SATURDAY ESSAY: A world terrified by impotent ghosts from the past

Like the contracts always say, the past is no guide to the future

There’s an interesting piece in the New York Times this morning (where else?) by Paul Krugman, in which he rather oddly argues on the side of the bankers (“there isn’t a structural problem really”) to make the following liberal (“let’s spend our way out of trouble”) point:

‘All of this strongly suggests that we’re suffering not from the teething pains of some kind of structural transition that must gradually run its course, but rather from an overall lack of sufficient demand — the kind of lack that could and should be cured quickly with government programs designed to boost spending.’

It’s the same one-dimensional thinking that could just as easily be applied to Merkel, Schäuble, and the 1922 Committee in its insistence on more and more cuts to services, and tax cuts for those with money to spend: it’s all about demand. But even more depressing is Krugman’s example as to how this sort of return to growth can be achieved: an article written in June 1939 saying the same thing as those (like me) who argue there is a structural problem with the model of capitalism we’re using:

‘The paper in question was published in June 1939. Just a few months later, World War II broke out, and the United States — though not yet at war itself — began a large military buildup, finally providing fiscal stimulus on a scale commensurate with the depth of the slump. And, in the two years after that article about the impossibility of rapid job creation was published, U.S. nonfarm employment rose 20 percent — the equivalent of creating 26 million jobs today.’

This is pretty  cool thinking from Krugman: we’re in the mire, quick – let’s get a war going and then supply it. This isn’t what he means of course, but the argument is so narrow as to be laughable. His problem in the piece is that he is arguing within the strangulating confines of  a sterile debate about theory and process…but in 2012, when he is offering 1939 solutions – comparing a debt free US with the zillion-dollar indebted America we see today. His article is the perfect quintessence of how and why we are failing to tackle what is, really, The Global Cultural Crisis: the one that should’ve begun in 2004, then was kicked down the time-line to 2008, and is still unravelling in 2012.

For people like Krugman and Buckley, the past is for shaping the future, and the present is for kicking into the future.

Think about it for a second. Wolfgang Schäuble is driven by memories of the Weimar 1923-25 hyperinflation: an event caused by direct money-printing following the draconian exconomic sanctions of the First World War. It all took place 23 years before he was born. The Tory’s ‘radical’ committee is called the 1922. The substantial proportion of votes in last weekend’s Greek election were cast in support of a theorist who died 130 years ago. Angela Merkel’s approach to life was learned in a Communist State that collapsed 22 years ago. The British Prime Minister (when he isn’t making it all up as he goes along) clings to the at least partly discredited ideas of Baroness Thatcher who, along with Reagan, let loose the dogs of banking on us. His Government is dominated by rich public schoolboys and Oxbridgers living in a fantasy world of good old days when everything was getting better and better.

The Right across the West cleaves as strongly as ever to the ideas of Milton Friedman, a bloke whose monetarist laissez-faire principles insisted  that a self-correcting economy would result in the absence of regulation….as opposed to the absence of wealth apart from the rich 3%. That same rich 3% now manipulates markets from gold to Government bonds across the world….all in the name of the Mighty Milt. He proposed the idea of trickle-down wealth, which in practice works in the opposite manner. Friedman spent thirty years developing his ideas: thirty years in which there was no global internet, China was a sleeping Red, satellite communication was unknown, and Bob Diamond had reached the tender age of twelve. There were no SOL trading software packages, deep liquidity pools, Hedge Funds (beyond a tiny sector after 1949 doing what Hedgies should do) or segmented multivariate bourses.

The Left clutches the comfort-blanket of Keynes ever more closely to its one-more-heaving breast. J M Keynes, the man whose opening words in talking about State economic stimulation were “it should never be attempted unless the public finances are in good order” is presented as the man who’s ideas never failed, but he wouldn’t recognise a single element of the globalist investment banking system that is so out of control in the contemporary economic environment.

In the UK, Labour is led by two men who seem incapable of getting beyond Keynes, and thus fail to land even a kid glove on the Friedmanite economic thinking of Camerlot’s right wing. All they need to do this is some Lesson 1 maths, but they’d rather support (and be supported by) a trade union movement representing a mass workforce that’s been devoid of the mass thing for two decades. The most powerful woman in the Party believes every word of socio-psycho-gender theories put forward between 1968 and 1971, and then proved completely wrong a quarter of a century ago. In the States, even Ron Paul – by far the most thoughtful and inventive of the Presidential candidates – can’t get beyond the idea of currencies based on the gold standard. Why gold in 2012? Because that’s what was used in 1926?

Francois Hollande in France represents a soft-left view that has failed wherever it’s been tried. Even in Greece – where the Establishment Parties are being deserted in droves – the successful breakthrough has occurred among those Parties admiring the ideas of a dictator who shot himself in 1945 after reducing Europe to rubble, and a Soviet system that imprisoned and killed more of its citizens than any other State in history – including the one run for forty years by a mad paedophile in Beijing.

Why is this? The explanation varies depending on which tribe one is talking about at any given time; but basically, it’s a species thing largely involving a terror of the future, and a suspicion of The New Idea. We are all haunted by the ghosts of economies past.

Bankers quote the past purely from sociopathic greed. They point to it as a track record…while noting, in half-point type at the bottom of every investment contract, ‘The past is no guide to the future’. I think this is what folks call hedging.

Bureaucrats in general (and Brussels in particular) stick rigidly to the past as a form  of self-preservation. They are The Preservatists I’ve written about previously: like all contraceptives, they stop unexpected things from happening. But then they happen anyway, and so the functionaries defend themselves by saying that the event was unforeseen.

