall in many sectors), prices are rising because of increased money supply and dollar devaluation which is not yet being reflected in the Dollar Index.
Take a look at U.S. GDP and you will see that for the past several years it has tracked in tandem with price inflation. Obviously, if prices inflate then this means people are spending more, which then leads to higher U.S. GDP; it’s like magic, right? In other words, inflation makes it seem as though U.S. GDP is always improving.
However, this has not been the case in the past couple of years.
Official GDP has flattened despite the fact that U.S. money supply and inflation have rocketed higher. What does this mean? I believe it is a sign of stagflation and a reckoning in 2022. If we examine inflation adjusted GDP numbers from Shadowstats we see that GDP has declined rather aggressively in the past couple of years.
We can also see odd tendencies in oil and gasoline prices. While it’s true that gas prices have been higher in the past, this does not address the full context of the situation. U.S. travel spending has declined 12% since 2019 and airline travel has dropped at least 21% in the past year. Average gasoline usage dropped after 2019 and still has not recovered. Yet, gas prices continue to rise? In other words, travel demand is stagnant but prices are INCREASING – this is another signal of inflationary pressures and dollar devaluation. Oil is priced in dollars globally, and therefore any inflation in the dollar will be readily visible in oil. This would help explain why pandemic paranoia and reduced travel have not caused gas prices to drop.
If the current momentum continues the majority of necessities in the U.S. will not be affordable for most people by next year. We are looking at a fast-moving decline in production along with a swift explosion in prices. In other words, a stagflationary disaster.
This is the Federal Reserve’s fault
I and many other alternative economists have been warning about the inevitable inflation/stagflation crisis for years, but the most important factor to understand is WHO is responsible this event?
The mainstream financial media is going to protect the government and the Federal Reserve at all costs during this breakdown. They are going to blame Covid, the lockdowns here and overseas as well as the supply chain bottleneck.
The Fed is the true culprit, though.
While there have been many American Presidents and other politicians that have supported the Fed in its inflationary activities, the central bank itself needs to be held accountable for the downturn that is about to occur. This is a process that started back at the founding of the Fed, but spread like cancer after the crash of 2008 and the introduction of 12+ years of stimulus and bailout measures along with near-zero interest rates.
The inflationary end-game
The pandemic is the perfect cover for the inflationary end game. In 2008 the response to the crisis was to print and pump dollars into banks and corporations in the U.S. and around the globe. This money supply was held in corporate coffers and in central banks overseas, which slowed the effects of inflation. This set the precedent for subversive stimulus policies by giving the Fed a blank check to do whatever it wanted.
In 2020, the Fed created trillions more but this time the money was injected directly into the U.S. economy through Covid stimulus checks, PPP loans and other measures. In the alternative economic field we call this “helicopter money.” These dollars triggered a massive retail buying spree in 2020, but with more dollars in the economy chasing less goods prices are now spiking much higher.
The big discussion today is whether or not the Fed will taper their asset purchases, reduce their balance sheet and raise interest rates to counter inflation?
The fact is it won’t matter; inflation/stagflation will continue or even accelerate as the Fed tapers. With a taper comes the threat of a flattening yield curve in Treasury bonds as well as the danger of bonds and dollars being dumped by foreign investors and central banks. If the trillions upon trillions of dollars being held overseas come flooding back into the U.S., inflation will continue at its current pace or erupt even higher. In fact, the world’s ownership of dollars reached a 26-year low recently. The global transition away from the dollar, toward inflation-resistant investments, has already begun.
This is not a policy error
I explained this Catch-22 threat in my recent article The Fed’s Catch-22 Taper Is a Weapon, Not a Policy Error. In that essay I outline the Fed’s documented history of creating economic disasters that conveniently end up benefiting their friends in the international banks.
I also explained (with evidence) how the Federal Reserve actually takes its marching orders from the Bank for International Settlements, a globalist institution which along with the International Monetary Fund and World Economic Forum is openly seeking a one-world economic system and one-world currency system.
I do not believe that the Fed’s actions are a product of ignorance or stupidity or basic greed. I do not believe the Fed is scrambling to keep the U.S. economy afloat. I believe according to the evidence that the Fed knows exactly what it is doing. The pandemic offers a perfect scapegoat for an engineered crash of the U.S. economy which the Fed is trying to facilitate.
