Made in China: A Parody

Uncle Sam points out the problems we have when we buy cheap products from China. "Buy, Buy American Pie" was written and performed by the Capitol Steps (www.CapSteps.com). This is a parody and involves exageration.

Tastykakes are made in the United States and not in China and definitely contain no harmful ingredients. Visit www.Tastykake.Com. Little Debbie is also located in the United States and not in China and their products contain no harmful ingredients. Visit www.LittleDebbie.Com.

Ten REAL reasons to avoid products made in China:

1. Products made with hazardous materials

2. Lack of quality control, monitoring, and safety regulations, plus corruption

3. Tainted food, deadly drugs, adulterated products

4. High levels of antibiotics and toxins in seafood

5. Exploitation of the Chinese workforce and use of child labor

6. Predatory pricing and unethical business practices

7. Massive industrialization at the expense of the environment

8. Deforestation and mining has destroyed the water supply in Asia

9. Chinese military manufactured goods

10. Manufacturing in forced (laogai) labor camps and prisons

As long as China buys and holds the ever-growing massive U.S. debt, U.S. leaders in Washington will be reluctant to confront China and its policies.

71 Year Old Woodstock Grandfather Gets Call from Apple CEO Steve Jobs

Here's another Truth is stranger than fiction event.

Link: Woodstock man wins $10,000 iTunes prize

Louie Sulcer won a $10,000 iTunes gift card for downloading Johnny Cash’s “Guess Things Happen That Way,” the 10 billionth song downloaded from iTunes. 

Apple started the two-week contest to celebrate the milestone.

Erika Neldner | Ledger-News

Louie Sulcer, 71, of Woodstock, GA, enjoys listening to his blue iPod Nano. Now, he has to figure how he’s going to spend a $10,000 iTunes gift card he won in an Apple contest he knew nothing about.

 

Sulcer said he and his wife, Harriet, had just returned home from  babysitting their grandkids when they noticed several missed calls on the Caller ID from Apple, Inc. Sulcer thought the credit card he used to purchase the Johnny Cash song might have been expired. 

They were watching the Olympics when the phone rang. It was Apple, Inc. … again.

Sulcer said he picked up the phone and a man said “Congratulations, Lou, this is Steve Jobs.” Sulcer sarcastically said, “Sure it is.” 

He really thought it was his son playing a joke on him.

“It took him about four times for him to convince me,” Sulcer said.

Sulcer said he couldn’t believe he won, and he didn’t even know about the contest. “I had no idea, and that probably made a lot of people mad, especially some of the younger people,” Sulcer said. 

He also said Apple had another surprise for him—it was a call from Roseanne Cash, Johnny’s daughter. Her backup guitarist, and husband, played “Guess Things Happen That Way,” for him over the phone.

Sulcer’s kids bought him an iPod for his birthday in October. He said he’s added 400 to 500 songs to it—some from his CDs and about 40 to 50 from iTunes. That collection soon will rise. At an average of 99 cents per song—it could be years before his gift card is depleted.

Sulcer has become an instant celebrity. Following the announcement Feb. 25, he said he’s had all kinds of interviews from local and national television networks to the local newspaper and Rolling Stone magazine. Interviews started in the morning and went through almost 11 p.m. Feb. 25.

“I had five camera crews in here at one time. I’m not used to that,” Sulcer said. “I played football at (Georgia) Tech in the 1950s and 60s. I sure didn’t get this much (attention). I’m not someone that craves attention.”

Climate Change and Politics in Copenhagen: We Won’t Get Fooled Again?

I'm so tired of being misled by our leaders that I search for people who don't sugarcoat what they see happening. This leads to inner conflict: the satisfaction of getting a somewhat realistic view of the problems that we face up the creek, and anger from realizing that how skilled our leaders are at promising to solve problems to gain power.

John Michael Greer doesn't sugarcoat what he sees. Below are some excerpts from his recent essay on the politics of climate change conference in Copenhagen. Don't read this unless you enjoy dark humor and you want to become more cynical. The realization that there are no easy solutions is always very difficult to swallow.

