Tim Morgan at Surplus Energy Economics takes the risk of looking a little bit into the future of Modern Industrial Economy in his 250th blog post,
The Surplus Energy Economy, Part-5 , What Happens Next?
Dr. Morgan's thesis is that you only get to use the energy that is left after you spend energy to get your energy. It is that "Surplus Energy" which drives the trucks, trains, factories and farms of industrial economy. As more energy is required to obtain a gallon of diesel fuel, there is less for the rest of the economy. People get paid less than what their bills are, even when they quit going out for food and entertainment.
Some people are higher up in the stack, but in the US, the prosperity of working people has been in relative decline since I graduated high school in 1976. The US has had declining total prosperity per capita since about Y2k, so we got to watch the top 10%, the stock markets. Those were put on life-support in 2008-2009. "Zombies" is the financial term to describe these corporate life-forms now.
In part #4 he pointed out that China and the world in aggregate had this downturn of prosperity per capita in 2020, but that Russia has not yet had that downturn.
He points out that the decline in net resources and net energy is gradual, but that the relative cost of the net energy is already so high that established industrial economies cannot be sustained without cheap inputs from outside, which is what we see supporting the US economy, cheap imports for $US. This has been "papered over" with fake-promises of future wealth, which might be kept in a rapidly expanding economy of the 1950s - 1960s US or Europe, but not now, when real-economy is contracting. He comes to the inevitable conclusion that there will be defaults, and that current inflation will continue, as an expanded money-supply gets more and more diluted in its ability to buy real things.
Inflation will persist, and the ability to cover the cost of the essentials of life will become more of a struggle at all levels of society. Financial elites will be more threatened by the allocation-of-losses, which is bound to occur when notional wealth in the world is more than 10X real wealth. Massive losses will be assigned all around. The losses assigned to the dead are the easiest to deal with, followed by losses assigned to the terrified. Things that kill a lot of people become attractive. People who will be able to pursue their interests without effective coercion become a major threat to those who seek to maintain their wealth/power, and to impose all losses on the lower economic classes (99%).
There are threats to financial systems and currencies. Personally, I think that central banks are prepared to change over to a gold standard. They have long maintained gold-reserve parity, and bought the most gold in 2022 that they had bought since Nixon had to default on the gold-standard. This one-time adjustment would probably require a gold-price of 10X to 30X the current valuation, from what I have read. It does not require much trust. Central Bank Digital Currencies would require a lot of trust in a time of panic. Many are dubious, but central banks like the idea, because they keep getting something for nothing, and they decide how much everybody else gets, too.
What I see as the bigger threat is the sudden discontinuities when the music stops and there is one chair per 10 players. Some players have machine-guns.
I'm speculating on my own at this point, because I continue to see the conflicting needs of major financial owners to keep the economy going, and to keep their power and control undiminished. How can the threat to ownership be moderated so that every day it is a less threatening decision to negotiate a bit of loss of wealth, to maintain some comfortable control of relative position in the global oligarchy? Every day needs to be another day that nobody starts a nuclear war.
The US/NATO have more and more of their remaining geopolitical eggs in the basket of this nuclear threat, since they have nuclear war, the $US global financial regime, and advanced spying and propaganda networks as their primary assets. The financial extraction of wealth from the rest of the world, which is necessary to support western economies, as they are now structured, will stop when the financial regime changes to a level field of trade under a gold-based system. There will be no long term transfers of wealth from colonies to the financial centers of empire. Imperial institutions will collapse, as happened with the break-up of the USSR. The oligarchs of our world are all taking steps to induce the first stages of collapse to happen to somebody else. The US Fed is owned by US retail and commercial banks, and is purportedly seeking to make the ECB crash first. The Fed may succeed.
Still, implosion of political-economy in Europe does not assure the safety of American finance. European neo-colonization brings a financial collapse forward in time. How long will it be possible to hold European economies captive? Everybody knows who bombed Nordstream now, and the US/NATO want European sanctions on Russia to extend to China next? How much fear will be required to do that? What will be the economic cost of just creating that much fear?
Is there a valid rationale?