Why? Because the more desperate people are financially, the easier they are to buy off with false promises and a loaf of bread. They are easier to control. On top of that, with the U.S. economy reduced to second- or third-world status, it is easier to sell the public on the predetermined solution – total global centralization and far less freedom.
As the stagflationary crash plays out, never forget who was really the cause of the public’s suffering. In the fog of national crisis it is easy for the establishment to shift blame and responsibility and to cloud the truth. The inflation calamity is about to get much worse, and as it does we need to rally newly awakened people to take action against the central bankers and globalists behind it.
Imagine a town of 1,000 adults and their dependents in which one person holds the vast majority of wealth and political influence. Would that qualify as a democracy? Now imagine that 100 of the 1,000 adults own 90% of all the wealth, collect 97% of all the income from capital and have virtually all the political power. How can a society in which 90% of the populace is decapitalized, disenfranchised and demoralized by political powerlessness be a democracy?
This is America: a kleptocratic autocracy that serves the few at the expense of the many, stripmining the bottom 90% under the guise of a fraudulent “democracy” in which only the few wield real power. Recall Smith’s Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.
It’s also a fact that the top 10% get virtually all the gains from the nation’s capital, and this wealth is concentrated in the top 0.1%:Monopoly Versus Democracy: How to End a Gilded Age Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans.
Exactly how can a system of governance that is nothing but an invitation-only auction of political favors in which the top 0.1% own more than the bottom 80% be a functional democracy? The answer is it cannot. Politics and government have been reduced to protecting and enriching a neofeudal autocracy while claiming to serve the stripmined public.
This extreme concentration of wealth and power is not accidental; the government’s policies have generated this concentration of wealth which has hollowed out democracy. The super-wealthy didn’t siphon $50 trillion from those earning their living from labor on their own; government policies aided and abetted this vast transfer of wealth.
Trends in Income From 1975 to 2018: $50 trillion in earnings has been transferred to the Financial Aristocracy from the bottom 90% of American households over the past 45 years.
The catastrophic consequences of this systemic concentration of wealth and power are also well documented. For example, Human and nature dynamics (HANDY): Modeling inequality and use of resources in the collapse or sustainability of societies. Extreme inequality brings down societies, and America is now a society dominated by extreme inequality.
America is nothing but a vast moral cesspool that the public is told is a pristine pond of “democracy”. Self-enrichment is cloaked as “doing God’s work,” profiteering is sold as “value,” fraud is packaged as “finance” and rapacious monopolies are marketed as “enterprise.”
Institutions have become little more than rackets enriching insiders and the wealthiest few; they have lost moral legitimacy which is the fundamental foundation of democracy and a market-based economy.
It wasn’t just bad luck that financialization and globalization hollowed out America’s economy and democracy and turned the bottom 90% into debt-serfs and tax donkeys; it was government policies implemented by elected officials and the appointed handmaidens of the super-wealthy. Virtually every major policy implemented by either party served the interests of the super-wealthy and corporations: tax cuts had trivial impacts on the bottom 90% while vastly increasing the wealth of the super-wealthy; the Supreme Court’s rulings in favor of corporate “personhood” and “free speech” (a.k.a. the best government we can buy), and the evisceration of the rule of law for corporate fraud, collusion and embezzlement (“too big to fail, too big to jail”).
The Federal Reserve’s free money for financiers distributes gains on the order of 20-to-1 in favor of the super-wealthy: $2 trillion in gains for the bottom 90%, $40 trillion for the top tier.
The list is long and painful proof that the elected government of the United States serves the interests of the top few–a reality masked by expert PR and partisanship.
Partisanship reflects a core structural dynamic: America is now a two-tier society and economy. If you’re an executive at a big Wall Street investment bank, you can rig markets and embezzle billions and you’ll never face any personal legal consequences such as being indicted, convicted and imprisoned. (Bernie Madoff’s conviction was a classic Soviet-style show trial to mask the fact that thousands of other white-collar criminals kept their ill-gotten gains and faced no consequences.)
But try being an employee at a local credit union and embezzle $5,000–a prison sentence is very predictable.
