"Why Are You So Negative?" Good Question. Here's the Answer: Real Life

I think it's more productive to go with Plan B: set aside our emotions and reluctance and start doing the hard work of dealing with polycrisis.

A new reader kindly let me know that my writing was negative and depressing. I thanked the reader for the feedback and realized the question "why are you negative?" was a fair one that deserved an answer.

In a nutshell, the answer is the startling decay of everyday life. Why my writing strikes so many as negative is I am reporting from my direct experience and then pursuing a relatively simple query: do the institutions and systems that dominate our everyday lives have any formalized self-correcting mechanisms, and if so, why aren't they working? If they lack such mechanisms, then they're running to failure and this is not a positive outcome for all of us who depend on these systems and institutions.

Let's stipulate a few things before we proceed.

1. If we can't be honest, then why bother? If we can't bear to face the visible, obvious realities in daily life, then what's the point? If the real world I'm experiencing is instantly declared "negative and depressing," then how do we actually make any progress? We can't.

2. The secular religion of America is "you must always be positive, upbeat, and talk up hope." A positive mental attitude is definitely a plus when compared to indignation, entitlement, resentment and passivity, but realistic appraisals are the essential foundation of actual problem-solving. Feeling inspired because "we're going to Mars!" qualifies as upbeat but there is absolutely no connection between going to Mars and reversing the decay of our everyday life--none. The decay can't be reversed by upbeat inspiration or some new gadget or app. The problems are far deeper and far more interconnected.

3. The source of hope is to face these realities directly rather than declare anyone who addresses them without sugarcoating a "doomer."

4. The decay of everyday life is depressing because there are no easy fixes, and that there are no easy fixes is depressing, too. That's part of the reality we wish to avoid. But that doesn't mean there are no ways to improve the situation, and the path to improvements, both systemic and personal, are what I write about.

5. We all need a break from depressing realities. I strictly limit my exposure to the media and social media as an essential means of retaining some shred of sanity. I focus on the real world, and the workings and consequences of the systems we rely on.

6. Where you stand matters. Many of my readers are older, and therefore likely to have bought a nice home for $45,000 decades ago at the start of their careers, worked hard, earned a pension or accrued a 401K fattened by the relentlessly rising stock market and are now worth $2 million. From where they stand, life in America looks good, and focusing on the decay of everyday life somewhere other than their neighborhood strikes them as negative and depressing.

7. Abstractions don't reverse the decay of everyday life. Waving a chart of the GDP around--it's rising, so everything's great!--has no connection to real-world decay or institutional dysfunction. That household wealth rose $20 trillion doesn't means the problems are magically going away on their own; it simply means the system is optimized to make the already-rich richer. Waving a chart of GDP around doesn't actually solve anything. It's the functional equivalent of waving photos of cute kittens and puppies around and saying "everything's going great!"

8. All this is evidence that we're losing the will to actually reverse decay and are choosing to change the narrative as the "solution". In other words, if we stop talking about the negative, depressing decay of everyday life, then we can get on with being upbeat and positive--look at GDP and household wealth, they're going up! This desire to change the narrative rather than actually tackle difficult problems is understandable, but fatal to actual problem-solving. It is the equivalent of the Roman upper class reassuring themselves that Rome was eternal, so everything would sort itself out on its own because it had always been sorted in the past.

Here's my direct experience in the real world: a 21-year-old today cannot have what I had 50 years ago: a part-time job that paid for my college tuition and books, a studio apartment, ownership of a car and spending money. I didn't have to borrow a dime to work my way through college, have my own apartment and car and have a life beyond classes and work. I have documented this in detail: We Feel Poorer Because We Are Poorer: Here's Proof (December 4, 2023).

Let's not over-complicate what's straightforward: we're becoming more prosperous when our wages / labor buy more goods and services, especially the essentials of life: shelter, food, energy, utilities, transportation, higher education, healthcare and childcare. If the money we have left after paying for essentials buys more discretionary goods and services, we're getting more prosperous.

