Monday, August 29, 2022

Trust And Consequences

 Societal Participants,

  Reading Marx the other day helped me get perspective on changes-of-system. Marx's world was changing from the ancient feudal system to the new industrial economy. Everybody was displaced. Nobles didn't like it, and said so. Newly-landless peasants didn't like it, and had no say; just died young. Life expectancy in England among factory workers was 28 years. Three of Marx's 6 kids lived to adulthood, and their lot was much above average.
  Around 1848, when Marx was writing Das Kapital (which was a paid job, with content he had to include) Europe was going through revolutions to end the old monarchic system, and industrialists, and their factory outputs, drove these revolutions in Sicily, France, Germany, Italy and the Austrian Empire. Naturally, proletarian revolution, which was already underway, and the platform of the Communist Party of Germany, which commissioned wordsmith Marx, was advised. Marx didn't feel this way later, but everybody liked the original rousing call to arms, and wondered why he didn't go further with all that.
  By the time Marx died in 1888, the productive-engine of industrial economy had created more ecological niches for humans than just owner and laborer, so the Marxian synthesis based on owner-laborer tensions became increasingly obsolete. Otto von Bismark, Germany's "Iron Chancellor" was a master of that transition, becoming chancellor of Prussia in 1862, and remaining chancellor of united Germany until 1890. Bismark mended a lot of European economic problems.
  Now, with energy resources becoming more expensive to extract, and in shorter supply, due to depleting the easy reserves first, and the same things happening with fossil-water in China and the US, and lithium, copper  rare-earths, and stable patterns in the oceans and atmosphere, we need to look at everything as it is.
We need to look at ourselves, humans as we are, and the failing , corrupted global wealth-management system as it is.

  How do we manage to cooperate? Cooperation on big tasks, especially big tasks over an extended period of time, is our most powerful asset. Groups of people coordinate without structure when fairly small, under 150. The Romans used 100 men as a military group, with a Centurion over them. Centurions reported upwards and commanded downwards. It worked. We see that pattern everywhere. At each layer a lot of information is discarded and simplified. Commands going down multiple layers tend to get cumbersome and stupid by the time they reach the level of the people  who have to carry out orders. 
  As systems get bigger, they need more command-and-control layers, which are expensive, and reduce task-appropriateness at ground level, when they are working optimally. They get worse over time, because the top layers are soon just giving orders to suit their selfish interests, which really degrades the functionality of the whole system to do whatever it was designed to do.
 "You Are Here", of course, as are we all.

  Bureaucratic systems usually have self-correction features designed-in. These are expensive, like long lists of government regulations for military parts production, but the system gets dysfunctional too quickly without these features, so it is the cost of sticking-around at that level of size and complexity.

  Feudalism was a system with a command and payment hierarchy that went from King to serf and back, and mostly did nothing except trickle-up some food and work and wealth. Occasionally the king called for workers or an army. The king and nobles operated a protection racket, promising protection from other kings and nobles.     There were some skilled tradesmen. This kind of system arose throughout the world with local variations. There was not necessarily "trust", because wherever you lived, it was just the world as you knew it. 
  Industrialization destroyed that system, but it provided a flow of stuff, and human societies had to learn how to channel the flow of stuff. It turned out that factory-economy was unbalanced, so some balance was created by exporting weapons to un-industrialized countries, via armies that stole their stuff, made them buy the outputs of factories, and killed anybody who got in the way of that plan. World War-1 almost destroyed that colonialist model, and WW-2 did finish it off, because it was not an efficient use of human resources, natural resources, or factory outputs, compared to a financialized global economy without overt enslavement of peoples, just financial enslavement...

  Also following WW-2 there was further experimentation with hierarchical/totalitarian command-economy vs distributed control of economic decisions about production, consumption and trade. There is no pure system, of course. Any system has mixes of local-control and hierarchical control. Importantly, when a system collapses and reforms, its bureaucratic institutions are new and the corruptions of time have not yet set in. At the end of WW-2 the US had most of the bank-owned gold in the world, because  FDR devalued the dollar against gold so that the rest of the world sent gold to the US for American factory goods. The US also had a completely unbombed factory production system, and lent to European countries for cheap so they could buy American stuff and rebuild. That made total western economy grow. Everybody in the Marshall-Plan countries liked it. The command-economies of the USSR and China did similarly well at first, but could not keep up after a decade or because of lower efficiency-at-ground-level, evidenced as making millions of left-boots and the "Cultural Revolution".