Link: The Archdruid Report: The Human Ecology of Collapse.

The question that has to be asked is whether a modern industrial society can exist at all without vast and rising inputs of essentially free energy, of the sort only available on this planet from fossil fuels, and the answer is no.

…will somebody please explain to me someday how a head of state got given the Nobel Peace Prize while he was enthusiastically waging two wars?

Meanwhile the socialists are insisting that it’s all capitalism’s fault and can be solved promptly by a socialist revolution, never mind the awkward little fact that the environmental records of socialist countries are by and large even worse than those of capitalist ones; other radicalisms of left and right make the same claim as the socialists, often with even less justification.

I think a great many people are beginning to realize that whatever results come out of Copenhagen, a meaningful response to the increasing instability of global climate will not be among them.

Suppose, for the sake of discussion, that Obama agreed to cut US carbon emissions far enough to make a real impact on global climate change. Would those cuts happen? No, because Congress would have to agree to implement them, and Congress – even though it is controlled by a Democratic majority – has so far been unable to pass even the most ineffectual legislation on the subject.

Suppose the improbable happened, and both Obama and Congress agreed to implement serious carbon emission cuts. What would the result be? Much more likely than not, a decisive Republican victory in the 2010 congressional elections, followed by the repeal of the laws mandating the cuts. Carbon emissions can’t be cut by waving a magic wand; the cuts will cost trillions of dollars at a time when budgets are already strained, and impose steep additional costs throughout the economy.

any nation that accepts serious carbon emission cuts will place itself at a steep economic disadvantage compared to those nations that don’t.

Business executives whose companies will bear a large share of the costs of curbing carbon emissions have funded some very dubious science, and some even more dubious publicity campaigns, in order to duck those costs; academics have either tailored their findings to climb onto the climate change bandwagon, or whored themselves out to corporate interests willing to pay handsomely for anyone in a lab coat who will repeat their party line; politicians on both sides of the aisle have distorted facts grotesquely to further their own careers.

Beneath all the yelling, though, are a set of brutal facts nobody is willing to address. Whether or not the current round of climate instability is entirely the product of anthropogenic CO2 emissions is actually not that important, because it’s even more stupid to dump greenhouse gases into a naturally unstable climate system than it would be to dump them into a stable one. Over the long run, the only level of carbon pollution that is actually sustainable is zero net emissions, and getting there any time soon would require something not far from the dismantling of industrial society and its replacement with something much less affluent.

Even if it turns out to be possible to power something like an industrial society on renewable resources, the huge energy, labor, and materials costs needed to develop renewable energy and replace most of the infrastructure of today’s society with new systems geared to new energy sources will have to be paid out of existing supplies; thus everything else would have to be cut to the bone, or beyond.

I long ago lost track of the number of global warming bumper stickers I’ve seen on the rear ends of SUVs.

Nobody, but nobody, is willing to deal with the harsh reality of what a carbon-neutral society would have to be like. This is what makes the blame game so popular, and it also provides the impetus behind meaningless gestures of the sort that are on the table at Copenhagen.

a strong case can be made that the most viable option for anyone in a leadership position is to enjoy the party while it lasts, and hope you can duck the blame when it all comes crashing down.

the immediate costs of doing something about the issue are so high, and so unendurable, that very few people in positions of influence are willing to stick their necks out, and those who do so can count on being shortened by a head by others who are more than willing to cash in on their folly.

The Two Root Problems that Plague the United States: Too Much Debt and Corporate Influence in Politics

Nathan Martin sees two major problems clouding the future of the United States.

Link: Nathan's Economic Edge: FREEDOM’S VISION – Introduction….

There are currently two ROOT PROBLEMS that plague the United States:

1. Our current money system is comprised almost entirely of debt backed money. This system is only 38 years old and yet it has already reached the limits of mathematical growth. The economy, on every level, is saturated with debt. There is not enough income to mathematically EVER repay this debt, and thus CHANGE IS GOING TO HAPPEN, whether we like it or not, or whether we believe it or not. Any system that is designed in such a manner is mathematically destined to fail from conception.