I've got a "maybe" for that. If we model an inevitable economic decline in industrial economy, as the real cost of real energy and raw-materials rises, how might this possibly be managed by those who are accustomed to being in-control? If unnecessary burdens are added to an economy, which can be removed later, then an economy is pre-choked, with an option to un-choke later. It is widely-observed that most green-economy measures like electric-cars and biofuels actually use a little more carbon and cause a little more pollution when the whole production-to-landfill cycle is analyzed. There are political interests pointing this out, saying that these green-mandates restrict economic-growth, and they are right. They assume that growth of the real economy will continue to be possible on this finite planet with declining oil, gas, coal and minerals. Probably not...
So, for those who cannot countenance a world where they are not the owners, we have the mysteriously rising excess deaths, each one the end of a claim against future wealth, which would compete with them. There are brakes on the productive economy of the USA, via outsourcing production, and mandating inefficient battery-car and electric-grid changes. Those changes will not be possible, and when the mandates are lifted, there will be some economic relief in the declining real economy. That is sort of a control lever. Those benefits would take years of re-tooling, which has energy and materials costs. At any rate, it is possible to modulate a gradual decline of industrial economy up and down at any given point in time to get political buy-in. The dead don't get a say...
What about that imposition of losses? It's really unjust to impose excess-death increases upon populations through secretly slow-poisoning them with a mandated "medical treatment". It occurred to me that this very mechanism, creeping towards the light of dawn, would be a potential mechanism of managing the imposition of vast losses of notional wealth in favor of non-elites,"vaccine victims". If it becomes accepted that the global mandates of gene-therapy Vaccine-products were a criminal conspiracy, a series of war-crimes against humanity, then it would facilitate reparations. If 90% of notional-wealth is to disappear, then those who participated could be forced to take the first round of losses, not (surviving) pensioners and current workers.
This would imply a change in the management of the power structure. Top level owners are good at avoiding loss of wealth, but this is also an unprecedented situation in the world.
Richard Heinberg looks at the looming debt crisis, the music stopping in that game of musical chairs. He points out a category of debt called "Theft Debt", which is debts that never could be repaid, Ponzi schemes, but also the debts of wealthy countries to poorer countries, who send resources and labor for promised eventual reward, and the theft from future generations, nature and other species, all "legal"... He looks at US Federal Debt, the service of which is a small part of the budget, but growing inevitably now. It must be paid by law. How will that work? He makes the point that learning to get by with less is the best lesson, the one that is not a trick, not a manipulation.
The Consciousness Of Sheep looks at this same breakdown of economies of scale at low energy prices, giving a different assessment of the viability of the communications industry business model for the "Fourth Industrial Revolution". Paradise Postponed
The communications sector faces an even worse death spiral than those opening up elsewhere in the economy. This is because a large part of communications – along with the technologies that might require 5G – are entirely discretionary. I might need access to a phone for emergencies. And I am currently pissed with the government and the banks for insisting I have a phone to verify online transactions. But most of the other things we do with phones, like sharing photos or watching YouTube videos, are entirely discretionary. Nor do I particularly need a refrigerator that is capable of doing shopping on my behalf, or a washing machine that I can operate from the other side of the planet. And don’t get me started on the complete waste of time and energy that is the proposed “metaverse.”
Crucially, as is the case in all death spirals, the communications networks depend upon mass use in order to remain profitable. That is, it is only because enough of us use our phones to watch videos, record our exercise routines, and do our online banking, that the communications industry can keep prices affordable to a critical mass of consumers. But rising energy, food and resource costs is forcing a majority of the population of Europe to abandon discretionary spending of all kinds in favour of maintaining essentials. And so, while communications “can” – in a legal sense – pass on their rising costs, economically they cannot because they will drive consumption down and thus lose the critical mass required to remain profitable.
The advocates of the third disruption will no doubt claim that this is merely about the correct allocation of money. Whether through a socialist redistribution of wealth or a fascist programable basic income, so long as we put enough money in the hands of ordinary people, they will continue to consume. This though, is also a mirage. Money has no intrinsic value but is merely a claim on future energy and resources. Indeed, the only thing which gives money its value is our shared belief that those resources will be there in future – which is why, by the way, governments and central bankers are so scared of inflation. But the situation we now find ourselves in is precisely that the energy and resources our currency is based upon are not there anymore – at least, not in the quantities and at the price we depend upon.
There are a lot of situational uncertainties. 2023 seems to have been dubbed "the year of poly-crisis", which might keep most of us off-balance, or on-our-toes.