Economists have only ever worked with a rear-view mirror while driving through the fog. It’s tough to be a visionary while driving like this, but Marx managed it, basing his dialectical materialism on the idea of socialism being the synthesis of the agrarian and capitalist systems. This really was using the past as a predictor of the future, and it failed – as Marx himself accepted in his fading years. Free marketeers of the Friedmanite School admire the work of Adam Smith, a Scottish mercantile theorist who died 222 years ago, when half the global producers of 2012 hadn’t been discovered let alone exploited. Well vivat professores and all that, but could they at least have been alive in the 20th century please?

Large multinationals recite the theories of Ted Levitt ad nauseam. Levitt is the man who invented globalism, and then rationalised it with a stream of assertions, very few of which bear any interrogation at all. Yet his ideas continue to evoke hero-worship among the bollocks-school of global marketingspeak. Just a few weeks back, Michael Hiles put this on his blog:

‘I re-read this book almost yearly, and it reminds me again and again what an advanced thinker Ted Levitt was and how his ideas continue to shape business today.’

They sure as hell do, Michael. You and I may have noticed the mercantile zero-sum disaster that is now  upon us, but not Mr Hiles. To be fair, Levitt’s early ideas were right on the button: focus on the customer, not your ability to extrude stuff in a certain way. But his most enduring and nihilistic theory was that of the unstoppable inevitability of the dictates of Globalism. This has given us, among many other putrid things, a Newscorp with every British Government and both houses of Congress in its pocket, an AOL that behaves like the Moonies, a Microsoft that keeps unstable software on sale by shoving eveyone else out of the way, a Goldman Sachs perverting the actions of well-near every Government and investment market on the planet, and above all, ISPs dishing out joke service and poorly designed products from the safety of a million silos – the diametric opposite of the customer-facing model espoused by Ted Levitt.

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I haven’t bothered to study the political class at length in the above analysis, because as I sit here and type in May 2012, the fact that they too are devoid of ingenuity, spine, independence, or concern for the Citizen is almost completely irrelevant now. The Executive (and much of the legislature) are the kept whores of media moguls, oilcos, bankers, trade unions, and in fact any interest group offering enough money to get them elected or work with the security services. We clearly are not going to get any new ideas from that  direction. Equally, we won’t get any new blood from there either, because the system acts as a blatant and blunt weapon to repel even the most latent of new Party structures or approaches.

So I fear we must look to other disciplines – and other forms of pressure – to invent and then effect change. The detail of that process requires an essay – if not a book – all to itself. Suffice to say here that there are many pointers….and there is nothing wrong at all in being eclectic about sources of inspiration.

The internet has proved itself on several occasions to be something politicians transmit on, but never listen to. This is not so of multinational business. Large globalist concerns react vey swiftly to bad publicity and online pressure groups. The evidence thus far suggests that making life uncomfortable for anti-social business online is a far quicker and more effective thing to organise than the standard lobbying routes…all of which are crowded out with people who have far larger sums of bribe-cash than any of us. Today’s agents of change are outside, not inside, the legislative assemblies of the world.

Social anthropology is a highly pertinent discipline: most economic and fiscal theories ignore it completely, imagining that a ‘model’ somehow doesn’t have any real people to take into account. Social anthropology is completely absent from the mindset of supranationalism in general and the EU in particular. It makes zero impression on the thinking of the current German political executive, and roughly the same amount on the actions of Brussels bureaucrats. The fact that the FT’s Gillian Tett talks more sense about Japan, the US, China and regulation than most other commentators put together demonstrates the power of a mind looking first at people, and why they do what they do. Ms Tett, before she become a sought-after financial journalist, was a social anthropologist. Her Book ‘Fool’s Gold – How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe’ is the best book about financial culture and mores ever written. I’d be willing to lay odds that nobody in the UK Coalition or the Obama White House has read it.

Neuroscience in general (and Cognitive Behaviour Therapy [CBT] in particular)  offer enormous insights about the effects of testosterone and the learned response that dominates so much of Bourse activities.

Eckhart Tolle is a Buddhist-influenced writer on social and personal equanimity whose slim volume The Power of Now is one of the largest-selling books in history. Devoid of fluffy psychobabble and offering a profound insight on almost every page, it should be required reading for any market trader trying to get past tricks and monthly targets out of the mind – instead to focus solely on the circumstances of right now…and the consequences of any and all actions in the long term.

The key point about this tiny fraction of suggestions (that any practical Renaissance brain could arrive at with the application of even minimal thought) is that they are out of the ordinary, and designed to make the future better – not rationalise the ridiculous and time-wasting process of clinging to a piece of wreckage called the Past. This applies to nothing more tragically than the model of capitalism we have in 2012.

We have tried State command and we have tried Every Man for Himself. Neither worked – except for a corrupt and privileged minority. For a time we tried mutualist capitalism for a limited number of product fields and services, and on the whole it has worked – as the CIA’s website records clearly and with the necessary numbers to make it stick. But even that is not the entire answer or anywhere near it: the development of a bigger and better mutual business sector is really a form of fine tuning. Only facing up to the reality of failure and thinking within different criteria across the piece of capitalist endeavour and finance will get us to a better future – what I’ve been pushing as Radical Realism for some eighteen months now.

To get to bold solutions we need to start asking brave questions and attacking shibboleths. I ask questions like those below all the time. They usually evoke helpless laughter from the Preservatives, but they have a validity that is inflating with every year. Perhaps from here on in, the Masters of the Universe should think of the whole as an exam paper:

3rd GRADE ECONOMIC REALITY, MODULE ONE.

Answer ALL Questions. Answers without workings-out shown will be scored zero.

1. The production/mass demand circle is looking increasingly vicious – what other criteria for success should we use to replace it?