If a spoiled-rotten rich kid gets caught with drugs, Mommy and Daddy’s lawyer kicks into gear and gets a suspended sentence plea bargain. The kid from the bottom 90% gets a tenner in the Drug War Gulag. And so on.
America is also a regional two-tier economy/society. When a society kneels down and worships financialization and globalization, it gives all the political and financial power to the already-super-wealthy and corporations who get 97% of the gains from financialization and globalization.
Since the majority of already-super-wealthy and corporate managers reside in coastal metropolitan areas, the tide of new wealth flooding into the hands of the few boosts the economies of these select regions. The Brookings chart below may look like a chart of political polarization, and superficially that’s obvious: the 500 counties Biden won hold 70% of the nation’s GDP while the 2,500 counties Trump won hold 30% of the nation’s GDP.
The real polarization is economic-financial: there are two economies in America and there’s very little commonality in the two economies. One benefited greatly from financialization and globalization, and the other was hollowed out and brought to its knees by financialization and globalization.
Since income and political power flow to capital, the disparity / inequality far exceed the 70/30 split depicted in this chart. The chart showing the soaring wealth of billionaires is a more accurate reflection of inequality in America.
What’s missing from the 70/30 map is the staggering percentage of residents in the wealthiest 500 counties who are precariats living paycheck to paycheck, the ALICE Americans: Asset Limited, Income Constrained, Employed.
Is there any wonder that stripmined Americans who sense their powerlessness are attracted to virulent partisanship? The more extreme the pendulum swing of wealth-power inequality, the more extreme the political blowback.
America’s political class has no plan to reverse this destructive tide. Our leadership’s “plan” is something they know well first-hand: bribery and complicity: just send a monthly stipend of bread and circuses to all the disempowered, decapitalized households, urban and rural, so they can stay out of trouble and not bother the elites’ profitable pillaging of America and the planet.
The insurrection and coup happened long ago, when financialization and globalization hollowed out the real economy and disempowered the bottom 90%. When the whole rotten palace of corruption collapses in a putrid heap, look no further for the cause than the extremes of wealth-power inequality that rendered “democracy” a convenient facade for the stripmining of the bottom 90%.
Try to find a developing-world kleptocracy in which the top few collect more than 97% of the income from capital. There aren’t any that top the USA, the world’s most extreme kleptocracy. We’re Number 1.
It’s that time of the year, and instead of following tradition and making new predictions and forecasts (which we preppers do all the time anyways), I usually look back into the recent past, review my (and other’s) work and previous analyses, what transpired (or not), where my perspectives need adjustment and where, and so forth.
I decided to review and expand on a few topics addressed previously here and see where we are on those. In April, I wrote about the thirdworldization of the United States, as both it, and the rest of the First World, is gradually shifting towards the Third World.
It’s not only happening, but accelerating. And the entire world is going that way, too – or soon it will, judging by the signs. These things have a delay and don’t happen linearly, but in waves.
Thirdworldization 2.0 – When the First World becomes the Third World
Let’s see some more about how life can be in places constantly suffering with economic crises, political upheavals, moral degeneracy, authority demoralization, institutional failure and social decadence.
For anyone who’s never lived in such a context, understanding the dynamics of the system and societies in the Third World (or any place in which the order has changed drastically, yet not totally evaporated), can be a good way to prepare for what’s already underway.
The current crisis is global and unlike others seen in recent times
Notwithstanding the crap lining up just waiting to hit the fan – a pandemic, a debt time-bomb, geopolitical tensions, and lots more – the capacity to deal with all that is at an all-time low. Even wealthy nations look exhausted, depleted and lost like never before.
There’s zero willingness to cooperate and coordinate a solution, despite authorities’ constant and oddly similar declarations to the contrary. Speaking of the leadership currently in charge, it’s as mediocre, misguided, and uninspiring as it can possibly be.
And this is everywhere. We’re screwed.
It’s impossible to say for sure whether or not all that will end up in a full-blown SHTF of some kind, much less when. It can take a year, or ten. What’s certain is this: until things reach that catalyst point, degradation will force large swaths of populations worldwide, in most if not all countries, to take a few steps back in many fronts.
