Which Nations Will Crumble and Which Few Will Prosper in the Next 25 Years?

Adaptability and flexibility will be the core survival traits going forward.

What will separate the many nations that will crumble in the next 25 years and those few that will survive and even prosper while the status quo dissolves around them? As I explain in my recent book Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic, the factors that will matter are not necessarily cultural or financial; being hard-working and wealthy won't be enough to save nations from coming apart at the seams.

Here are the factors that will matter in the next 25 years:

1. The ability to engage and survive non-linear change, which is rapid, unpredictable and systemic, as opposed to linear change which is gradual, predictable and limited in nature.

None of the current political systems are decentralized enough and adaptable enough to survive the non-linear era we're entering. As I explained in What If Politics Can't Fix What's Broken?, the politics of centralized compromise and incremental, top-down adjustments are wholly inadequate to dealing with non-linear disruptions.

2. The nations that cannot jettison their parasitic elites will fall; the few that find the political will to jettison their parasitic elites will have the wherewithal to survive and possibly even prosper as the global status quo collapses around them.

The problem, as we all know, is the parasitic elites rule the centralized hierarchies of wealth and political power, and they will cling to power even as the nation they rule crumbles around them. The hubris, complacency and greed of the ruling parasitic elites is near-infinite; the idea that the political and financial structures that they dominate will not survive simply doesn't exist in the parasitic elites, with the exception of a few outliers who are constructing remote bugout compounds with landing strips etc.

Unfortunately for these outliers, they can't escape satellite and drone imagery, or the loose tongues of employees, contractors, etc.

By the time the populace awakens to the precariousness of the entire status quo, it will be too late to effect meaningful change via removing the parasitic elites from power. Just as Rome was too hollowed out to survive by the end, the status quo structures will be too enfeebled to adapt quickly enough to survive.

3. Centralization of wealth, power and control has been the "solution" for hundreds or even thousands of years. We're approaching Peak Centralization and the systemic failure of centralization as the "solution" to anything.

The only sustainable solution going forward is radical decentralization of capital, political power and control of resources. The parasitic elites rule solely because wealth and power are so highly concentrated in the hands of the few. As the financial and political systems unravel and fail, solutions that are completely outside these centralized hierarchies will arise--if the populace is free to embrace them.

4. Solutions will obsolete the existing centralized financial and political structures. Reforms will all fail, as the parasitic elites will never relinquish their control or power. The "solution" will be the total collapse of the centralized financial and political structures and the parasitic elites that control them.

5. Adaptability and flexibility will be the core survival traits going forward. The only structures adaptable and flexible enough to respond quickly and effectively enough to survive are decentralized networks-- non-hierarchical, distributed rather than centralized, self-organizing rather than top-down.

Few if any of the "leading citizens" of Rome anticipated its collapse 20 years prior to the implosion. That is as true of the parasitic elites now as it was then. Collapse is truly "impossible" in the current mindset; it isn't even conceivable that what works now will stop working. But complacent belief in the permanence of the status quo doesn't stop friction or rust, nor will it stop collapse.

As an American, I hope the citizenry comes to understand the choice is simple and profound: either tolerate the dominance of our numerous parasitic elites and watch the nation come apart and fail or jettison the centralized structures the parasitic elites need to enforce their dominance.


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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The Neutered Fed Is Politically Trapped

Everyone now knows that the only meaningful goal of Fed policy is propping up the world's greatest credit-asset bubble.

In this era of fake news and deep-fake digital recordings and images, it's important to use unedited images. With this firmly in mind, here is an unedited photo of Federal Reserve Chair Jay Powell and former Fed Chairs Janet Yellen and Ben Bernanke from their recent unprecedented appearance on 60 Minutes:

The purpose of the Fed chiefs' dog-and-pony show was to promote the notion that the Fed really really really (try not to laugh out loud) "cares" about the average American, even though 85% of the $30 trillion in gains generated by the Fed's policies flowed to the top 10% and roughly two-thirds of the gains flowed to the top few percent.