2. We have lost sight of the purpose of CORPORATIONS. The concept of a corporation first came about when Europe was exploring the new world. This was a very expensive and risk filled proposition, wealthy individuals could lose everything by losing a ship at sea and subsequently having family members of the deceased sue them. Thus the necessary capital for exploration and advancement dried up. And out of that came the concept of limited liability. Thus the Corporation was born as a way to serve mankind so that exploration could continue.

Today, corporations seem to have risen to a special place, one that is higher than man. This is because capital has concentrated so greatly that corporations use their money to influence politicians and to write laws in their favor. Yes, this is an extension of the Golden Rule, whereby those with the gold make the rules. But it is now at such an extreme that politicians on the national stage cannot get elected without massive infusions of their money – and thus there is a circle that feeds into them and makes them even larger and more powerful.

These two root problems are now intertwined as some of the largest corporations in America are the ones who are producing and controlling the quantity of our money. They use their vast money to buy BOTH SIDES of political issues thus ensuring that their interests are represented. This super representation has got to stop as it affords a few individuals power and control over the majority who do not have the same access. This is NOT how our political system is supposed to work. This is why our solution addresses BOTH of these key issues – a sustainable future will not exist unless the balance of power is restored – that political and power balance will help to bring the quantity of money back under control as well.

Quite literally, the QUANTITY OF MONEY IS OUT OF CONTROL, especially when one considers the shadow banking world of derivatives. Just look at how quickly the math of debt went from millions to billions and now on to trillions. Did YOUR income advance by a like amount? No! And that is exactly why the inflationary math of debt backed money does not work.

Bill Still’s movie, “The Secret of Oz” presents history in a fascinating way, he then picks up on author L. Frank Baum’s symbolisms and spells them all out for you – The yellow brick road, the silver slippers, the Emerald City, the mindless Scarecrow, the heartless Tin Man, the cowardly Lion. Even the witches and flying monkeys have meanings that you will find fascinating.

This brings us to Bill Still’s quote from The Secret of Oz, “It’s not WHAT backs our money, it’s WHO CONTROLS its QUANTITY!”

There are four key words in that sentence that are simple to understand:

WHAT – The problem is that our money is now backed by debt. In the past, our dollar has been backed simply by the rule of law, debt free – supported by the “good faith and credit of the United States.” Such was the case with Colonial Script or Lincoln’s Greenbacks. The dollar has also been backed by both gold and by silver. While those who support commodity backed money have the right idea in that they seek to control the quantity of money, this has proven to be much harder in practice than in reality and is why today no modern country uses commodities to back their money. Yes, it is possible to create the national money debt free AND to control the quantity of money. What most reasonable people can agree is that of all the things NOT to have behind our money, debt is it!

WHO – There are two choices here, the government who represents the collective People, or the bankers who represent themselves as individuals. Currently it is the BANKERS who issue and control the quantity of money, not the government as most are led to believe. By design, the system is backed by debt and PRIVATE central bankers collect interest payments on the debt backed money from YOU. In other words, big banks get to collect hundreds of billions of dollars annually just so we can have the “privilege” of trading for goods with their private debt-based money. We know this sounds harsh, but it is true! This system concentrates the money power into the hands of a few allowing them control over politics and works to MINIMIZE FREEDOM for the vast majority of Americans.

CONTROL – Here’s the simple truth – NO SYSTEM OF MONEY has ultimately withstood the test of time. WHY? Could it be that regardless of WHAT backs the money or WHO controls the quantity, any time that the quantity of money gets out of control CONFIDENCE will eventually be lost? Of course. But throughout history, some systems have fared better than others. Is it possible to have the advantages of flexibility and to still keep prices under control? We think so, and we’re going to spell out how.

QUANTITY – Too little quantity and the economy will suffer. Too much quantity and the economy will also suffer, just in a different way. Finding the right balance, then, is where a sustainable and productive system will be found.