2. When is a siege-economy (boo-term) just self-sufficiency (hooray-term) by another name?

3. If investment banking largely moves indigenous jobs offshore, starves the entrepreneurial sector, and creates unrepayable sovereign debt, why are all these heavily-bonused, tax-avoiding jerks necessary?

4. Should every G20 member have a large mutual-trust bank that encourages cutting-edge new business sectors and low-cost social housing? If not, why not?

5. ‘Enlightened self-interest is an oxymoron in today’s Western culture’. Discuss with examples.

6. ‘The health of society is more important than the wealth of shareholders’. True or false?

7. ‘Those who dislike Milt Friedman’s ideas are closet Communists’. Discuss with the use of your left brain hemisphere.

8. ‘Sustained growth, near-full employment, and social stability of the kind seen in the mixed economies of the West between 1952 and 1965 has never been equalled’ (CIA website). To what extent is this past judgement relevant to the future, if at all?

9. ‘The purpose of capitalism is to maximise the healthy employment of society’s law-abiding citizens and thus reduce the cost of government’. Would you agree with that? Give reasons and quantify why they are relevant.

10. List FIVE positive benefits for society as a whole deriving from obligation and derivative leveraging. (NB none of them should include your salary or options growth).

Good science and philosophy is not about the past, but rather the eternal. Until such time as Homo sapiens evolves (which it won’t do without geographical isolation or huge climate change) the eternal species truth is that we have succeeded by genetic competition within the pack, and cooperation between packs. We are doing neither of those jobs properly at the moment. New ideas about how to do it are vital if we aren’t to blow ourselves to smithereens at the end of a globalist game nobody can win.

 

 

84 thoughts on “SATURDAY ESSAY: A world terrified by impotent ghosts from the past

  1. Exam questions are just the thing to send a chill of terror down one’s spine (especially if one hasn’t stayed up all night every night for the last two weeks swotting up in advance) and in the fear-raising stakes, yours are of vintage quality. Congratulations!

    All great thinkers can be rubbished, if that’s what one wants to do, and new ideas by their very nature are bound to invite angry and contemptuous dismissal, especially so in this age of Internet know-alls with megaphone voices – so somehow, I wouldn’t expect a rush of penetrating contributions based on original thought. But even though it’s always easier to ask fundamental questions than to provide definitive answers, we have got to start somewhere, I suppose, and here is as good a place as any. Thanks for trying.

    • The quality of proffered ‘exam questions’ betrays JW’s advancing age. Should any Slog readers be under 30 (unlikely, I grant you), they would require multiple-choice answers to be made available, with 90% of them categorised as frankly ludicrous, only to be ticked by a complete moron.

      That aside, a brilliant piece – I really don’t know how JW maintains this quality of analysis.

  2. I’d like to believe that Krugman’s followers don’t read The Slog because anyone who is a Krugman follower surely cannot read. If one can read it should be possible to deduce (or just to read) that you cannot turn stones into bread. He harps on that the couple of trillion spent already haven’t resulted in the killer inflation his critics fear and that we just need a bit more of the same to fix things. Indeed the inflation has been conspicuously absent and the reason is that the trillions have not gone into the wallets of consumers and the cash registers of businesses but onto the balance sheets of financial institutions! From there it has been spent on things like government debt (how do you like that?) and equities and some has been deposited at central banks. The inflation has manifested for one, in the stock market. And that’s a fat help! It’s not as much about money supply as it is about credit. When businesses and consumers are neck deep in debt – they don’t want to take on more debt even at 0%. And in many cases nobody will give them anymore credit, even if they wanted it. So does Krugman suggest we line people up in front of a shotgun and tell them to borrow and spend more? Or does he just want to give away the cash?

  3. As I read this (great piece thanks again JW), I had this increasing feeling of expectation….waiting…..waiting for the punch line.

    Which was – The Austrian School.

    http://en.wikipedia.org/wiki/Austrian_economics

    It is the Austrian School of economic thought, Hayek, Von Mises et al, who are generally accepted to be the antithesis of Keynes and Friedman (Chicago School).

    And for those who like it packaged alternatively, this Hayek vs Keynes Youtube is hilarious, yet relevant. (3.7 million views)

    • Exactly my thoughts Funkyronster,

      as you noted:
      “As I read this (great piece thanks again JW), I had this increasing feeling of expectation….waiting…..waiting for the punch line.
      Which was – The Austrian School. ”
      So many different economic views mentioned in one article and the one with the most common sense is missing?!? Come on John.
      The Austrian School is explaining economics from the individual point of view.
      Ron Paul mentioned: “I suspect that when the definitive history of the twentieth century is written, Mises will be considered one of the greatest economists, if not the greatest, of the [20th] century.”
      It’s so important to spread the message and to educate the people like he is doing.

      About free trade & sound money
      “There is no human event that has happened in the world more calculated to promote the enduring interests of humanity than the establishment of the principle of free trade. I don’t mean in a pecuniary point of view, or as a principle applied to England, but we have a principle established now which is eternal in its truth and universal in its applications. It is a world’s revolution and nothing else.” – Richard Cobden, 1846
      It was all about “Free Trade” these days, now it’s all about “free and sound money”. It’s time to shut down the monopolist central banks forcing us to use near worthless paper money and lend them at central planned interest rates; why not a free competition of privately issued currencies? Those backed by real values will prevail & survive because they can hardly be inflated. That’s the way to freedom, prospertity & peace!
      McSurfy

      • Never going to happen while the elite have a death grip on the governance of pretty much every square inch of the world’s productive land. You might own it, but they regulate what you can do with it.

        The truth of the matter is that most of the elite aren’t actually all that bright, talented or even particularly well educated outside of a narrow study course of ‘how to stay rich while making sure those filthy plebs mind their place’. Add to that that they have a massive dose of unwarranted ego and entitlement. And are almost universally lazy – being brought up in a house with 12 servants waiting on you hand, foot and probably backside will do that to you. They depend on the simple fact that the playing field is absolutely NOT level, for if it were… they’d have to play the game by OUR rules. The best and brightest would quickly supplant them.