The bottom 80% got essentially nothing except a drastic reduction in the purchasing power of their stagnating wages. If this is how the Fed "cares" about average Americans, I wonder what they'd do if they chose to impoverish average Americans. Oh wait a minute, they already did.

I've covered this in recent essays:

The Fed's "Wealth Effect" Has Enriched the Haves at the Expense of the Young

What Killed the Middle Class?

It's All About Who Reaps the Gains (Asset Bubbles) and Who Eats the Losses (Stagnating Wages)

What triggered the unprecedented propaganda-fest of the three Fed monkeys? The realization that the Fed is evil is seeping into public awareness, and the Fed honchos are awakening to the reality I've spoken to here many times: the Fed is now constrained politically in terms of how far it can go to bail out the banks and the super-wealthy again.

Speak no evil (Jay Powell), see no evil (Janet Yellen) and hear no evil ("I saved the fortunes of the super-rich, oops I mean the world" Ben Bernanke) were trotted out to deny the Fed is evil, which only confirms that the Fed is in fact evil. Why else line up the Fed Chairs like school kids giving their book reports?

The Fed is now trapped by three dynamics:

1. It has been neutered by the stock market--nobody believes the Fed is "independent" or that it "cares" about anything but the market and the financial aristocracy who own it.

2. It can't force people to borrow and spend or lenders to lend to poor credit risks.

3. It is finally being recognized as the key driver of widening wealth and income inequality.

Some may claim the December stock market swoon "tutored" the Fed, but it was actually neutered: Fed credibility is a bad joke as everyone now knows the Fed is the stock market's slave. And since the top 10% own the vast majority of stocks, the Fed is the slave of the financial aristocracy. Everything else is fancy footwork, obfuscation and propaganda.

Everyone now knows that the only meaningful goal of Fed policy is propping up the world's greatest credit-asset bubble because the Fed has elevated the stock market to the benchmark for the entire economy. Nothing else matters, and oh, by the way, the trillions created out of thin air by the bubble belong to the already wealthy.

While the Nation Fragments Socially, the Financial Aristocracy Rules Unimpeded

As noted in The Coming Crisis the Fed Can't Fix: Credit Exhaustion, the Fed can't force households or corporations to further burden themselves with additional debt, nor can it force lenders to give "free money" to borrowers who are guaranteed to default. Rather than possessing godlike powers, the Fed is toothless. The only power it has is to inflate asset bubbles that benefit the few at the expense of the many.

This chart shows the precise effect of Fed policies since 2008: a vast, unprecedented expansion in the wealth and income of the financial aristocracy at the expense of everyone below.

Any questions about why the Fed is politically trapped? How much more of this will the American public be able to stomach before a populist from the left or right or heck, even the center, publicly call out the Fed's backstopping of the stock market as the driver of soaring wealth-income inequality and demands the Fed be stripped of its power to protect and reward the banks, financiers and the super-wealthy?

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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While the Nation Fragments Socially, the Financial Aristocracy Rules Unimpeded

America's aristocracy is not formalized, and that's the secret of its success.

If there is one central irony in American history, it is this: the citizenry that broke free of the chains of British Monarchy, the citizenry that reckoned everyone was equal before the law, the citizenry that vowed never to be ruled by an aristocracy that controlled the government and finance as a means of self-enrichment, is now so distracted by social fragmentation that the citizenry is blind to their servitude to a new and formidably informal financial aristocracy.

From this juncture, ironies abound: the so-called Socialist demands for Medicare for All, "free" college for all and Universal Basic Income (UBI) are encouraged (or perhaps orchestrated) by the financial aristocracy, which rakes in tens of billions of dollars in profits from its banking, healthcare, national defense and higher education cartels: throwing more trillions down the ratholes of Medicare and higher education will only further enrich and empower the financial elites.