Both Sides of the Global Warming Debate Are Wrong

John Michael Greer, one of my favorite sources of intelligence, describes why the global warming debate is so polarized, with scientific "evidence" being used by both sides. He suggests that we should be more concerned about Peak Oil, which is less controversial and more predictable, but not very marketable. Excerpts below.

Click on the link below to read the whole essay. The comments are very interesting also.

Link: The Archdruid Report: Hagbard's Law

…Hagbard’s Law is a massive factor in modern societies. Coined by Robert Shea and Robert Anton Wilson in their tremendous satire Illuminatus!, Hagbard’s Law states that information can only be communicated between equals, since in a hierarchy, those in inferior positions face very strong incentives to tell their superiors what the superiors want to hear rather than ‘fessing up to the truth. The more levels of hierarchy between the people who gather information and the ones who make decisions, the more communication tends to be blocked by Hagbard’s Law; in today’s governments and corporations, the disconnect between the reality visible on the ground and the numbers viewed from the top of the pyramid is as often as not total.

Many of my readers will be aware that two examples of this sort of figure-juggling surfaced in the last couple of weeks. From somewhere in the bowels of the International Energy Agency (IEA), a bureaucracy created and funded by the world’s industrial nations to provide statistics on energy use, two whistleblowers announced that the 2009 figures that were about to be released had been jiggered, as past figures had been, under pressure from the US government. The reason for the pressure, according to the whistleblowers, was that accurate figures would be bad for the US economy – as indeed they would be, for much the same reason that a diagnosis of terminal illness is bad for one’s prospects of buying life insurance.

Of course news stories about the leaks brought a flurry of denials from the IEA. Doubtless some people were fooled; still, the gaping chasm between the IEA’s rosy predictions of future oil production and the evidence assembled by independent researchers has been a subject of discussion in peak oil circles for some years now, and it was useful to have insiders confirm the presence of fudge factors outside analysts have long since teased out of the data.

The second and much more controversial example came to light when persons unknown dumped onto the internet a very large collection of private emails from a British academic center studying global warming. Like everything else involved with global warming, the contents of the emails became the focus of a raging debate between opposed armies of true believers, but the emails do suggest that a certain amount of data-fudging and scientific misconduct is going on in the large and lucrative scientific industry surrounding climate change.

The result is a great deal of faux science that manipulates experimental designs and statistical analyses to support points of view that happen to be fashionable, either within a scientific field or in the broader society. I saw easily half a dozen examples of this sort of thing in action back in my college days, which spanned all of five years and two universities. Still, you don’t need a ringside seat to watch the action: simply pay attention to how often the results of studies just happen to support the interests of whoever provided the funding for them. You don’t need to apply a chi-square test here to watch Hagbard’s Law in action.

There’s good reason to think that the feedback loop by which popular attitudes generate their own supporting evidence via dubious science has distorted the global warming debate. The fingerprints show up all over the weird disconnect between current global warming science and the findings of paleoclimatology, which show that sudden, drastic climate changes have been routine events in Earth’s long history; that the Earth was actually warmer than the temperatures predicted by current doomsday scenarios at the peak of the current interglacial period only six thousand years ago; and that the Earth has been a hothouse jungle planet without ice caps or glaciers for around 80% of the time since multicellular life evolved here. Technically speaking, we’re still in an ice age – the current interglacial is on schedule to end in the next few thousand years, giving way to a new glaciation for a hundred thousand years or so, with several million years of further cycles still in the pipeline – and claims that setting the planetary thermostat a little closer to its normal range will terminate life on Earth are thus at least open to question.

What interests me most about the current global warming debate is that these facts, when they get any air time at all, commonly get treated as ammunition for the denialist side of the debate. This hardly follows. Paleoclimatology shows that the Earth’s climate is unstable, and prone to drastic shifts that can place massive strains on local and regional ecosystems. It’s equally clear that number juggling in a British laboratory does not change the fact that the Arctic ice sheet is breaking up, say, or that a great many parts of the world are seeing their climates warp out of all recognition. Even if natural forces are driving these shifts, this is hardly a good time to dump vast quantities of greenhouse gases into an already unstable atmosphere – you could as well claim that because a forest fire was started by lightning, dumping planeloads of gasoline around its edges can’t possibly cause any harm.