        They absolutely cannot allow sound money, particularly in the form of competing currencies backed by something of intrinsic value, to proliferate. The advantages of a fiat currency are legion for the controllers of it, but the three most important aspects (from their point of view) are;

        a) By it’s very definition, because it’s founded on debt, a fiat currency MUST undergo inflation constantly. That’s nothing more than a back door tax on every citizen’s productivity. One that’s collected for free and flows only into the pockets of the currency’s issuers – the banks.

        b) Once the fiat currency becomes effectively worthless (and historically ALL of them have), it’s a simple matter to wind it up with a bout of hyperinflation, pay off your ‘creditors’ with the correct numerical value of a now worthless currency, and set up a brand new one the very next day. They haven’t got a legal leg to stand on. After all, the balance sheet said you owed them 200 billion quid and that’s exactly what the cheque said on it. The fact that it wouldn’t have bought a loaf of bread at that point isn’t important.

        c) A single currency (and this applies equally to one that’s backed by gold, oil, or anything else – why do you think that nearly every nation in history has had some variation on our legal tender laws!) made it easy and straightforward to tax the population. A pound is a pound and a dollar is a dollar. If we were allowed to freely transact in pounds, dollars, euros, quatloos, gold-pressed latinum and Martian Fire Beads we’d have the option to pay the tax in whichever was currently cheapest, in terms of requiring the least productivity to amass. That would actually be trivially easy to manage with modern computer technology, of course, but why would the elite want to take any chances when it comes to squeezing your t*t until it’s purple?

    • You’ve got that all wrong.
      In no way can Keynes be equated with the Chicago school, and Freidman was practically an Austrian. Austrian’s are far closer to the Chicago, Freshwater school than anything Keynes dreamt up. The Chicago school is responsible for the “devil take the hindmost” type of capitalism which has destroyed the west,

  4. There was nothing per se wrong with Keynes theories.
    It’s the cherry picking of them to suit ones pseudo
    intellectual mental masturbation.
    The one underlying theme of the rearward looking
    A.holes,is the very human fear of real change..

    • Adam Smith is also cherry picked, by that particular creeds fundamentalist economists who like others in different versions of their profession are the new priesthood.

      ” No society can be flourishing & happy, of which the far greater part of the members are poor & miserable ”

      ” To feel much for others & little for ourselves: to restrain our selfishness & exercise our benevolent affections, constitute the perfection of human nature. ”

      ” Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people”

      Adam Smith.

    • Err, no. There was so much wrong with Keynes theories, they weren’t even wrong. But they told the Powers That Be what they wanted to hear, and that was sufficient – still is actually.

      • Whereas the right wing Chicago school told the very rich exactly what they wanted to hear, and were even wronger.

  5. JW
    Either you’ve got inside my head and have influence over my thinking
    or
    I agree
    Good piece that has helped me flesh out my stunted observations

  6. “Until such time as Homo sapiens evolves (which it won’t do without geographical isolation or huge climate change)…”

    As usual you are actually answering your own question… as MIT has determined…

    “Researchers at one of the world’s leading think tanks have developed a computing model that predicts serious implications for our way of life as a result of our incessant need to consume resources like oil, food, and fresh water. According to a team of scientists at the Massachusetts Institute of Technology, the breaking point will come no later than 2030, and when it does, we can expect a paradigm shift unlike any we have seen before in human history – one that will not only collapse the economies of the world, but will cause food and energy production to decrease so significantly that it will lead to the deaths of hundreds of millions of people in the process.”

    http://www.infowars.com/peak-civilization-mit-research-team-predicts-global-economic-collapse-and-precipitous-population-decline/

    The changes coming to our planet as a result of environmental changes are not some conspiracy theory but sound fact based on behavior we are engaging in… endless spending of financial capital leaves governments broke… endless exploitation and destruction of our planetary capital leaves us in a far worse position. Not having money is one thing poisoning the planet til there is no potable water or food… well, there is your impetus for evolution.

    • Yup, been saying much the same thing for 20 years. In the long run the Georgia Guidestones aren’t going to be far off; if we don’t take DRASTIC steps to prevent it right now, the world population by the end of this century is going to be somewhere close to the 500 million they quote, if not significantly lower. Remove chemical fertilisers and much of the automation and mechanisation and the world can feed about 10% of it’s current population on a long term basis. The water supply, assuming we don’t pollute it all, somewhat more. But not 7 billion or more.

      Absent the invention of some cheap, clean and super-plentiful energy source to replace oil, peak oil is functionally equal to peak humans.

      Even allowing for that unlikely energy event, no matter what we do to mitigate it, we can safely assume that we’re going to hit peak population in the very near future, most of whom aren’t going to live out their natural lifespans.

      • Absolute Bollocks!

        Believe the satanic Guide Stones at your peril. The only way that the population will be decimated is because the Great God wishes to unleash his wrath on the world. And first He will punish mankind through the natural consequences of sin, war, and then He will visit His own chastisement on mankind, for failing to listen to His Word, and that of his blessed Mother, Mary, over the centuries. You can call me every name under the sun, but you can keep your Adam Smiths, your Milton Friedmans, your Keynes and your Krugmans; they are merely men. But the Divine Master has spoken, you either listen to His words in the Gospels and through His only divinely inspired Church, or you don’t. Man has turned away from God; his comeuppance is but a short time away!