As for Universal Basic Income (UBI), the financial aristocracy is cheering loudly for UBI, which would enable debt-serfs to keep servicing their debts. (Is anyone so naive to think that UBI won't have a clause which enables the deduction of debt payments from the monthly "free money"? Does anyone think the financial aristocracy is going to give $1,000 a month to debt-serfs and then let them default on their debt? Get real!)

The demands for social justice, i.e. that everyone be allowed to be treated the same before the law and enjoy the same rights as other citizens, is a core tenet of American culture. Long before the Constitution was even ratified, the calls to end slavery were becoming louder. Long before women won the the right to vote, the calls to treat women equally before the law were gaining ground.

In the long sweep of U.S. history, the rights of gays to marry and other contemporary social justice issues are of a piece with all previous drives to eliminate disparities between the way individuals are treated before the law. This is of course as it should be: this was a core value of the revolutionaries, as limited as it was in that era, and this drive is largely what makes America America.

Equally important was the cultural drive to never be ruled by a neofeudal aristocracy or let an aristocracy form in America. Yet this is precisely what has come to pass: we are ruled by an informal but oh-so neofeudal aristocracy.

As social justice controversies fragment the increasingly economically precarious populace, a financial aristocracy has arisen that rules the nation behind the screens of "meritocracy" and "equal rights." No one is more in favor of equal rights and the abolition of social privilege that the members of the financial aristocracy, who have no need for social privilege since they control the real source of power in America: proximity to credit and newly issued money.

(Look at the liberal leanings of the Silicon Valley, L.A., Boston and NYC elites. They all love whatever distracts everyone from scrutinizing their power, and love recruiting fresh talent to slave away for their private empires.)

With this wealth, the financial aristocracy buys political influence for piddling sums and scoops up most of the low-risk productive assets of the private sector.

The core structure of the financial aristocracy is the state-cartel, the cartels that are funded and enforced by the central state: higher education, healthcare, national defense, banking, mortgages, student loans, etc.

For the financial aristocracy, the federal government is their personal enrichment machine, collecting trillions in taxes and borrowing additional trillions which are funneled through the state-cartels.

The number of seats in the American aristocracy is extremely limited, and so the top 5% are willing to go to extreme lengths to get in the first class lifeboat as the Titanic takes on water. This manifests in all sorts of ways, including the elite college admissions scandal.

While social justice proponents focus on divisive distractions, the financial aristocracy is tightening its control of the nation's economy and political order.As everyday life, civil liberties and economic security all become increasingly precarious for the bottom 90%, the divisive focus on social privilege becomes a useful distraction for the financial aristocracy, which also controls the mainstream media.

America's aristocracy is chuckling with great amusement as society is torn to pieces by media-circus sideshows. America's aristocracy doesn't need any titles or overt class distinctions as the aristocracy of old had; this would only call attention to their dominance. The ideal arrangement is a society shredded by social-media-driven fabricated divisions and a profound apathy to the actual structures of power, wealth and control.

America's aristocracy is not formalized, and that's the secret of its success.The power and control are exercised behind the formal machinery of governance and finance, and this structure protects the aristocracy from scrutiny.

So by all means demand Medicare for All and UBI: the aristocracy is heavily promoting these expansions of its wealth and power. Just as the Roman elites favored distributing free bread to the disenfranchised masses and the staging of Netflix binge TV watching--oops, I mean circuses-- so too does America's aristocracy favor UBI, Medicare for All and a fragmented society in thrall to disunity.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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The Coming Crisis the Fed Can't Fix: Credit Exhaustion

Thus will end the central banks' bombastic hubris and the public's faith in central banks' godlike powers.

Having fixed the liquidity crisis of 2008-09 and kept a perversely unequal "recovery" staggering forward for a decade, central banks now believe there is no crisis they can't defeat: Liquidity crisis? Flood the global financial system with liquidity. Interest rates above zero? Create trillions out of thin air and use the "free money" to buy bonds. Mortgage and housing markets shaky? Create another trillion and use it buy up mortgages.