The problem with the global warming debate just now is that tolerably well funded groups on both sides are using dubious science to advance their own agendas and push the debate further toward the extremes. The common habit of thinking in rigid binaries comes into play here; it’s easy enough for global warming believers to insist that anyone who questions their claims must be a global warming denier, while their opponents do the same thing in reverse, and the tumult and the shouting helps bury the idea that the territory between the two polarized extremes might be worth exploring. As a result, moderate views are being squeezed out, as the radicals on one side try to stampede the public toward grandiose schemes of very questionable effect, while the radicals on the other try to stampede the public toward doing nothing at all.

It’s instructive to compare the resulting brouhaha to the parallel, if much less heavily publicized, debate over peak oil. The peak oil scene has certainly seen its share of overblown apocalyptic claims, and it certainly has its own breed of deniers, who insist that the free market, the march of progress, or some other conveniently unquantifiable factor will make infinite material expansion on a finite planet less of an oxymoron than all logic and evidence suggests it will be. Still, most of the action in the peak oil scene nowadays is happening in the wide spectrum between these two extremes. We’ve got ecogeeks pushing alternative energy, Transition Towners building local communities, “preppers” learning survival skills, and more; even if most of these ventures miss their mark, as doubtless most of them will, the chance of finding useful strategies for a difficult future goes up with each alternative explored.

The difference between the two debates extends to the interface between statistics and power discussed earlier in this post. Both sides of the global warming debate, it’s fair to say, have fairly robust political and financial payoffs in view. The established industrial powers of the West and the rising industrial nations elsewhere are each trying to use global warming to impose competitive disadvantages on the other; fossil fuel companies are scrambling to shore up their economic position, while the rapidly expanding renewables industry is trying to elbow its way to the government feed trough; political parties are lining up to turn one side or the other into a captive constituency that can be milked for votes and donations, and so forth.

Still, I find myself wondering if Hagbard’s Law plays a much bigger role here than any deliberate plan. The global warming story, if you boil it down to its bones, is the kind of story our culture loves to tell – a narrative about human power. Look at us, it says, we’re so mighty we can destroy the world! The peak oil story, by contrast, is the kind of story we don’t like – a story about natural limits that apply, yes, even to us. From the standpoint of peak oil, our self-anointed status as evolution’s fair-haired child starts looking like the delusion it arguably is, and it becomes hard to avoid the thought that we may have to settle for the rather less flattering role of just another species that overshot the carrying capacity of its environment and experienced the usual consequences.

The Magazine Cover Jinx Hits Tiger Woods

Tiger Woods’s image as a clean-living sports icon is in tatters – adding irony to the front cover of Golf Digest magazine’s January issue, which went to press before the sex scandal broke.

Tiger Woods on the cover of Golf Digest advising Obama

This is another chapter in a long history of magazine covers signaling a major trend change. For example, Business Week picked Enron as the most successful business in American just before it disintegrated. Being on the cover of Sport Illustrated has seemingly jinxed athletes and teams many times.

Magazine cover appearances may signal the Peak of Hubris for the fallen idols.

Link: Best man speech could draw Tiger Woods out of hiding – Times Online.

The magazine features a mocked-up picture of Woods acting as caddie to President Obama, to illustrate an article headlined “10 Tips Obama can take from Tiger.” The feature, now causing some embarrassment at Golf Digest, suggests that the President, struggling to turn around a recession, could learn the art of “the quick recovery” from the famously adept golfer.

“Woods is a good role model…because he has always been able to pull himself together after setbacks,” it notes, also observing: “Woods never does anything that would make himself look ridiculous.”

I doubt that Obama will be getting any advice from Tiger.