  7. Excellent article.I believe a solution(if possible) has to be worked out on the world stage-otherwise the danger of serious clashes(possibly even military)is too great

  8. Excellent analysis John.
    Having said that you might think that I didn’t read a word of it because I believe that human nature is basically immutable. This of course means that the past is a good measure of the future. We live in a Malthusian zero sum world and what we can’t acquire though cooperation we take by theft or war. The next phase is WW3 after that the cycle continues.

  9. An observation on question 8 – the circumstances described by the CIA are relatively easy to generate – just have a world war that destroys much of the planet’s industrial base, and the survivors can do very well indeed. This may be the plan.

    • I am glad you said ‘survivors’ and not the ‘winners’ Germany and Japan rose from the Ashes. What social conciences and discipline, and will to survive they had…UK and USA on the other hand… got to enjoy a fast pace life, industrial and sexual revolution…The Greedy got rich – the poor got poorer- the really poor just did the decent thing and died quietly.

  10. A good read thanks John.

    And today the Chinese have become the first player in the next game of QE. Soon to be joined by Bananabux Ben. No amount of first party manipulation in commodities (namely gold) will make a bit of difference this time.

    • The paper manipulation of PM’s will only end when
      the physical is sold out.If everyone buys whatever they
      can afford,it’s true price will be discovered.
      It’s Benanabux as the abbreviation.
      Save ink,the CB’s will need every bit of it.

      • Yep, can’t believe when I started buying PMs it was just a hedge against this kind of thing; now its all actually playing out

  11. 1. Firstly and mostly it is about STABILITY, thus:
    1.1 Real-Estate bubbles must be averted – this is accomplished successfully in Germany since 1999:

    http://de.wikipedia.org/wiki/Privates_Veräußerungsgeschäft

    1.2 “End the Fed” is Ron Paul’s Moto and also the straightforward
    application of the constitutional law.
    1.3 Gold can be used by governments to leverage on, according to a globally agreed-upon ratio, e.g. 10, thus limiting the flux of FIAT money.
    1.4 Thus the defensive period,, namely till the above is achieved,
    must involve decisive austerity measures.

    2. The 1940s order of cause and result:
    2.1 You wrote:
    “a dictator who shot himself in 1945 after reducing Europe to rubble, and a Soviet system that imprisoned and killed more of its citizens than any other State in history”
    2.2 It was Stalin’s attempt to export the Bolshevik revolution, which forced a restraint acting from the west, massively backed by Anglo-America.
    2.3 Communism is merely a destabilization scheme, which omits pricing
    and exterminates the civilized strata in society.

    • Communism is about redistributing wealth when it has been abusively concentrated in the hands of a few, and can only be understood as the result of a revolution where people strive for survive. Thus it is more about about stabilizing. Not only it doesn’t kill civilization but aims for it. USSR educative system was far better than most western countries today. Soviet achievements in science and technology cannot be denied. Have a look at which spacecrafts are the only ones carring people to the ISS, you brainwashed western fanboy.

      • @debanked_bollockist: What are you smoking?
        Communism was not about any of those things. Ask the many tens of millions who were murdered under Stalin and other communist despots.

      • @bankrupt_taxpayer: “Communism was not about any of those things. Ask the many tens of millions who were murdered under Stalin and other communist despots.” – You should perhaps study one of those murdered also – Trotsky.

  12. Maybe part of the problem is economists think their subject is akin to a natural science and politicians play pick and choose. Fact of the matter is most schools of thought have something to say.

    Keynes for example often gets a bad press but it is forgotten that he helped the UK over the WW2 spending/debt excesses in the immdiate aftermath. Friedman also makes much sense but represents one strand of thought only.

    I’m personally taken with Kondratieff – the long cycles. I think we may be at the end of one now. A confluence of changing technology and globalisation, culture and attitudes, and unsustainable financial structures – spending and debt.

    Personally I struggle to envision a scenario where things don’t get very messy indeed. In some ways you have to applaud the politicians for trying to stave off the crash. However it is going to get worse before it gets better. My thinking is that governments need to be thinking about how to avoid the worst side effects of the colleral economic damage and ensure that we are in shape to take advantage of the the upturn. Trying to avoid the downturn is in my view likley to make the inevitable worse. Almost needs a re-set button.

    Debt forgiveness may be a way forward but game theory / human nature suggests it will never happen.

    • Agreed… because we are suffering the inevitable outcome of an economic system never designed or imagined to have to deal with the size, and complexities of our modern economies… I also feel that some sort of coordinated, global debt forgiveness or “restructuring” is the only stable way out of this ever increasing debt pyramid… however, I can’t site any examples of the world working together in this kind of coordinated, logical fashion for the betterment of mankind… but I can point a finger at all of human history as an example of how people will turn to warfare, expansionism, and chaos when placed in these situations.

    • Marc…
      You should have a read of some Hyman Minsky.
      Very interesting, good on the myth of rational markets and how credit and asset bubbles are inevatable in a poorly regulated financial system.

      like Kondratieff, he doesn’t ignore the effects of de-leveraging in the economy, which other schools do.

  13. Misallocation of Capital in most of Western countries since the end of the period of reconstruction 1945 to 1975) has to be included in any analysis. A reasonable read is “How the West was Lost”, (Dambissa Moyo). Extreme nationalism is now looming everywhere. For the real dangers of how populations can be maipulated, read Gellner (Nations and Nationalism).

  14. Your essays are such attractive reading, John, because there is so much emotion in them. Even when one doesn’t understand the content of a paragraph or section, it’s still worth continuing to read for the pleasure of the emotion radiating from the page.

    In contrast, the MSM are bland of feeling even if the content is useful. There is no emotional experience from the author that, perhaps, the human race is drinking in the last chance saloon. No doubt, the patriarch Noah would have expressed himself with similar feeling to those, whose only emotion was to laugh, as they watched him build his gigantic boat on dry land.

