Sunday, October 31, 2010

Guy McPherson, "Empire of Lies"

 "Empire of Lies"
by Guy McPherson

"Benny and the Inkjets are tossing the money around, but it didn’t pump up the industrial economy the last time and QE2 will be no better, even if the next version is expectedly gihugic. He’s destroying the dollar in the process of printing fiat currency, but he cannot keep up with the ongoing economic contraction. Fiat currency is rapidly turning into compost. Call it Screwflation Nation, for short, and it’s an approach that might lead to a new American Revolution, one that has been criticized even by Peter Orszag, Obama’s former economic adviser. Even McDonald’s is raising prices, for the first time in two decades. And, although government statistics indicate prices are declining, the numbers based on things we actually buy suggest otherwise.

This essay will not go down the rabbit hole of inflation vs. deflation, preferring instead to use the simple, technically incorrect, but well-understood route of equating increasing prices with inflation. The academic ground of inflation vs. deflation has been worked to death with little understanding. If you want to pursue that topic, I encourage you to check in with Mish Shedlock, Nicole Foss, John Embry, Peter Schiff, and Gonzalo Lira (Lira believes hyperinflation has already been triggered). Rather than chase the tail of terminology, I’ll simply assume that when average folks can no longer afford food and water, economic collapse has occurred. At that point, we needn’t worry about the terms of the debate.

The U.S. industrial economy still faces strong headwinds from the four horsemen of the economic apocalypse: energy, employment, credit, and housing. Ultimately, the U.S. gets to choose from few remaining options. They all spell the end of American Empire: default or hyperinflation seem likely, along with extreme deflation. And although we’re already there, these 23 latter-day doomsayers figured out we’ll be in an economic depression next year.

The oil crunch has arrived, despite OPEC’s lies, and the oil squeeze is running the show. Oil prices are headed up on the perception of global economic growth, according to JP Morgan and a report prepared for the New Zealand Parliament. Even the International Energy Agency questions whether reserves will fill the gap between supply and demand. They’ve never been so circumspect. Similarly, the United States Geological Survey has infused reality into its estimates by reducing Alaska’s reserves by 90%. Meanwhile, the U.S. military — charged with making sure U.S. consumers have enough crude oil to keep the Hummers running — is feeling the squeeze.

Never mind that we’re still in an economic depression, according unemployment numbers and other metrics of macroeconomic reality. The United States, and indeed the OECD, is no longer driving the world’s economic bus. And, of course, the entire field of economics is a sham built on a foundation of incorrect assumptions, lies, and misinformation. To call economics the dismal science is to denigrate all legitimate sciences while smearing the word “dismal.”

Is France foreshadowing the rest of the developed world? Will protests in France make it across the pond? Personally, I doubt Americans can be bothered to turn off the television long enough to notice the lies in which they are immersed. But I’ve been wrong a few million times before.

The only question of economic significance at this point is which event puts the stake in the heart of the industrial economy. At this point, a single tremor, an inopportune echo, an unexpected shift in the winds, and the entire icy edifice will come down like an avalanche. Will the derivatives explode? They’re still out there, and the exposure of JP Morgan alone exceeds global GDP. Or maybe somebody will notice the actual U.S. government debt, which is beyond belief, much less payment. Perhaps the big bank death spiral will get it done. Maybe the ongoing, ever-growing foreclosure crisis will bring it all down. The natives are growing restless about that issue. Perhaps a Keynesian liquidity trap will do the trick — and, by the way, we’re already in that trap, and there’s no way out. Under this scenario, the monetary authority (in our case, the Fed) loses control because long-term interest rates are very low (we’re stuck at zero for the Fed’s foreseeable future, and even the Fed acknowledges they’ve lost control when — in an act of treason — they defer decisions on monetary policy to banks).

Although Benny Bucks have levitated the stock markets so far, the impending collapse of those markets, as foretold by insider trading at a sell to buy ratio of 3177 to 1, might be sufficient to terminate the industrial economy. Most stock trades are done robotically, so don’t think stock prices have anything to do with the worth of a company or that the time-tested buy-and-hold strategy is a safe bet. In fact, regular people have already fled the stock markets because the markets no longer reflect economic reality (although, unlike conspiracy theorists such as Charles Hugh Smith, I don’t believe stock-market movements are engineered). There’s good news elsewhere, too: We’re blowing bubbles faster than an eight-year-old with a fresh pack of Hubba Bubba, as even historians can see, and the collapse of any of those bubbles could sink the imperial ship. Bonds, anyone? There’s a fiscal train wreck on the way in the bond market. Indeed, Ben Bernanke is acting like a possessed zombie intent on destroying the U.S. economy all by himself, through hyperinflation if necessary. Ben, your not alone: I’m here to help.

Non-economic phenomena could bring civilization to its knees, too. Most obviously, the ongoing environmental collapse, including profound rates of extinction, could take us with the rest of the living planet. But an overdue electromagnetic pulse from a solar flare — or a nuclear device — could terminate many of the world’s electronic infrastructure instantly. A sufficiently sophisticated Stuxnet-style cyber-attack could do some serious damage, too. On the other hand, civilization could simply starve itself to death.

If the end of American Empire is the silver lining, then continuation of the empire represents the blackest cloud in world history. If Americans would get off their collective lazy asses, they might start a civil war. That’s a big if, and I’m not willing to bet on it. Additional imperial news includes war crimes perpetrated by U.S. soldiers and the abject shaming of this country by our naked aggression throughout the world. And then covering up the whole stinking mess, just as the oligarch’s presidential administration continues to cover up the environmental effects of the disaster in the Gulf of Mexico. But those problems are about to take care of themselves in the undertow of economic collapse. And even the silver lining bears its own bad news: Peak oil spells peak human population.

Empires are not benevolent. This world has never had a larger, more effective empire than the current one. If you’re cheering for continuation of the age of industry in an overshot world, you’re cheering for more torture, more human suffering, and more human deaths. Needless to say, we’re on opposite sides of this issue.

And if you’re living that comfortable life in the city, regardless how much you recycle, bicycle to work, and tithe at the altar, you still haven’t figured out the immorality of imperial living. Cities are the nadir of civilization, and they have an increasingly short and burning fuse. Furthermore, nothing about our survival as a species matters if we keep adhering to an irredeemable set of living arrangements, even if your city has “walkable” neighborhoods. Who wants to live as if life has no merit?"

1 comment:

  1. Stunning overview of the current swarm of "no exit" economic issues. I would question the reference to a USGS opinion that 90% of the Alaska oil reserves are gone. That sounds like strategic disinformation to me and I will check on that one. What IS interesting is that Russia is now the world's numbah one source of oil, China knows this all too well, and the Saudis are wringing their hands and much less arrogant as they sink into second class oil nation status. Russia holds all the oil cards and we should watch carefully how those cards are going to be played. There is a lot to worry about and being able to walk city streets at night in safety is way down on my list. It is the massive solar flares and rogue asteroids that one must factor, and a host of earth changes which are quite simply bigger and meaner and more potentially terminal than Benny and his Inkjets, who are just pathetic puppets in the Empire Punch and Judeo show.