Can the American Lifestyle Survive the End of Cheap, Abundant Oil?

John Michael Greer's essay A Gesture from the Invisible Hand explains why the end of cheap, abundant fossil fuels undermines the economies of the societies that are dependent on oil. This is really bad news for the "civilized" countries — and why denial from our leaders is the norm. Excerpts below.

This "peak oil" aftermath theme also explains why debt is accelerating and China is becoming a dominant economic power.

Link: The Archdruid Report: A Gesture from the Invisible Hand

It’s common, for example, to hear well-intentioned people insist that the market, as a matter of course, will respond to restricted fossil fuel production by channeling investment funds either in more effective means of producing fossil fuels, on the one hand, or new energy sources on the other. The logic seems impeccable at first glance: as the price of oil, for example, goes up, the profit to be made by bringing more oil or oil substitutes onto the market goes up as well; investors eager to maximize their profits will therefore pour money into ventures producing oil and oil substitutes, and production will rise accordingly until the price comes back down.

Energy is one of those places: in some ways, the most important of all. Energy is not simply one commodity among others; it is the ur-commodity, the foundation for all economic activity. It follows laws of its own – the laws of thermodynamics, notably – which are not the same as the laws of economics, and when the two sets of laws come into conflict, the laws of thermodynamics win every time.

This is necessary because energy doesn't follow the ordinary rules of economic exchange. Most other commodities still exist after they've been exchanged for something else, and this makes exchanges reversible; for example, if you sell gold to buy marble, you can normally turn around and sell marble to buy gold. The invisible hand works here; if marble is in short supply, those who have gold and want marble may have to offer more gold for their choice of building materials, but the marble quarries will be working overtime to balance things out.

Energy is different. Once you turn the energy content of a few million bushels of grain into a pyramid, say, by using the grain to feed workers who cut and haul the stones, that energy is gone, and you cannot turn the pyramid back into grain; all you can do is wait until the next harvest. If that harvest fails, and the stored energy in the granaries has already been turned into pyramids, neither the market economy of goods and services or the abstract system of distributing goods and services can make up for it. Nor, of course, can you send an extra ten thousand workers into the fields if you don't have the grain to keep them alive.

The arrival of geological limits to increasing fossil fuel production places a burden on the economy, because the cost in energy, labor, and materials (rather than money) to extract fossil fuels does not depend on market forces. On average, it goes up over time, as easily accessible reserves are depleted and have to be replaced by those more difficult and costly to extract. Improved efficiencies and new technologies can counter that to a limited extent, but both these face the familiar problem of diminishing returns as the laws of thermodynamics, and other physical laws, come into play.

As a society nears the geological limits to production, in other words, a steadily growing fraction of its total supply of energy, resources, and labor have to be devoted to the task of bringing in the energy that keeps the entire economy moving.This percentage may be small at first, but it's effectively a tax in kind on every productive economic activity, and as it grows it makes productive economic activity less profitable. The process by which money produces more money consumes next to no energy, by contrast, and so financial investments don't lose ground due to rising energy costs.

This makes financial investments, on average, relatively more profitable than investing in the kinds of economic activity that use energy to produce nonfinancial goods and services. The higher the burden imposed by energy costs, the more sweeping the disparity becomes; the result, of course, is that individuals trying to maximize their own economic gains move their money out of investments in the productive economy of goods and services, and into the paper economy of finance.

Ironically, this happens just as a perpetually expanding money supply driven by mass borrowing at interest has become an anachronism unsuited to the new economic reality of energy contraction. It also guarantees that any attempt to limit the financial sphere of the economy will face mass opposition, not only from financiers, but from millions of ordinary citizens whose dream of a comfortable retirement depends on the hope that financial investments will outperform the faltering economy of goods and services. Meanwhile, just as the economy most needs massive reinvestment in productive capacity to retool itself for the very different world defined by contracting energy supplies, investment money seeking higher returns flees the productive economy for the realm of abstract paper wealth.