    We have, indeed, tried State Command and Every Man for Himself as well as all points between, including democracy which is, perhaps, the least bad form of human governance devised. Yet, even that has gone bad by giving and giving to the voters what no one has earned.

    Perhaps, if we had stuck to the Gold Standard seriously, we might agree with Ron Paul that this was our salvation from destroying ourselves economically. But we didn’t and we couldn’t, because only a tyrant, an autocrat, would have been able to make the Gold Standard work. That would have meant the elimination of democracy in order to stay solvent globally. So, Ron Paul is, as you say, mired and lost in the 1920s. No hope from anyone who believes that the re-introduction of the Gold Standard will save us!

    So, with question 1 of the exam paper, we need to do something about, if we can, the enormous level of demand for the insufficient production and supply. My answer, which will surely fail me the exam, is depopulation. I say this on purely theoretical grounds because no human beings can ever reduce the global population sufficiently and without producing chaos and anarchy for those still left alive.

    After all, if the depopulation of the last two world wars of about 90 miilion people was replaced in the 90s by the global increase of just ONE year, and is being replaced at slightly more than annually at the rate of 80 million per year nowadays, then it is clear that the theoretical solution of global depopulation is not available to the resources of mankind.

    Of course, nuclear winter can be arranged but this is not depopulation but annihilation with no possibility of future economic activity, to say the least.

    Does the answer to the exam question 1 not require a Deistic intervention? No, of course not! We are human beings and we are intelligent and we can fix this problem! Yeah! The wiseguys, who over the years, got us into this mess, are the fathers and grandfathers of those, who will get us out! Pull the other leg; it’s got bells on!

    • Have no fear, we’re going to get depopulation one way or another. Either some clever chap in a white coat invents a genetically engineered super-virus that kills everyone who hasn’t been vaccinated, we go the mushroom cloud route… or dear old Mother Nature will eventually call time herself. One way or the other, 9/10ths of everybody under the age of ~60 alive today is not going to die of old age.

      I don’t like it, but it seems pretty much inevitable at this juncture. Too many people, not enough planet.

      • Looks to me like consumerism has depopulation built into it. We have less than 1 generation before the demographics of greed kick in where to buy what we wanted we rationed children ourselves. No need for a depopulation pill it’s already on the way in the developed western world. Being able to sate sexual appetites without fear of conception at a time of exponential growth of consumerism = ‘natural’ population control. Immigration distorts that to some extent especially residual feeling of needing a large family to look after aged family members.

  15. Demand is a relative value.

    Produce in excess of what can be consumed and we have become really good at that. Someone comes up with something new, the old stuff is no longer sold as people are on fixed incomes the problem moves from one area into another.

    Humanity is in getting itself into a bind whereby we cannot consume all we produce “and the poor demand concept”.

    Ramped up over the last century as new technology gets implemented and the best way to speed it all up is actually use austerity so all new methods must be employed to turn a profit, Beautiful. Freebie Laptop in a box of cornflakes coming to you soon makes the little plastic toys of years ago look derisory in comparison.

    If you understand this then the liquidity issue quoted as a problem is not really a shortage of cash at all, but you you have a choice of buying A or B and you bought B so A is stuffed,

    A personal opinion.

  16. Not sure if it’s OT, but a rather disquieting article –

    “Construction of a town for the training of counter-insurgency measures by special troops of the Bundeswehr

    From petrapez | May 11, 2012

    The largest training center in Europe is emerging on Germany’s third largest military training area in Saxony-Anhalt, 40 km north of Magdeburg, in anticipation of the “coming insurrection.”

    Following a query from the “Mitteldeutsche Zeitung” to the Bundeswehr about the new utilisation of the Altmark training area on the Colbitz-Letzlinger Heide, on May 9 the paper published on its website, in the article “Angriff (attack) in Schnöggersburg”, the remarks by Oberstleutnant (Lt. Col.) Peter Makowski, who supplied the answers.

    To train most realistically the suppression of disturbances and rebellions which, in the opinion of the security agencies, are anticipated to start in conurbations (“Conflicts arise, however, in urban centers”), a deserted ghost town with 520 buildings on six square kilometers is being built for the military for 100 million euro, one which has industrial plants, a link to a piece of fictional autobahn and even an airfield with a 1,700 meter-long grass runway – because the competent authorities are also increasingly trying to bring mass protests under control from the air, as the legitimation efforts for drone missions or fighter jets (the beginnings for them in the civilian sector are to be found in the Tornado deployments with thermal imaging cameras in the search for a missing boy – video) show.

    “There will be a cultural center, a political and also an industrial area with large buildings, even if there are no chimneys there that really smoke,” said Lieutenant Colonel Makowski.

    The construction of the city of “Schnöggersburg” will start this year, the plans have apparently been in the making for six years.

    On the 232-square-kilometer Altmark training area, which is fundamentally used by the Army Combat Training Centre (GefÜbZH), already every year some 20,000-25,000 soldiers of all arms, including the special operations forces, are trained in urban warfare in six smaller settlements – with fanciful names like “Plattenhausen” (Pre-fab Houses) or “Stullenstadt” (Butty-Town) and in Salchau in the former village centre of Salchau – and to date modelled on the Afghan and Kosovo situations.

    Bundeswehr: “There are, with a total of 23 training and exercise facilities, various options for rehearsing battle groups in the scope of a highly intensive battle, or a task force in operations of low to moderate intensity.

    This number of trained special forces / elite soldiers will multiply with “Schnöggersburg”. The Bundeswehr City will be a “mythical city that could be anywhere in the world.” The broader general description therefore no longer excludes Bundeswehr missions inside Germany against its own civilian population, which are forbidden by the Constitution, and there is no attempt being made to conceal it.