As I said before, it’s already happening.
The Third World will get much worse, and the First World will become a lot like the Third.
This is not SHTF as some might see it, but a middle-of-the-road-yet-still-gloomy scenario. Many in Preppersphere can’t conceive of anything less than the Apocalypse. Fine, to each their own. Besides, preparing for the worst means covering for everything less, so in principle it’s not a bad strategy, right?
I live in Brazil, but have visited the US, EU, and a few other countries and continents, even having lived abroad for a period during the 1990s. I’ve experienced both realities under different circumstances and gained some perspective on the contrasts between advanced societies, and ones with broken, inefficient, and corrupt institutions, and with weak social contracts.
That’s what I’m here to share. I’ll continue to raise awareness to what society converts into long before TEOTWAWKI happens, and try to help others prepare and deal with that. I do this not only because this is where I have some degree of knowledge, but also because that is what I see happening.
It’s hard to make progress in a ‘quicksand environment.’
In developed countries, people frame their decisions and take action based on reasonable probabilities, and the assumption that certain basic conditions of the social contract won’t change radically or suddenly, depending on who’s in charge or some other spurious reason.
A functional checks-and-balances system warrants the stability of laws, regulations, the tax regime, while the political rules and institutions create a favorable environment for investment and risk taking by people, families, and businesses. That’s what promotes the development and advancement of a country.
That’s perhaps the most important thing to understand about (and consequently prepare for) thirdworldization: it’s not just that things change, but how they change. Thirdworldization is the present and constant possibility that things can get done, undone, and again, at any moment, in unpredictable ways, without debate or warning.
How do you make plans for the future in such context?
Instability and uncertainty make life in general much harder to navigate in the Third World.
If the goalposts are constantly moving, everyone will act short or near term as a way to adapt and survive. The harder and more unstable the context, the faster you must both adapt and act (what is SHTF if not chaos?). So, there’s a silver lining to living like this, but also a price: it’s riskier, more stressful, tiresome, and frustrating.
I won’t say it’s hell, because it’s not.
Most people don’t live 24/7 in fear or under serious risk, not even in severely hit places. It’s not a full-scale SHTF. Life’s just more fluid, more challenging, and not as predictable and calm as in more civilized nations. Actions and consequences don’t follow a linear, predictable path.
Look around and see the sweeping anxiety and depression everywhere. I’d argue it’s not being caused by the pandemic, or even the economy going kaput, but by the appetite of governments everywhere to change basic rules and destroy freedom and individual liberty in the name of an emergency. When you combine this with people’s willingness to forfeit their rights, privacy and liberties in the name of illusory safety you end up with our current world.
That’s what I mean by the world going the way of the Third World.
Observing and understanding the real nature of fluidity in everyday life of a dysfunctional society can be critical, because dysfunctional is exactly what the world is fast becoming.
I’ll give some examples to illustrate what I’m talking about…
What does the path to authoritarianism look like?
The executive, legislative, and judiciary overstepping each other is common in banana republics. Every country can have a bill of rights, but it’s the separation of powers that make the constitution effective. Without a checks-and-balances system, rights are just words on a piece of paper.
This creates both confusion and infighting while simultaneously eroding confidence in the government’s institutions. People lose reference, politicians tend to abuse this strategy more and more, and from there it’s only downhill. It’s the exact script dictators and populists everywhere follow every single time to not only take power but to try to keep it forever.
For a long time this was something unacceptable and unseen in advanced nations. Despite this, though, it’s still been happening for some time now only having escalated in the last couple decades. Since 2020 it’s exploded, and it’s now eroding political and social stability in various developed countries.
And this is not only about inflated presidents declaring wars and contracting treaties and other actions without congressional approval, but also the government ceding increasing powers to agencies – NGOs and others organizations of unprepared, unelected tyrants aligned with the elites, eager to interfere and micromanage both society and people’s lives, as they steal people’s inherent rights and freedoms.
We now have moral ambiguity from top to bottom.
As we go lower down the scale into a full-fledged Third World nation, everyday life begins to border on the bizarre. In developing countries, the public administration is a cesspool of incompetence, poor planning, lack of vision, populism and corruption which drains precious resources and wealth from what would otherwise be a productive population.
