The Boundaries and Future of Solution Space – Part 1
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Gustave Doré Dante and the Angel of the Church before the Door of Purgatory 1868 We’re going to try something a little different. Nicole wrote another
[See the full post at: The Boundaries and Future of Solution Space – Part 1]Largely through the thinking on this site, several years ago I took a walk in the woods. I am/was a pensioner at that time with a small guaranteed income of some $1800 a month. Adequate for survival but with inflation eating away my purchasing power, the writing was on the wall, even considering governments reneging on pensions in the future.
I had no land, no savings, and my work skills were quite specialized. I managed to enter into a share cropping experience with a landowner and bought 6 weaner pigs. Over the last three years, my herd has grown to about 40 pigs. I have not sold any and butchered only one for personal use. My pension has just been adequate enough to buy fencing materials and food over the winter for my animals. The government has found ways to reduce my pension income by over $300 so I have had to cut my personal living expenses considerably so that I could keep feeding my herd. My original sharecropping agreement was settled with a cash payment and I have had to find two other locations on which I now pay a small rent.
I am now 75 years old and the benefits of the decision have been gratifying. My health has improved with the daily exercise I have to do in maintaining my herd. My respect and love of nature has improved in watching pigs breed, eat and survive. I have also gained in personal friendships as people in the community have observed my efforts. If I was to liquify my herd at this moment, I would probably realize 12 – 15,000 dollars. But that in a sense would only be a break even point financially after I deducted all my expenses. So from a business point of view, I am not successful.
However, in terms of health, community, and having an asset to barter with if our system collapses, I am in excellent shape. I also have skills that would help others to survive and a surplus of female pigs that would allow them to start herds of their own while killing and eating the boars for personal survival and bartering.
Personally, I am rather surprised that the economic situation has held together as long as it has but I still have faith that it will crash very soon. To echo some advise I received from grandfather who lived through the depression through farming and raised 8 children, it was this: “In the depression you could buy a loaf of bread for a nickel, but no one had a nickel.”
He had a working farm and a large family so he not only was able to take care of his own, but had surplus to help others. I was amazed at the number of people who came to me at my grandfather and later my grandmother’s funeral who told me how much help they had given to others in those terrible times.
Liquidity crunch? Enter cashless e-money as the TPTB solution of choice. There are way more electrons in the world than there are physical trees with which to make Federal Reserve Notes. And electrons are much faster to put to work than mechanical printing presses.
I would be willing to guess that new electronic entries can be generated at a faster rate than any rate of withdrawals, required to meet everyday living expenses. Was it Greenspan that said he could guarantee all the money necessary to meet future debt obligations, he just couldn’t guarantee it’s purchasing power? And this before the technology that exists today, to create bit-money?
This new means of creating unlimited liquidity should certainly assure that demand will exceed supply to the point of causing ever increasing price rises,,,until, of course, the supply chain breaks down, sometime in the future, and on someone else’s watch. And, after all, isn’t that what politicians do, take credit for temporary solutions, while pushing problems onto the next watch?
In light of the fact that there is nothing backing today’s money, and considering the above points, I must continue to keep the horse placed before the cart,,,that deflation to a central banker is like garlic to a vampire, and won’t be tolerated, until the currency is destroyed, along with it’s producer. As in “Whatever it Takes.”
That is when you will get real deflation and revaluation of medium of exchange.
Add, this isn’t 1929. Money then contained, and was backed by, precious metals, and was hoarded for that reason. How does one cram electrons into a mattress? Why, when there are plenty to go ’round?
While I think ‘Swineherder’ is doing what he can under the circumstances if things go ‘south’ to the extent his pigs become essential to his survival then things are going all the way ‘south’ and there is no guarantee he will be around to sell or even eat them.