Ukraine is reportedly poised to invade Transnistria, the Russian-area isolated between Ukraine and Moldova from the break-up of the USSR. "Moldovans" are supposed to attack from the other side, which actual Moldovans have never wanted to do, and are not prepared to do, so they will be soldiers from somewhere, advancing through Moldova. At the same time, secret negotiations between the US/NATO and Russia are reportedly underway, and officially denied. Threats may be raised for bargaining pressure in such a setting, like the western threat to attack Crimea. It is almost mud-season on the European steppes again.
It is hard to see what the rational intentions of the western financial and power elites may be in the current rapid-escalation of multiple crises, but Andrew Korybko tries, and he takes a different position than I have seen. Korybko makes the case that a Tri-Polar world is arising with "The Golden Billion" in the western camp, including neo-colonized Europe, which ahs been attacked to break it away from Russia, the "Russian-Chinese Entente", where China has been trying to maintain a mutually beneficial relationship with the "Golden Billion", but may now be unable to maintain that. That will "necessitate" EU "sanctions against China", which will be another attack on neo-colonized Europe, just as "Russian sanctions" have been.
What Korybko presents differently is the third pole of this global tripod, as being led by India, firmed up in the effective Global South Conference of January 12-13, 2023. The third pole will include India, Brazil, Iran, Turkey the BRICS and the SCO in a forum which will serve their national interests, not merely financial and military, but cultural and civilizational. India as the leader of this movement is a hypothesis which I will be keeping in mind and watching for as history unfolds.
Pepe Escobar explores the complex relationships of the 12th Valdai conference, preferring that "Middle East" be properly referred to as "West Asia":
Kayhan Barzegar of Islamic Azad University in Iran qualified the two major strategic developments affecting West Asia: a possible US retreat and a message to regional allies: “You cannot count on our security guarantees.”
Every vector – from rivalry in the South Caucasus to the Israeli normalization with the Persian Gulf – is subordinated to this logic, notes Barzegar, with quite a few Arab actors finally understanding that there now exists a margin of maneuver to choose between the western or the non-western bloc.
Barzegar does not identify Iran-Russia ties as a strategic alliance, but rather a geopolitical, economic bloc based on technology and regional supply chains – a “new algorithm in politics” – ranging from weapons deals to nuclear and energy cooperation, driven by Moscow’s revived southern and eastward orientations. And as far as Iran-western relations go, Barzegar still believes the Joint Comprehensive Plan of Action (JCPOA), or Iran nuclear deal, is not dead. A least not yet.
Egyptian Ramzy Ramzy, until 2019 the UN Deputy Special Envoy for Syria, considers the reactivation of relations between Egypt, Saudi Arabia, and the UAE with Syria as the most important realignment underway in the region. Not to mention prospects for a Damascus-Ankara reconciliation. “Why is this happening? Because of the regional security system’s dissatisfaction with the present,” Ramzy explains.
Yet even if the US may be drifting away, “neither Russia nor China are willing to take up a leadership role,” he says. At the same time, Syria “cannot be allowed to fall prey to outside interventions. The earthquake at least accelerated these rapprochements.”
Bouthaina Shaaban, a special advisor to Syrian President Bashar al-Assad, is a remarkable woman, fiery and candid. Her presence at Valdai was nothing short of electric. She stressed how “since the US war in Vietnam, we lost what we witnessed as free media. The free press has died.” At the same time “the colonial west changed its methods,” subcontracting wars and relying on local fifth columnists.
Shaaban volunteered the best short definition anywhere of the “rules-based international order”: “Nobody knows what these rules are, and what this order is.”
She re-emphasized that in this post-globalization period that is ushering in regional blocs, the usual western meddlers prefer to use non-state actors – as in Syria and Iran – “mandating locals to do what the US would like to do.”
A crucial example is the US al-Tanf military base that occupies sovereign Syrian territory on two critical borders. Shaaban calls the establishment of this base as “strategic, for the US to prevent regional cooperation, at the Iraq, Jordan, and Syria crossroads.” Washington knows full well what it is doing: unhampered trade and transportation at the Syria-Iraq border is a major lifeline for the Syrian economy.
Non-Financial Actor (took this picture of Jenny in the Yoakum garden recently)
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