The bureaucracy can reach paralyzing levels. The tax regime is so complex and illogical that it’s almost impossible to comply, even if you want to. The regulations are unstable and mutating. Besides punishing the population, these regulations lower the appetite of people and businesses to invest and take risk. The economy becomes less dynamic, less competitive and, eventually, it crawls.
Finally, when the government, institutions, and other authorities begin to become ambiguous with their defining the rules they create and enforce, people start thinking “why should I follow any of that?”
And once this happens, then it’s only a matter of time for disorder to increase and morality to collapse. That’s what a slow-burning SHTF means, after all: a semi-functional system where everything is fluid and the laws have little practical effect.
There’s little guns can do to solve bigger issues.
But let’s switch gears a little to explain something related: guns are important and can save us in some specific situations. But they can’t help with any of the stuff I’m talking about.
Who are we gonna shoot? The politicians? The corrupt cops? The lazy public workers? The stupid laws? That would solve nothing. All it would mean would be civil war, which only makes everything worse.
Things might get to that point, but it’s a completely different dynamic. When the system is up, shooting someone can land you in jail – even in the Third World.
“How’s that any different from anywhere else?” you might ask. In many ways, this starts with an ineffective investigation apparatus: here only about 6% of intentional homicides are solved, in comparison to an average of 65% in US, 80% in France, and 90% in UK.
Translating, it’s a lot more discouraging to commit a crime in the First World than in the Third. But then other distortions and inequalities come into play. The rich and/or connected almost never go to jail, no matter the crime.
And this leads to the second big difference: the slow and utterly unfair justice system that punishes the entire society, by not punishing the deserving, as it should.
And then there’s the infamous Third World penitentiary system…
These are true SHTF microcosms. No prison anywhere is paradise, obviously. But do you have any idea how bad and dangerous a Third World jail is? If having forty dangerous inmates in a small cubicle originally designed to hold four gives you chills, you understand why honest citizens (especially preppers) are so reluctant to brag about firearms and shooting others in developing countries.
In there, one can get raped, beat up, killed. Or co-opted by one of the many factions that command organized crime, to whom you’ll belong for protection, for the right to live, or even to keep your relatives from being abused, tortured, or killed outside.
Instead of rehabilitating prisoners, this system turns them into even better (that is, worse) criminals.
Mass escapes are also commonplace in Third World prisons. So are violent riots and rebellions in which enemy factions fight, torture, kill and literally rip apart their rivals, as a way to display ruthlessness and inflict fear into opponents. Sure, these things also happen in First World prisons, but not with nearly the same frequency, brutality, or impunity.
There are many ways to get unwillingly involved in this mess of a system, too.
As the situation worsens, so does the entire system. If you do everything right, lay low and get lucky, you may be well. It’s not guaranteed though. Something crazy can happen by pure chance or opportunity, and you’re suddenly involved in something you didn’t ask for, but can’t avoid or escape anymore.
For instance, one day the cops or some government agent – inspection, fiscal, whatever – pay a visit to your small shop or business and ask for a “collaboration”, for… reasons. You pay, of course. It’s extortion, but you don’t want to upset the “law” – and the system can’t protect you from itself.
Now you’re a cash cow.
You go for a jog in the streets and 99% of the time nothing happens. One day you get mugged, or your wife or daughter get groped while riding a bicycle, and there’s little you can do (if you thought “guns!”, go back a couple paragraphs and read what I said about those again).
And then, there’s the organized crime…
I could talk about organized crime for forever, discussing how it grows and spreads based on the same principles and practices that high-profile corporations use to grow and spread. How it infiltrates all levels of society, by corruption, intimidation, lobbying, or even by financing people to occupy strategic positions. How it gets involved with politicians, legitimate businesses, the media – until it’s just one big thing with tentacles everywhere.
Instead, I’ll do you all a big favor and just point to a couple of movies that not only show in true, raw, vivid colors how this whole mechanism works, but do it in a very entertaining and thrilling way. Elite Squad (1997) and its sequel, The Enemy Within (2010) are two of most brilliant and well-made Brazilian movies ever (both rated 8.0 on IMDB).