And so on. Every economic-financial crisis can be fixed by creating trillions of out thin air, except the one we're entering--the exhaustion of credit. Central banks, like generals, always prepare to fight the last war and believe their preparation insures their victory.

China's central bank created over $1 trillion in January alone to flood China's faltering credit system with new credit-currency. Pouring new trillions into the financial system has always restarted the credit system, triggering renewed borrowing and lending that then powered yet another cycle of heedless consumption and mal-investment--oops, I meant development.

The elixir of new central bank money isn't working as intended, and this failure is now eroding trust in the central bank's fixes. Central banks can issue new credit to the private sector and it can can buy bonds, empty flats and mortgages, but no central bank can force over-indebted borrowers to borrow more or force wary lenders to lend to uncreditworthy borrowers.

Let's be honest: the entire global "recovery" since 2009 has been fueled by soaring debt. The output of more debt is declining, that is, every additional dollar of debt is no longer generating much in the way of positive returns. As with any stimulant, increasing the stimulant leads to diminishing returns.

Then there's the issue of debt saturation and debt exhaustion: those who are creditworthy no longer want to borrow more and those who are not creditworthy cannot borrow more, unless lenders want to eat the losses of default a few months after they issue the new loan.

The evidence is plain enough: defaults of student loans and auto loans are already at monumental levels, and the recession hasn't even started. Zero-percent financing for vehicles is a thing of the past, and those borrowers with average credit ratings are paying 6% or more for a new vehicle loan.

Coupled with the ever-higher prices of vehicles, this is leading to auto loans of $600 and $700 a month and lenders extending the duration of the loans from 5 to 7 years. Just how badly do households need a new vehicle at these rates and prices?

As for housing--unless the buyer just sold a house in a bubblicious market and has hundreds of thousands of dollars in cash, housing is out of reach of the bottom 95% in many markets. This raises the other dynamic of credit exhaustion: the whole exercise of buying a home or dumping more money in stocks is ultimately based on greater fools arising who will pay substantially more that the buyer paid today.

Greater fools generally depend on credit to finance their purchase, and so the erosion of creditworthy borrowers means the pool of greater fools willing and able to pay $1.2 million for the old bungalow someone paid $1 million for today is drying up fast.

Only a fool buys an asset that is poised to lose value as the pool of future buyers dries up. No wonder insiders are selling stocks like no tomorrow, and housing markets have become decidedly sluggish: the pool of qualified borrowers who are willing to bet on another decade of central-bank goosed "growth at any cost" is shrinking rapidly.

The next crisis won't be one of liquidity that central banks can fix by emitting additional trillions; it's a crisis that's impervious to central bank manipulation.The credibility of central banks is already evaporating like spilled water in July-baked Death Valley.

Central banks cannot magically make uncreditworthy borrowers creditworthy or magically force those who have forsworn adding more debt to borrow more at high rates of interest, and as a result they are powerless to stop the tide of credit from ebbing.

Thus will end the central banks' bombastic hubris and the public's faith in central banks' godlike powers, the "global growth" story, the China story, and all the other fairy tales that have passed as policies for the past decade rather than what they really were: politically expedient cover for the greatest expansion of inequality in modern history.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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A Precarious Revolution Is Brewing

Once again profound social and economic forces are changing the nation in ways that are difficult to understand in real time.

The American Revolution arose not from politics but from rapid social and economic changes that revealed the precariousness of the colonists' prosperity. Conventional histories focus on the political context (Boston Tea Party, etc.), but more important were the changes in social relations, and the impact of the economy moving from quasi-feudal forms of patronage to an economy of impersonal market forces.

The political revolution was the result of profound shifts in social and economic structures.

As Gordon Wood explains in his seminal book The Radicalism of the American Revolution, it was these social changes that nurtured the revolutionary zeal of the average (non-elite) male citizen.