    On the website of the Bundeswehr, which some time ago had the slogan “Wir Dienen Deutschland” (We serve Germany) in its banner, this short report on the project:

    ‘Within the framework of the development and expansion of the Altmark training area a realistic and mission-related infrastructure is to be established.

    This requires overall

    – An urban conurbation in a central location with a comprehensive built-up area in the sense of an “urban core”, which provides sufficient space for operations by all arms categories up to higher command levels, and namely within this core, the space around it and in the airspace above.

    – Special facilities with buildings and transport infrastructure, to enable training of the many capabilities of the service arms which may be involved in the scope of an operation with combined forces.

    – Creating conditions for the deployment of air-mobile forces and air forces, so as to incorporate this third dimension in the training for operations in urban environments.

    – An integration of the training/exercise infrastructure in the technology, so that the control and evaluation of complex exercises is possible.’

    In Germany there are, apart from the simulated towns of the Altmark training area, other ones such as the local battle facilities “Bonnland” und “Hundsfeld” on the Hammelburg military training area in Bavaria, which were formerly real towns and, in recent years, have been used increasingly for the training of Bundeswehr soldiers for missions abroad plus local police officers, federal police, THW (Technical Aid), civil defence and fire services.

    That the increasing consolidation of these organisations with the military is founded not only on disaster relief – legitimate under article 35, paragraph 1 of the Basic Law – is shown by the increasing number of inland Bundeswehr deployments. Ulla Jelpke published the following press release in late February:

    ‘For years, the inland activity of the armed forces has been increasing rapidly. In 1999 the armed forces were called out to just one need for mutual assistance, in 2010 such measures reached their high point to date with 71 missions.

    Of the 68 missions over the past year, no more than 22 can be considered as assistance for disasters or major accidents. In the majority of cases they were services for other agencies, often for the police: on the occasion of demonstrations, such as the Castor transports, as well as the security for major events, such as the Pope’s visit, the Bundeswehr provides both accommodation and catering. Even when it is not repressive operations as at the G8 summit in Heiligendamm in 2007, during which armoured reconnaisance vehicles and Tornado aircraft were deployed against demonstrators: this increasing cooperation between the police and armed forces does not originate from practical constraints, instead, it is clearly an expression of a political strategy to establish the military as a domestic political player.

    Available for civil assistance are some 21 support measures, mostly for civil societies, such as the provision of aids at sporting events. Here the military seems to want to present itself as a friend and helper.

    Which begs the question of the capacity of civilian emergency services: When a fire of just 200 car tyres, as in April 2011 in the vicinity of Kalkar, is too much for the civilian fire service to cope with and they had to call on the Bundeswehr, then that’s a clear sign that the civilian emergency services are poorly equipped. Manifestly, the priorities in the protection of the population are wrongly set.”

    The Federal Government is now hard pressed to explain, to the German public and their neighbours in the European states, what the whole purpose is of the Bundeswehr urban insurgency training facility in anticipation of mass protests and riots.”

    http://www.radio-utopie.de/2012/05/11/bau-einer-stadt-auf-sechs-quadratkilometer-zum-training-der-aufstandsbekampfung-durch-militar/

    • The fact that American, German, British, and many other countries military’s focus has seemingly changed (under the guise of anti-terrorism efforts) into crowd control, suppression, and quarantining is the proof that we are in a financial, and environmental endgame… there are not enough resources (capital, or physical) to support the world at the level it has reached, especially not with the impending challenges of destabilized extreme weather events, food production problems, water supply issues, ocean acidification (1 billion people around the world live off the Oceans), diminished oil supply, chemical related Bee deaths (CCD), and geopolitical power struggles resulting in civil and multi – national wars. The only valid currency for the future is a defensible residence with secure water, and farmable land attached… once I get my suzuki jeep converted to a vw turbodiesel engine that runs off of olive oil (which I overproduce), get those photovoltaics installed on the roof, and install rain capture and solar distillation facilities on my house (with meter thick wall, on an island, on top of a hill, surrounded by neighbors, with only two small access roads)… than I will have made investment that I can be certain of receiving long term security and real life dividends (food) for the next 40 years.

    • Do you think it is a coincidence that a Labour Government warned certain DWP staff that they may encounter suicidal claimants… and insisted that more peopole should take up training to deal with a ‘expected growth’ in suicide amongst claimants? maybe not, but it just so happens it was discussed just before the rules changed regarding Disability and Incapacity claims were being ‘re jigged’ Driving vunelrable people to suicide by Government policy is… in my book GENOCIDE. Not quite as subtle as gas chambers and not as headline grabbing. Thousands of second rate nurses have trained as CBT therapists to tell people thay are not really sick it’s all in the mind!.. Hell Yeah….35 Thousand pounds per annum to assess someone -tick box only- who has ‘low mood’. not a threat. can do some work.

    • Agreed, I despise the attitudes that lead people to apologise for the success of the human race. We are resourceful and resilient as a species and we will solve the problems we are currently faced with. With any luck we’ll emerge as a better race of people.

      The elite classes dictate when the wars happen, however they have detached themselves so thoroughly from the rest of us that they will likely get few volunteers to take up arms and fight their war. Though they may find a war of the civil type on their doorstep instead.

      • We won’t resolve any problem. We don’t have such universal conscience. We do not think in the common good for our species, and no relevant international organization is on the task.
        Problems will get solved via depopulation (wars for the increasingly scarce resources).

      • I’m not suggesting that people are going to consciously act for the greater good with no reason.

        I just happen to think that the human race has a superior ability to adapt and thrive. The mass destruction you depict isn’t based on anything other than an assumption that nothing changes and the problems the world faces are only solvable through violent means. Most of the shortages the world experiences are down to bad organisation rather than actual lack of resources. Better organisation, by scaling back the influence of central planning is a great place to start.