Apart from superb action flicks, they’re blunt, brutal, realistic portraits of crime, drug fighting/trafficking, institutional corruption, and overall social and moral decadence. They explain how crime evolves and takes over the system – how it gets “institutionalized”. It’s shocking, revealing, and educational.
There’s a reason I keep returning to the topic of crime.
Crime and violence are insidious and pervasive – the first evidence of collapse – while at the same time both the cause and consequence of deeper issues. Crime is the antecedent to (serious) shortages, and skyrockets when the grid goes down. It becomes both a collective and an individual problem. It affects us directly, and indirectly, physically and mentally – an itch no one can scratch.
Look how fast crime has grown in the US and around the world just in the past few months. I’m not talking about a 2% increment, but something in the two or even three figures in some places – and again, in months. For many, especially the part of society living in safe and civilized regions, crime may seem like something distant, numbers and statistics presented in the news.
That all changes when it comes to our door, and then the cat is definitely out of the bag.
To conclude, there’s been a lot of talk about the possibility of civil war in the United States. I think that it can happen, but not necessarily like 1871. It could be a mix of guerrilla warfare and crime, for instance. Or we could witness a steep, sudden, and widespread rise in crime and violence. In Haiti, gangs rule the country and casualties are high. It affects everyday life and impacts the whole population, the economy, everything. It may not be declared, but its de facto a civil war.
Abandoning innocence
When everything is good and there’s a surplus, collaboration happens easily and even spontaneously. With all the challenges and hardships we’re facing, people are entering survival mode everywhere. Becoming more knowledgeable about the dynamics of living in a dysfunctional society can build psychological preparations to live in a fluid and unstable world.
I acknowledge none of what I talked about here is prerogative of Third World or collapsed countries. Disorder, corruption and malfeasance are part of human nature and exist everywhere. But again, it’s certainly more widespread and violent where it’s not contained, and – this is critical – not punished.
And that’s precisely in proportion to the level of institutional efficiency, solidity and civil cohesion. Once these decay, the doors to social maladies are held wide open. And wherever this happens, a similar scenario unfolds.
Long cycles operate at such a glacial pace they’re easily dismissed as either figments of fevered imagination or this time it’s different.
But since Nature and human nature remain stubbornly grounded by the same old dynamics, cycles eventually turn and the world changes dramatically. Nobody thinks the cyclical turn is possible until it’s already well underway.
Multiple long cycles are turning in unison:
1. The cycle of interest rates: down for 40+ years (last turn, 1981), now up for an unknown but consequential period of time.
2. The cycle of inflation / deflation: the 40-year period of low real-world inflation and rip-roaring speculative debt-asset inflation has ended and now an era of scarcity, real-world inflation and speculative debt-asset deflation begins.
3. The cycle of capital-labor balance: capital has dominated labor for 40+ years, siphoning $50 trillion from labor. This cycle has now turned and the rebalancing is underway: it’s capital’s turn to surrender gains and power.
4. The cycle of social order-disorder: as documented by historian Peter Turchin and others, social order (in Turchin’s phrase, the integrative phase) holds sway for about 50 years and then it gives way to an era of social disorder (the disintegrative phase). This phase doesn’t end with mild reforms nobody even notices, it ends with a rebalancing of social, political and economic power.
5. The cycle of wealth/power inequality: wealth–and the political power it buys–becomes increasingly concentrated in the hands of the few at the expense of the many. This feeds economic and political dysfunction and exploitation that must be remedied by reducing extremes of wealth-power inequality.
6. The cycle of speculative excess: those in power protect their wealth and the wealth of their cronies by instituting moral hazard, the disconnect of risk and consequence: the central state and central bank backstop and bail out the most egregious big speculators, who keep all their gains and transfer their losses to the public.
The public concludes the only way to get ahead in such a rigged financial system is to belly up to the gaming tables and gamble that the next bubble will never pop because those in power won’t ever let it pop.
But alas, humans do not possess god-like powers, they only possess hubris, and so all bubbles pop: the more extreme the bubble, the more devastating the pop. The faint cries that fade to silence are: but this time it’s different! and the Fed will save us! That’s not how cycles work: all the god-like powers are revealed as hubris, which arouses the fatal ire of Nemesis.
