Has Our Economy Hit Zenith?
Good Morning Middle America, your King of Simple News is on the air.
Markets around the world continue to plummet as the whole ugly sham of exponential growth begins to reveal the growing cracks in the foundation.
European markets are following Asian markets lower, home foreclosures in the U.S. have spiked by 71% in the third quarter, unemployment benefits and medical benefits will soon run out for some 700,000 people and the layoffs are continuous.
Chrysler is closing another plant and laying off 1825 more workers and the news that the only thing worse than GM taking over Chrysler is GM not taking over Chrysler seems to be sound logic.
What I’m trying to say this morning is that we are in far more serious trouble than most of us would like to believe. Julian Robertson, the famed 76 year old investor, stated that we have entered what will be a 10 to 15 year recession. If you think Mr. Robertson has a bad outlook, James Kunstler, the celebrated author of “The Long Emergency,” believes that have entered permanent decline.
Alert reader, Billy b, sent me an article with the opinion of six Nobel Laureates as to their positions on the economic issues that we currently face. All of which recommend the immediate implementation of radical depression era tactics. Work projects, extended unemployment benefits, government immediately taking over healthcare and other radical government intervention into a problem that government leadership created.
The terrifying part of their academic suggestions was that while they are aware that the U.S. is in crisis, not one of them even suspicions the actual reasons why the U.S. is in crisis.
We are getting down to the fish or cut bait part of this program, so I may as well scare everyone to death with my darkest beliefs. I very much accept as true that our economy has reached zenith for the premise of exponential growth to continue. We have hit the proverbial wall.
If in fact I am correct and the physical system, which is finite, cannot be expanded beyond our current $14 Trillion consumption based economy. . .all future bets are off. “The Biggest Lie Ever Believed,” will have come home to roost.
All future assumptions that support the continuance of our entire economic underpinnings are predicated on exponential growth. Medicare, Social Security, government retirements, road construction and maintenance, etc. etc. etc….are all unfunded; counting instead on continual growth to provide the $TRILLIONS of forward booked debt
All things living reach maturity. We don’t say, “I was going to climb that mountain this year, but I think I’ll wait until I get younger.” Our economy is a living thing and I believe that it has matured. No other country in the world has ever reached the per-capita level of consumption of the U.S., as all have reached their physical limits prior to that point!
I am very much soliciting input on my theory, that no different than oil, our economy has peaked. That is not a good thing for a country who has literally bet the farm on the foundational belief that man’s gross ignorance could trump natural physics.
Let me hear what you have to say. If you agree, we have a lot of work to do. If you disagree and have a sound argument to support your counter position, you will make me one happy man.
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Sorry to disappoint you Mike, but I agree wholeheartedly. I have felt for years that “something” wasn’t right. For instance how a person can make $10 million a year… what does he actually produce to make that possible? It never made sense and has been a big scam from day one. I really think we will eventually wind up back in a 1750 era economy, but only after a horrible upheaval. We have 5 billion persons on Earth who we cannot and will not feed. I can’t even really begin to imagine what the transition will look like.
Whenry,
Your point is well taken regarding the $10 million dollar men. Ridiculous, totally without merit or foundation and nothing more than white collar crime that is sanctioned by government leadership. In other words, normal human behavior when you let them play alone.
The transition in my opinion will not be gradual, but instead will decline very quickly.
Here is a little past history:
“We are not in recession and I don’t believe that we will go into recession.” — Alan Greenspan, Ben Bernanke, George Bush and others.
“The housing market will have a soft landing and rather than decline in price will merely gain value more slowly.” Alan Greenspan, Ben Bernanke, George Bush and others.
“All of these guys are lying to you.” — Mike Folkerth
Greenspan said that what we have here is a “once in a century credit tsunami”.
Why do they keep letting this guy out of his cage?
What is happening with our economy today is exactly what will happen EVERY TIME, anyone or any nation decides that they are smarter than simple math and physics. It will happen EVERY TIME anyone or any nation becomes so ignorant and arrogant as to actually believe that an exponential growth economy (or anything exponential ) can grow on indefinitely by manipulating the system in an attempt to fool nature and change the end result of the exponential function playing out.
The reason for these economic events is ignorance by the masses of our entire world, far beyond anything ever witnessed in the history of our planet earth. The wonder of all wonders.
Our new form of rule, coming very soon (communism) will seem comforting compared to where we are headed over the next 10 -20 years, if the people (I did not say politicians) of our nation do not wake up and become an informed, participating mass once again.
Regarding your article yesterday, Mike. I still insist, Kunstler is a rabid optimist along the lines of his 18 month forecast to really hard times in this country. We will be very lucky to make it to the end of this year before all the shoes fall and the lid slams on our pampered, ignorant, just plain dumb view of the our country’s politics and the world, that we so enthusiastically hone from the sound bites spun on our TV sets daily.