        War shouldn’t be necessary and I prefer to think that it won’t be.

  17. Oh John If only you could have read my school essay about how I would build a country and how I would run it. I was only 15 and already – “to smart for my own good”! There is a great similarity on the basics. O.K. I Conceed your writing is more Eloquent,and comes from a sound educated mind, BUT as a young uneducated person that I was, the thinking was very much the same. I hunger for a different approach to Globalism which is distructive to communites and long for a return to small comminuty sustainment. I love your writings dearlyJohn, however in this case I have to disagree about losing the past. We have a lot to learn from our past and if anything it has surley taught us it is ‘survival’. I believe that smaller communities with local and I do mean LOCAL services run by people who live in the community they serve, is a far better way to live. Like the old days… John,When are you going to start up a political party to challenge those who should be challenged properly? So, who was it that invented money and interest on loans? anyone?…heehee
    a man approached a young prostitue and asked her “how much” she replied explaining a list of services and costs. He Replied” Hmm sounds great ,can I have number 2 followed by number 5, I have no money on me can I pay you ‘in kind’…

  18. Will Hutton advocates “managed inflation” to solve the debt crises, according to his interview a while ago on Sky News. He didn’t offer any idea of how to manage inflation, since it usually has a mind of its own once it gets started and the political elites become addicted to it.

  19. Sorry John, Bit off topic but may be interested in…to be filed under “Greed”
    British Gas has just announced an expected increase in fuel bills of £130.00 per annum. Coincidentally, this is the EXACT amount the Government pay to people on Disability benefits and other benefits to assist them during the harsh winters. The rise can be directly associated with ‘Global warming’ Environmental protection provision. WTF!!

  20. Phew !! this will take a couple of reads to take it all in. A great collection of various strands woven together to produce a potent statement of the situation we find ourselves in. thanks John.

      • BT

        You could do that, but what valuation would the banks be able to place on a pile of rubble. At the moment Spanish banks are treating them as saleable properties on their books. Also, how are the town halls going to pay off their debts without the income from the rates on all these ghost towns?

        I note that the BBC is finally starting to mention the problems in Spain, but when will start to tell it as it is? My own region is only up to its waist in the brown stuff, but it has no idea of how it is going to extract itself this side of 2100; others. like Castilla-La Mancha are looking at 2700! Ah well, I am at least 10years older than ‘The Slog’ so what do I care?

        M.

      • @Morvan: If huge numbers of properties will never sell this side of [whenever], the only practical solution is to bulldoze them and for the banks to take the hit on their balance sheets. That probably means some of them going down. Same problem in other EZ countries. Is there a painless solution? I don’t think so. Maybe default for local town halls and for Spain to quit the EZ. By banks retaining worthless properties on their books at loan values and Spain remaining in the EZ, all they’re doing is extending the depression. If the ECB & EZ governments unleash inflation onto their populations to solve this crises, they’ll have to bring the army onto the streets to quell civil unrest that will surely follow.

  21. STOP PRESS.9.59 pm.Britain’s economic problems solved.In one dramatic moment ,4 unknown celebs awarded a woman with lickstip ,clutching a dog ,£500,000 and the title of’Britain’s got talent’.Well there you go,sterling will open up Monday,inflation will be abated,our German car producing friends will be quaking in their boots,as this new ‘export’ sweeps the world,and government debt will be slashed by the proceeds of the issue of bonds in the future cash flow of this talented combination.Commenting on this shock stimulus to the economy,the soon to retire Governor of the Bank confirmed that ,yes, indeed,he was minded to go for outside talent and that Simon Cowell seemed a plausible choice …

  22. One of your best articles yet.

    One small niggle…you doubt the future evolution of Homo Sapiens. I agree that the humane drive we all share to look after weaker and non-productive members of society dilutes evolutionary forces, but this may be compensated in other ways, eg now we are sufficiently evolved no longer to be slaves to the regime of survival of the fittest, we are able instead to modify ourselves genetically if we wish, ensuring that the two types of evolution can continue in parallel ie

    adapt to the demands of the environment, and
    adapt the environment to our needs

  23. Thought provoking to say the least John…… greatly appreciated though
    I’ve been thinking along the same lines for a while……the existing economic models are ALL redundant for a lot of reasons……….global interconnectivity……trading speed and volatility as a result of the internet…….vast debt levels by individuals and all levels upward……..general majority acceptance that such levels are manageable……….or lack of collective will to reduce………ever increase in the range and % of the haves and the have nots in most if not all nations irrespective of the political / democratic model…….environmental degradation……..
    If i had to put it all in a nut shell…….the problems are now on a global scale but there is no sign of any global solution….

  24. I suppose your article sums it up, the game is over, once each country gets round to voting. Saying enough is enough, or was Mrs T right when she said, “Democracy is finished, once the man in the street finds out that he has to pay for the Political Elites bribes?”

    The above video sums it up

  25. John
    Excellent piece. You mention The Power of Now and I must be the only one of your responders who has read it as no one has commented thus far. Maybe if the “millions” who have bought it spent a little more (infact a lot more) time studying it we wouldnt need to worry about the current massive emanation of bollocks from every quarter!
    We wouldnt need to read your blog either because you wouldnt need to write it but then would we laugh (and cry…) as much.

  26. another gem, John.

    I like your thinking and hope, one day we see a return to the kind of mutualism that began to flourish prior to WW1, but with a 21st Century informationally dense overlay of comunication and self-realisation.

    you’ve given me plenty to think about – cheers!
    Lenny

  27. Pingback: CRASH 2: Why the Day of Reckoning will reconfigure Western politics forever. | A diary of deception and distortion

  28. Pingback: Milton Friedman at 100…. | A diary of deception and distortion

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