  "Winning the cold-war" encouraged the accelerated corruption of western financial-imperialism. Under the Cheney-Bush regime US/NATO sought to control all of the countries producting "easy oil" and cheap commodities through the "Global War On Terror". This changed the equation from the benefits of "capitalism" being attractive to the fear of getting treated like Iraq and Libya got treated. It was costly to support this global military, so maximum tribute had to be extracted from all the tribute paying countries, and maximum-pressure had to be maintained to keep non-tribute-paying peoples suffering (Cuba, Venezuela, Iran).

  The dominant western financial system has been internally corrupt, as evidenced in 2008, and it was not improved after that, merely made more promises of future profits and dropped more bombs. The internal-losses of gross corruption are invisible to most of us, but hinted at: "Derivatives are weapons of financial mass-destruction". The overt costs of the western financial-imperialist system to support western military are also very high. There is no carrot, only stick, and now Europe is getting the stick to keep the corrupt system from collapsing. This is a very-short-term reactive measure, not even a medium-term can-kicking.

  While the dominant global trade system, based on the $US, which is just a floating-currency, based on the ability to buy oil with it, and pay debts in it, has very high costs, maintained by fear, it is also creating a new crisis. The crisis is the shortage of food and oil. This can drive indebtedness a little farther, and can drive all of the people using this system into further austerity, or crisis-and-death. This is desperate for the system because it also reduces system-efficiency to just keep it intact.
If there was any choice other than freeze, starve or both, any rational person would take it.

  Rational people get to make their own personal decisions, but big decisions for nations, governments and corporations are made by "representatives", who are subject to bribes and threats within the system. That helps keep the system working. It's a cost of the current system. At some point, like in Sri-Lanka recently, the people come after the "representatives" of the system. The people are without any working support system at that point, and have lost all trust in representatives.

  Lack of trust in representatives, and lack of trust in the system are good internal-control mechanisms to sustain the functionality of the system. Russians are purported to deeply and broadly distrust their political and economic system. Chinese are constantly trying to protect any wealth they have by getting it and some family members to manage it into other countries, though that is made very difficult by the government. 

  Most of us born in the west since 1924 have little recollection of anything other than the postwar Bretton-Woods based system, and the post-gold version based on the "petro-dollar". Like the medieval-serfs, it's the only world we have ever known, "the world".  There is not much to trust or decide about, since we know of no other option. We may have a house or mortgage, but there is a lot of "rent" payable to banks and governments with that. We have to earn money within the system or soon become homeless. More and more become homeless.

  The rest of the world-of-nations now has choices forming between the corrupted and very expensive global-financial-imperialism model and a new model, the BRICS model of global trade and finance. There is a BRICS Bank. Instead of using petrodollars as the reserve currency, upon which deals are calculated and contracted, the BRICS system uses either bilateral currency swaps, or a combination-basket of currencies and commodities (wheat, oil, gas, gold, etc.). It also needs electronic security. It is bound to already be undergoing attacks. The potential long-term payoff is the efficiency of not needing to support a destructive global military threat and rapacious financial resource and wealth extraction schemes.

  The short term payoff to adopting the new system, as soon as it gets a perceived "critical mass", will be the option to repudiate existing $US debt. The group of countries that stands to benefit the most from that is the group of countries which owes 75% of that debt, North American and Western European countries. Right now, the screws are being put to Western Europe to undergo energy and financial austerity to support a regime in Ukraine that conscripts any man it can catch and sends him to a trench with a rifle to die by Russian artillery, in order to support the American military-industrial-complex and Globo-Cap, which owns it.

  Humans coordinate their efforts in groups through our natural abilities, coordinated by hierarchies and bureaucracies, and based upon habit, trust, self-interest and fear. As our bureaucracies and institutions age, individuals find more and more ways to insert straws into them to suck out the flow of resources, lowering system-efficiency. As that process goes on, only fear remains as a coercive motivation, and there is the force of habit. Every four generations or so, a system collapses, usually as another, more efficient system is arising next to it, and presenting a choice, at least to some participants. The new system always has some problems to work out, but they are worth working out because of efficiency. There is usually also a sweetener. As feudalism was replaced by factories, the peasants lost their right to the land, and the new business class got a lot of it. The new business class became the new center of power. They ended up finding ways to share to keep the society from breaking down in revolutions.

  At this point in history the engines of industrial production are past their peak, and will keep declining in total output. The days of making a lot of anything being the road to competitive-success are closing. The current class of global-financial-capitalist owners do not support the wellbeing of any society or nation. They extract the wealth of nations for themselves. They rely on nations to enforce their "property rights", which are denominated in $US. That enforcement is carried out through global military threat and the control of trade routes and financial mechanisms. There is profit for fewer and fewer humans in this system, and the representatives who serve their interests are more and more obviously harming the lives of the people who elect them, and the people are noticing. This does not make the news, but awareness is growing, even as it is broadly misrepresented to control hungry and desperate people. 