If you are interested in becoming informed and truly knowing why we are where we are and what can and should be done about it (unlike the 1/2 dozen noble prize winners Mike referenced); Research any site that contains Ron Paul’s writings to begin with. After researching the top 16 presidential candidates who ran for office, I found that Dr. Paul was the only one who never lied, even once, throughout the entire campaign. He is a wealth of information on how we should be managing our business; what is wrong, why it is wrong and what we should be doing to correct our mistakes. Not one of the other candidates is capable of this fairly simple task. There are many other sites and books available and I am sure that Mike would be happy to share these with those who are interested.
In the mean time, if you are not preparing for the worst case, believe me, you are being very, very foolish. -bb
Billyb,
Of course you are correct about the Communism point, it will look like the Radison compared to the life that most people will be living and will be welcomed with open arms at which point we will learn that no matter how bad the situation seems, it can get worse.
As the day goes on, more and more announcements are being made of giant layoffs as the $850 Billion bailout works it’s magic.
Any politician who voted for the $700B+ Bail Bill or push for it’s passing or is in the process of pushing another Bail Bill, should be run out of town on a rail.
All of the politicians running for office, presidential included, who voted for the Bail Bill shold not receive even (1) vote during the upcoming elections.
Those who choose to vote for one of these thieves, will be just as guilty of sealing the fate of us all as the scum responcible for the vote’s passing itself. -bb
Mike.. Rather than clarify anything, this may cloud the issue.. I have heard you reference interest on money as contributing to exponential growth.. I don’t understand this..
I consider money, or financing a commodity, just like a tool.. Interest is the cost, or rent for that commodity.. I see no difference between the person who rents a building, and the person who owns and is paying interest on a mortgage for a building..
Maybe you can explain where I’m wrong?? Or, if I’m wrong..
We all understand how credit is growing the supply of money.. If a bank has ten percent in reserve, it multiplies money by a factor of ten.. Now, we see how that works when everybody gets into the act..
WmA…
Here’s an interesting article that meshes with this topic ( http://carolynbaker.net/site/content/view/808/1/ ). I agree with it in essence, that “civilization” has always been a fraud, a hierarchical scheme by people driven by a lust for power and money.
I don’t think “civilization” is actually necessary, contrary to what we’re always indoctrinated to believe. Look at the animal world. It seems to function better than the human one! People decry the “law of the jungle,” but is the law of humans, what with their endless wars, actually superior?
Dave
http://daveeriqat.wordpress.com/
Desperate times call for desperate measures. Look at some of the headlines this week and connect the dots.
1. Joe Biden ‘this is more than just a capital crisis, this is more than just markets. This is a systemic problem we have with this economy.’ Joe Biden slips and lets a few cats out of the bag. The global economy is well on its way to collapse.
2. Economic Summit called for November 15th – Group of 20 Nations gather to discuss and put in place the framework for a One World Currency. Is the global economic collapse and One World Currency the crisis that Joe Biden is talking about?
3. India, China, and Japan all have moon missions why? A case of too little too late. They are looking for more raw materials and more energy sources.
Here’s a portion of an interview by ABC News with Professor Robin Jeffrey
http://www.abc.net.au/news/stories/2008/10/22/2398387.htm
This particular mission is to find a new energy source, helium-3 isotopes, the discovery of which could come as a major benefit not just to India, but also to the rest of the world. Professor Jeffrey agrees that what it may come down to is India’s need for energy - just like the rest of the world. “India is energy hungry and energy poor at the moment and, to make that great modern India that the leaders are aspiring to, energy is going to be one of the key things,” he said. “So if they find something in space I’m sure it will be very welcome.”
There is a bumper sticker I’ve seen on a number of trucks around here, we are a coal mining community; ‘EARTH FIRST, we’ll get to the moon and other planets next’
I used to laugh, now I cry when I see the irony in what was meant to be funny.
All of this and no mention of population control. All we need is more energy in India and it will suddenly become utopia huh?
What a bunch of loony tunes we are.
Wma, On your question of compounding interest, the very premise of anything compounding exponentially rules out sustainability when applied to anything finite. Our effort to circumvent that physical law is what precipitated going off the gold standard.
Rent is not an exponential equation, it is a linear equation that is payable at a fixed rate. If rent grew exponentially at a given percentage, such as interest does, the rent would increase month after month, doubling and quadrupling over time to a point that it could no longer be paid.
Money cannot be allowed to grow unrestrained as is the case with compounding interest, as it creates an imbalance against the material and energy system. The material and energy systems are constrained by physical laws while the printing of fiat currency is not. The result is purposefully induced inflation and eventually hyper-inflation.