Americans came to appreciate the precariousness of their prosperity, and this led to a deep split in the populace. Around 25% to 30% of the populace remained loyal to the British Crown/King, and these Loyalists reckoned it a political and economic disaster to separate from the "Mother Country."

The majority felt the exact opposite: their prosperity and liberties were all too easily snatched away by a Parliament and/or a Monarch who had little to no regard for their prosperity or liberties.

The precariousness of the relatively widely distributed prosperity and political liberties drove average people into an all-or-nothing choice: there was no middle ground, and the bitterness of the divide was life-changing. Benjamin Franklin, for example, completely cut off his eldest son when the son remained a Loyalist, despite the decades of affectionate intimacy they'd shared.

Such prosperity and liberties that existed were reserved for Caucasian males, of course; women had the right to divorce and own property but no political suffrage, and slaves had no rights unless they were freed by their owners.

The social changes in the family and economy Wood describes are of especially keen interest, as they mirror the present era in so many ways. Parents in the 1760s were admonished to treat their children as individuals and to use reason rather than punishment. Parental authority was thus reduced from rigid authoritarianism to a much more nuanced and difficult process of nurturing and guidance--a process familiar to every parent today.

The economy was changing rapidly as well, as the lines of authority that were once personal became market-contractual. Where small farmers in the early 1700s sold their harvests to gentry planters or merchants, by mid-century Scottish trading houses were buying small farmers' harvests directly, requiring written contracts rather than personal trust.

Small farmers made more money, and the landed gentry lost power over the flow of goods.

This disruption of traditional authority stretched from the home to the marketplace and ultimately to the British Crown and Parliament, which saw the rebellious colonists as wayward children who needed a good lashing to set them straight.

All of which brings us to the present, when once again profound social and economic forces are changing the nation in ways that are difficult to understand in real time. Traditional authority is weakening, and traditional social relations and markets are being disrupted, leaving most participants far more financially precarious than they were a few decades ago.

To take one important example: where owning a home once meant counting on slow and steady appreciation of home equity, in today's bubble-and-bust economy, timing is everything: poor timing can trigger the loss of one's down payment and home equity, and capturing that equity requires selling at the top.

As I noted last week in What If Politics Can't Fix What's Broken?, politics as practiced in a bygone era of stability no longer offers any solutions to these profound disruptions. Middle ground has vanished, and ideologies have become quasi-religious because they no longer offer any practical guidance to a society and economy that are being transformed by the 4th Industrial Revolution, resource depletion and demographics.

Once again Americans are awakening to the precariousness of their prosperity and liberties, and traditional forms of belonging, loyalty and authority are unraveling. As the pie shrinks, the struggle to maintain one's own share at the expense of others becomes Darwinian, and so it's no surprise that finance and politics are increasingly winner-take-all or winner-take-most zero-sum endeavors.

The elite college admissions scandal is a timely example of this dynamic: those with $500,000 can bribe the right people in the centralized hierarchy to get their Little Darling onto a winner-take-most career track.

A precarious revolution is brewing, as the old social, political and economic structures unravel and fail. The sober politics of compromise is giving way to the expedient politics of bread and circuses, borrowing whatever sums are needed to placate every corrupt, parasitic elite and every demanding constituency. This is the pathway to financial ruin as the currency will be destroyed by the politics of expediency.

New social, political and economic structures will arise that are stable because they reflect new realities. Describing these structures is the purpose of my books:
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic

Money and Work Unchained

A Radically Beneficial World: Automation, Technology and Creating Jobs for All: The Future Belongs to Work That Is Meaningful.

The politics of failed ideologies and financial expediency will not end well.

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


My new mystery The Adventures of the Consulting Philosopher: The Disappearance of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95 (print); read the first chapters for free (PDF)

My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Craig P. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Bob M. ($50), for your magnificently generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...