  Trust is built up gradually over a long time, and over the course of many tests. Trust remains in the $US financial system for fewer and fewer people in even the west. The Europeans are undergoing a crisis, and the (grrr) Russian Bear keeps not biting them, as they grow hungrier and more desperate and can't pay bills. They are told to look forward to 10 years of cold and hunger. The boy crying "Wolf" is the corrupt representatives, who are preparing for a winter of discontent, but they can't really prepare, because that would mean changing sides. Changing sides would mean accepting what the people need from the Russian suppliers of gas and oil, as they are doing by subterfuge, already. This winter, subterfuge will not supply enough gas and oil and there will be an energy crisis in Europe, rolling blackouts.

  The alternative is to give up on the Ukrainian government beating Russia, which everybody knows is impossible, and to open the Nordstream-2 pipeline.
That would cause the coming collapse of European financial institutions to come at a time when reliance upon Russian energy had been broadly accepted. 
The acceptance of Russian energy as a practical part of European economic survival would mean that the progress of a financial restructuring would include this as a basis. That would mean that the $US system would not have primacy in every way. It could not be used exclusively. This would mean that Europe would use parallel financial systems. As time proceeds one financial system will be preferred every time a deal must be done. Over time, the more efficient system will be used more often. This appears to be the nascent BRICS system. As the BRICS system reaches some tipping point, the obvious solution to many problems will be to default on $US debt and eliminate the cost of debt service.

  Each of us will need to work on local efficiencies of survival this winter. The global crisis of food and fuel is already set-in-motion, even if it causes the $US global financial system to collapse sooner. That engineered crisis of hunger and desperation to support Globo-Cap is discussed here:
How “Food Shortages” & Economic Collapse Protects the Status QuoEngineered Food & Poverty Crises Secure Continued US Dominance ,Colin Todhunter

  Consciousness of Sheep has this complimentary essay (or audio) about "Cost Push Prices", which looks at the current decline of cheap resource availability as raising prices after decades of globalisation lowering prices, and that there is no fix for it with tightening money supply. Money is tight already. That worked back in the days of plentiful cheap resources, when worker's wages could just be suppressed, but it brought us to this time which is more like 1848, when workers had so little as to favor the flames of revolutionary fervor. The social contract has been broken by the owners, and killing off a bunch of folks is not going to be a path to a society that can cooperate on big projects, such as we face.

  Not really explained here is that the countries that are "enforcing sanctions" are only "enforcing" them. The Economist is a Rothschild-owned publication.
Sanctions war isn’t going as planned – The Economist

  Whence cometh the butter for thine bread?  
Only one in three UN members back new anti-Russia resolution
International support for Ukraine has dropped dramatically since March

  In April, Bulgaria refused to pay for its contracted gas from Russia in Rubles, but Euros were made useless to Russia. Bulgaria quite receiving Russian gas. Bulgaria has contacted Russia in regards to reactivating that contract, presumably to pay in rubles, and to extend the terms of the contract, in order to buy the entire amount of gas, by means of extending the delivery-months lost since April into 2023.

  Any "reason" counts to justify an action, necessary for survival. This moral-high-ground will be easier and easier to "hold".  
German Lawmakers Break Ranks, Demand Halt To Weapons For Ukraine Amid "Escalation Spiral"
  As predicted, Europeans weary of being told to make "sacrifices" in what for them is a somewhat distant conflict on the continent's eastern periphery will reach a point of saying enough... for some within Scholz previously pacifist Social Democratic Party, that time is now. Yet critics of the letter are already calling it "capitulation" and other denunciations which come close to essentially saying the signatories are 'traitors' to the German and European cause while standing up to Russian aggression.

  Charles Hugh Smith ,   Economies can burn out, too, and they're already sliding into the final stages of burnout.

  Thanks Germ:  ("Effectiveness" is a one-way measure. "Efficacy" can be positive or negative. The vaccines have markedly negative efficacy this year.)
Increasing SARS-CoV2 cases, hospitalizations and deaths among the vaccinated elderly populations during the Omicron (B.1.1.529) variant surge in UK
  CONCLUSIONS There is no discernable vaccine effectiveness among ≥18 years of age, vaccinated third dose population since the beginning of the Omicron variant surge...

H​ome Economist (pictured with Jenny in shade of banana plants)​

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