One intriguing detail of this scenario is that it has already affected the first major oil producer to reach peak oil — yes, that would be the United States. It's unlikely to be accidental that in the wake of its own 1972 production peak, the American economy has followed exactly this trajectory of massive disinvestment in the productive economy and massive expansion of the paper economy of finance. Plenty of other factors played a role in that process, no doubt, but I suspect that the unsteady but inexorable rise in energy costs over the last forty years or so may have had much more to do with the gutting of the American economy than most people suspect.

If this is correct, now that petroleum production has encountered the same limits globally that put it into a decline here in the United States, the same pattern of disinvestment in the production of goods and services coupled with metastatic expansion of the financial sector may show up on a much broader scale. There are limits to how far it can go, of course, not least because financiers and retirees alike are fond of consumer goods now and then, but those limits have not been reached yet, not by a long shot. It's all too easy to foresee a future in which industry, agriculture, and every other sector of the economy that produces goods and services suffer from chronic underinvestment, energy costs continue rising, and collapsing infrastructure becomes a dominant factor in daily life, while the Wall Street Journal (printed in Shanghai by then) announces the emergence of the first half dozen quadrillionaires in the derivatives-of-derivatives-of-derivatives market.

Perhaps the most important limit in the way of such a rush toward economic absurdity is the simple fact that not every economy uses the individual decisions of investors pursuing private gain to allocate investment capital. It may not be accidental that quite a few of the world's most successful economies just now, with China well in the lead, make their investment decisions based at least in part on political, military, and strategic grounds, while the nation that preens itself most proudly on its market economy — yes, that would be the United States again — is lurching from one economic debacle to another.

Show Us the Money

John Michael Greer explains what will eventually happen to debt-infested and overspending governments who use financial paper to pay for real goods and services. Excerpts below.

Link: The Archdruid Report: The Twilight of Money

Over the last century, with the assistance of the economic hypercomplexity made possible by fossil fuels, the world’s industrial nations have taken the process of economic abstraction further than any previous civilization. On top of the usual levels of abstraction – a commodity used to measure value (gold), receipts that could be exchanged for that commodity (paper money), and promises to pay the receipts (checks and other financial paper) – contemporary societies have built an extraordinary pyramid of additional abstractions. Unlike the pyramids of Egypt, furthermore, this one has its narrow end on the ground, in the realm of actual goods and services, and widens as it goes up.

The consequence of all this pyramid building is that there are not enough goods and services on Earth to equal, at current prices, more than a small percentage of the face value of stocks, bonds, derivatives, and other fiscal exotica now in circulation. The vast majority of economic activity in today’s world consists purely of exchanges among these representations of representations of representations of wealth. This is why the real economy of goods and services can go into a freefall like the one now under way, without having more than a modest impact so far on an increasingly hallucinatory economy of fiscal abstractions.

An economy of hallucinated wealth depends utterly on the willingness of all participants to pretend that the hallucinations have real value. When that willingness slackens, the pretense can evaporate in record time. This is how financial bubbles turn into financial panics: the collective fantasy of value that surrounds tulip bulbs, or stocks, or suburban tract housing, or any other speculative vehicle, dissolves into a mad rush for the exits. That rush has been peaceful to date; but it need not always be.

Finally, of course, bubbles always pop. When that happens, the speculative vehicle du jour comes crashing back to earth, losing the great majority of its assumed value, and the mass of amateur investors, having lost anything they made and usually a great deal more, trickle away from the market. This has not yet happened to the current money bubble. It might be a good idea to start thinking about what might happen if it does so.

The effects of a money panic would be focused uncomfortably close to home, I suspect, because the bulk of the hyperexpansion of money in recent decades has focused on a single currency, the US dollar. That bomb might have been defused if last year’s collapse of the housing bubble had been allowed to run its course, because this would have eliminated no small amount of the dollar-denominated abstractions generated by the excesses of recent years. Unfortunately the US government chose instead to try to reinflate the bubble economy by spending money it doesn’t have through an orgy of borrowing and some very dubious fiscal gimmickry. A great many foreign governments are accordingly becoming reluctant to lend the US more money, and at least one rising power – China – has been quietly cashing in its dollar reserves for commodities and other forms of far less abstract wealth.