Bob Dylan wrote a song long ago called “Talking World War Three Blues” in which he noted that everyone dreams they are the sole survivor but everyone’s dream is a bit different in that they ‘didn’t see you around’ and therein lies the problem. There is no ‘plan’ one can have that works if the ‘system’ collapses. Gold, crops, protein and any other ‘asset’ can be seized by the state or any other actor with the means to do so even if it is just an 18 year old kid with a gun and if the ‘system’ breaks down everyone becomes an independent actor.
Our world is incredibly complex. My ability to exchange a promissory note backed by the ‘full faith and credit’ of the United States government for a ham depends on a few billion people working together and believing in that promise for it to happen. Should that faith and trust dissolve then we are left with an unpleasant alternative.
Huge energy throughput….has led to tremendous complexity [and] …far greater potential to concentrate enormous power in the hands of the few with destructive political consequences…
Ivan Illich talked about this back in the early 1970s in his little book (actually a compilation of several lectures) Energy and Equity. Even fewer people realize this important aspect of large quanta of energy through a system than realize we are at the limit of our limits.
In other words, the continued concentration of wealth/power in the hands of fewer and fewer (the infamous 1 percent, and now talk of the 1 percent of the 1 percent) is a guaranteed result of gorging on fossil fuels. We can try to put governors on this phenomena–for instance, the New Deal–but eventually even those mild attempts at restraint are overwhelmed.
It should be clear from this that there is no secret cabal of TPTB, meeting on a yacht somewhere once a year and staying in touch with weekly teleconference calls to plan their world domination. Sure, super wealthy people fight together to make rules that allow them to get richer, but, as Nicole puts it, when the music stops, they will be cutting each others’ throats to get their ass in the empty chair.
It should also be clear from this that the natural outcome of vast amounts of energy poured into a civilization will have all the same complex problems and dilemmas whether the particular segment of the civilization is socialist, communist, democratic, republican or whatever.
This is not an insignificant point, because the failure to understand that will create scapegoating and many other problems that will further absorb energy, both physical and psychic, that would obviously be better applied elsewhere. It’s not that bad behavior should not garner an appropriate response, but over-attention to this aspect of who is to blame will not be fruitful.
Industrial civilization is a complex organism in its own right, and a few must play the role of those in power regardless. Once those massive amounts of energy go away, much of the power reliant on that will also disappear. It is important to envision what types of hopefully relatively benevolent power structures might work in this kind of future. If we even have a choice. A number of writers in this arena of collapse have suggested dictators, tyrants, and various criminal gangs will fill this void. Certainly if we don’t make any positive effort in this direction that is a highly conceivable outcome.
What is the underlying wealth made of?
Land? Metals?
And, how does one measure it, other than in terms of currency?
Which currency? Dollar? Sterling? Ruble?The super-wealthy certainly will try the digital currency and to further concentrate power, but the problem is that their power also rests on a fabulously complex chain of specialization. Whether that breaks because it’s fragile, or whether because the drop of energy overwhelms their resistance (just as Mixte notes the New Deal was overwhelmed by the energy rise) doesn’t really matter. Sure you can IMAGINE a world where a few have a digital full-surveillance state (Hunger Games, eg) but the details of the REALITY of that aren’t really so practical. In a world of intermittent power for the masses, where being more wealthy will be seen as part of the cause and the enemy, where all the rare earth supplies, magnets, chips, tens of thousands of specific plastics, bearings, metals, parts, all become harder to source with ever-fewer companies still open, then the computer of the surveilled will be broken or won’t be on. You can no longer just go down to the mall and get a night vision drone. Or gasoline. Or even from Lockheed for that matter, as their creations also depend on the nut-and-screw manufacturers still being open much more than you’d imagine. Short answer, seems like a good idea– to them, as we see from their own white papers–but practically will fall apart. Like the Iraq war funding itself.