The notion that consequence can be as easily managed as PR is the ultimate artifice and the ultimate delusion.
The consequences of the drip-drip-drip of moral decay is difficult to discern in day-to-day life. It’s easy to dismiss the ubiquity of artifice, PR, spin, corruption, racketeering, fraud, collusion and narrative manipulation (a.k.a. propaganda) as nothing more than human nature, but this dismissal of moral decay is nothing more than rationalizing the rot to protect insiders from the sobering reality that the entire system is unraveling and heading for its final reckoning: collapse.
We’ve become so accustomed to the excesses of marketing that we’ve lost the ability to recognize the difference between “science” that’s been carefully designed to reach a pre-planned conclusion and science that accepts the outcome, even if it harms well-funded interests.
The vast expanses of ignorance greatly aid this artifice. Even though high school physics, chemistry and biology are sufficient to tease apart the vast majority of rigged experiments, trials and studies, few Americans have the interest or fortitude to read Phase III trial results, etc. critically, and so the corporate media can trumpet bogus results without fear of exposure: all the statistical tricks and gimmicks are passed off as “science” to the distracted and gullible.
And if someone dares to examine the results critically, then those benefiting from the ignorance make the results “secret” until the year 2929. And that’s the entire game in a nutshell: maximizing private gain from artifice, PR, spin, corruption, racketeering, fraud, collusion and narrative manipulation, all masked by an putrid spew of virtue-signaling and PR.
Every institution that was once trustworthy has been debauched to maximize private gain: higher education, science, medicine, national defense–the list includes virtually every sector and industry in America. Nothing can be trusted because somebody behind the scenes is spinning the story and data to mask their self-interest, their immense gains and the carefully contrived structure of diverting investigation and eliminating transparency, competition and accountability.
Our technocratic obsession denies the existence of the moral universe, reducing the world to techno-gimmicks (electric air taxis for everyone!), techno-fantasies (fusion reactors on every corner!) and techno-distractions (which billionaire will be the first on Mars?), as if a nation and society hurtling toward moral, social, civic and economic collapse can be saved by some “innovation” that beneath the surface is nothing more than another profiteering monopoly or cartel.
Many people fear collapse, but quality, service and reliability have already collapsed. The washing machine that two generations ago was designed and built to last 25 years now breaks down after a few years–so sorry, the motherboard failed. That will cost you almost as much as new washer, and so the manufacturer, bank and retailer win because the weary, clueless consumer will do the easy thing and buy a new, expensive appliance on credit. The “old” appliance (brand-new by previous standards) is hauled off to the landfill, the ultimate destination of everything in our Landfill Economy of poorly made junk.
Service would be hauled to the landfill as well if it was tangible. Alas, it is simply maddening, as nothing works and Kafkaesque bureaucracies have so much power that they are immune to transparency, competition and accountability. their websites don’t work, they botch the most basic transactions and they perpetuate incorrect information, but too bad–there is no recourse.
Big Tech is equally impervious to transparency, competition and accountability. Your “crime” is never explained, and there is no recourse, for the Machine has no judiciary or human contact: you query the Machine knowing full well that you will never extract anything remotely fair or just from its algorithmic monstrosity.
Technology doesn’t extinguish moral decay or eliminate the stench of self-serving artifice, PR, spin, corruption, racketeering, fraud, collusion and narrative manipulation. Technology only enhances the potential for profiteering under the tissue-thin guise of “innovation,” “technological advance” and the threadbare delusions of a populace that has watched too many contrived narratives in which technology saves the day.
The moral buffers have already thinned; there is nothing left to tap. There is nothing left in what actually matters: social cohesion, moral legitimacy, civic virtue–all stripped, depleted, gone.
Drones and robots won’t save us from collapse. Neither will fusion reactors, electric air taxis, billionaires in space, missions to Mars, algae-based meat or any of the other thousand “innovations” those profiting from moral rot promote in the hopes that the banquet of consequences being served can be swept away by more gimmicks, more artifice, more delusions, more fantasies, more PR, more spin and more narrative control.
Collapse can’t be gimmicked away. The notion that consequence can be as easily managed as PR is the ultimate artifice and the ultimate delusion.
After the Crash 