Up until now, it has been in the best interests of other industrial nations to prop up the United States with a steady stream of credit, so that it can bankrupt itself filling its self-imposed role as global policeman. It’s been a very comfortable arrangement, since other nations haven’t had to shoulder more than a tiny fraction of the costs of dealing with rogue states, keeping the Middle East divided against itself, or maintaining economic hegemony over an increasingly restive Third World, while receiving the benefits of all these policies. The end of the age of cheap fossil fuel, however, has thrown a wild card into the game. As world petroleum production falters, it must have occurred to the leaders of other nations that if the United States no longer consumed roughly a quarter of the world’s fossil fuel supply, there would be a great deal more for everyone else to share out. The possibility that other nations might decide that this potential gain outweighs the advantages of keeping the United States solvent may make the next decade or so interesting, in the sense of the famous Chinese curse.

Over the longer term, on the other hand, it’s safe to assume that the vast majority of paper assets now in circulation, whatever the currency in which they’re denominated, will lose essentially all their value. This might happen quickly, or it might unfold over decades, but the world’s supply of abstract representations of wealth is so much vaster than its supply of concrete wealth that something has to give sooner or later. Future economic growth won’t make up the difference; the end of the age of cheap fossil fuel makes growth in the real economy of goods and services a thing of the past, outside of rare and self-limiting situations. As the limits to growth tighten, and become first barriers to growth and then drivers of contraction, shrinkage in the real economy will become the rule, heightening the mismatch between money and wealth and increasing the pressure toward depreciation of the real value of paper assets.

Once again, though, all this has happened before. Just as increasing economic abstraction is a common feature of the history of complex societies, the unraveling of that abstraction is a common feature of their decline and fall. The desperate expedients now being pursued to expand the American money supply in a rapidly contracting economy have exact equivalents in, say, the equally desperate measures taken by the Roman Empire in its last years to expand its own money supply by debasing its coinage.

Money Is Not Real Wealth

John Michael Greer continues to eviscerate conventional economic thinking in his series on economics. Excerpts below.

Link: The Archdruid Report: The Metastasis of Money.

If economists took a wider view of the history of their discipline than they generally do, they might have noticed that what most of them consider a fundamental feature of all economies worth studying – the centrality of money – is actually a unique feature of an economic era defined by cheap abundant energy. Since the fossil fuels that made that era possible are being extracted at a pace many times the rate at which new supplies are being discovered, current assumptions about the role of money in society may be in for a series of unexpected revisions.

In an ironic way, this process of revision may be fostered by the antics of the world’s industrial nations as they try to forestall the Great Recession by spending money they don’t have. The economic crisis that gripped the world in 2008 was primarily driven by a drastic mismatch between money and wealth. When the price of a rundown suburban house zoomed from $75,000 to $575,000, for example, the change marked a distortion in the yardstick rather than any actual increase in the wealth being measured. That distortion caused every economic decision based on it – for example, a buyer’s willingness to go over his head into debt to buy the house, or a bank’s willingness to lend money on the basis of imaginary equity – to suffer similar distortions. Now that the yardsticks have snapped back to something like their proper length, the results of the distortion have to be cleared out of the economy if the amount of money in the system is once again to reflect the actual amount of wealth.

Yet this is exactly what governments and businesses are doing their level best to forestall. Governments are scrambling to prop up economic activity at a pace the real wealth of their societies can no longer support; banks and businesses are doing everything in their power to divert attention from the fact that a great many of the financial assets propping up their balance sheets were never worth anything in the first place and now, if possible, are worth even less. Both are doing so by the simple expedient of spending money they don’t have. As government deficits worldwide spin out of control and the total notional value of the world’s derivatives market climbs steadily above one quadrillion dollars, the decoupling of money from wealth is even more extreme than it was at the height of the real estate bubble.