What is wealth made of? Take a look at the underlying premise: wealth to whom? Human beings in this case. Well a forest is a storehouse of wealth in wood, water, but if you were dropped in the middle of one you’d probably starve. So it’s not exactly the wood, the ore, the fields, the sea that is wealth. It’s human imagination and activity that transforms these raw resources into forms that humans use, into wealth for humans. So in a strange way, WE are the wealth, not them, not “it.” That’s what several writers (like yourself, but also Charles Hugh Smith and others) mean by weathering the storm by focusing on skills and connections to make ourselves resilient. If we are the wealth, our skills, our knowing, our trading amongst ourselves, then we can be okay if only people can get their minds around not trading for money owned and dispensed by a third party, but among ourselves for our own benefit. –Far easier said than done, unfortunately.
And perhaps we should focus more on the solutions, on what type of leaders and governance we would like to see and has been proven to work, rather than re-hashing the problems again.
Prof, the situation you describe, ie cashless money, is already the case. The vast predominance of all “money” is both in the form of debt and as electronic entries. I don’t know for sure the share of actual printed money, but it is trivial.
As for being able to generate it faster than it is withdrawn, very possibly, but it could only be withdrawn electronically and one would have to trust its value, which, as you suggest, cannot be guaranteed.
But the biggest problem with that path is that its hyperinflationary effects would enable those in debt to pay off those debts very quickly and those who own the debts have no interest (literally and figuratively) in doing so. The banking system has created vast amounts of debt by fiat, with no actual collateral to back it up and when all debts become unpayable, they will be the ones rushing to grab whatever they can in the way of collateral which will suddenly be worth something real.
The situation Nicole describes already exists in the Chinese port of Quindao where owners of piles of iron, steel, copper etc have been borrowing money from the shadow banking sector against that “asset”. Because the shadow banks don’t publish their books, and certainly don’t tell each other what they are doing, unscrupulous types have been able to mortgage the pile many times over. When, about 2 years ago, one of the owners became unable to pay his interest, the banks tried to seize his asset only to find there were 6 other banks already there fighting over ownership.
That is what has happened on the grand scale. Greece, for example, was loaned billions more than its underlying assets were worth even then, and would be worth even less in a fire sale, the only reason the banks did not end up fighting over those assets was because they had the power to force the EU to buy their debts at 100% using public money.
And that is also why we have not seen hyperinflation while the world’s central banks have borrowed into existence, literally trillions of $ in the last 7 years; there is no way that those dollars have been allowed into circulation, they have been used exclusively to prop up banks’ balance sheets and then fed into intangible assets such as shares which are endlessly exchanged among the banks or their proxies at ever higher values while the original debt is used by governments to maintain basic services that can no longer be supported by taxes from an economy that is breaking down.
This is a very timely piece because its good to know that others are in the same boat. I had been working on my plan for a number of years and making what I thought to be reasonable progress until about a month ago when I read James Hansen’s latest paper and realised that my estimation of the climate issues is many orders of magnitude too optimistic.
Since then I have been pretty depressed and paralysed and I’m only just starting to climb out of the grief and try to figure out what I might reasonably do next. Its good to see that people like Nicole (as I would have expected) are also staring hard down the barrel and into the abyss. I look forward to the next in the series. I would copy to my friends and family but given their response to my personal crisis, I realise also that it will be a waste of time.
Imagine for a moment that a new energy source that outperforms fossil fuels in abundance and availability, but also has not any of the environmental constraints of fossil fuels, is discovered. I’m talking about an energy source with the density of nuclear fission but no radioactive emissions nor residues, whatsoever. Would it solve the problems of humanity within the current mindset? or just come to worsen them? I postulate that, by far, the current biggest problem humanity faces is the lack of capacity of changing our individual and colective behavior. No technology can fix that. This is something we have to become really aware of, and ponder it, because no magic trick will help us if we can’t truly and wholeheartedly change, from the predator competitive mindset, to the cooperative and solidarity based mindset. We need to do this desperately, to avoid our demise as species. Not even Low Energy Nuclear Reactions can save humanity from itself if we fail to change.
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