If the essentials are consuming a greater percentage of our earned income, we're becoming less prosperous, i.e. we're poorer. Those tasked with persuading us that gradual impoverishment is actually soaring prosperity have near-infinite statistical means to obscure this straightforward measure of prosperity: the purchasing power of labor / earnings.

If our hours of work buy fewer goods and services, we're getting poorer.

Fifty years ago, tuition at a four-year state university was $233 a year. That's about $1,400 in today's dollars. Today, the tuition at my alma mater is $14,500, a ten-fold increase. The same goes for rent and other expenses. If wages for 21-year-olds had risen by more than ten-fold, then everyday life would actually have improved. But this simply isn't the case.

I could afford my own small studio apartment, an old car and some spending money and pay all my tuition, fees and books out of my part-time earnings. Granted, I was frugal and made more than minimum wage, but still--what I did was not impossible or unusual. Yes, it required working a lot of hours but it was certainly within reach. (I lived in Honolulu, one of the most expensive cities in the U.S. It would have easier virtually anywhere else.)

Can anyone claim this is true today with a straight face? If it's true, then show me by doing it yourself. Go get a job at the same wages paid to a 21-year old, work fewer than 30 hours a week, and then rent your own flat, pay for your own car, pay all tuition and fees at a four-year state university and have a bit left over for the occasional bowl of ramen or movie or saving for a vacation.

If it's still within reach, then why isn't it the norm of everyday life for 21-year-olds today as it was two generations ago? If we're honest--and we're still able to be honest, aren't we, or have we lost that, too--then we have to admit this isn't progress, it's the opposite of progress: life is harder now, not easier.

That cars have rearview cameras and apps do this or that and now we have electric cars--none of these reverse the startling decay of affordability, purchasing power and thus prosperity.

Here's my direct experience in the real world: America is awash with refugees from what must be a great conflict or natural catastrophe. We call these refugees "the homeless." I lived in the San Francisco Bay Area for 32 years. Tech capital of the world, beautiful people, scenic, nice weather, home to the smart, ambitious, wealthy, and so on.

Around eight years ago, empty stretches of roadways suddenly filled with dozens of vehicles--encampments of the homeless. Patches of lawn near freeway offramps were suddenly filled with tents and trash. A tent encampment arose a block from our house--not in a "bad neighborhood," just not a protected enclave in the hills.

A homeless individual--does it really make us feel better to call this person "unhoused"?--started sleeping right beneath our bedroom window. I had to hose human excrement off our somewhat sheltered (and therefore ideal to use as a toilet) front entry. (We moved away in early 2019. Some solutions are systemic, some are individual initiative.)

Charts of GDP--it's going up!--aren't really relevant when you're hosing human excrement off your front porch. Neither are rising sales of EVs--we're saving the planet by stripmining it to make two billion unrecyclable batteries! These are abstractions, and they do nothing to reverse the startling decay of everyday life.

What caused this enormous flood of domestic refugees? We like simple answers and simple solutions, but there aren't any. The unaffordability of essentials such as shelter are certainly a factor, but the decay of family, social ties and the economy all play a part.

How can we claim with a straight face that "life is getting more prosperous" when half the populace owns essentially zero financial wealth? Trillions in stimulus has piled up tens of trillions in financial wealth, but how has so little trickled down to the 170 million Americans who comprise the bottom 50%? Can we declare "this is an increasingly prosperous nation" after pondering this chart? That 170 million Americans own a grand total of 2.6% of the nation's enormous financial wealth? That's statistical noise, not prosperity.



Yes, this is negative and depressing. Why? Because it's fact, and there are no easy, one-size-fits-all fixes. If we're looking for a conflict or natural disaster that unleashed a massive reversal of progress, we might want to look at how wages have fared versus capital: capital skimmed $149 trillion from wage-earners.



Here's my direct experience in the real world: the quality of appliances and other everyday life products has declined precipitously. My first apartment in the SF Bay Area in 1987 had a 40+-year old refrigerator, still humming along. In the early 1990s, a neighbor gave us his old 1960s era fridge when he bought a new one. The point here is that appliances routinely lasted 30 or even 40 years two generations ago, and now they fail within a few years.

This is not an abstract data point like GDP or federal debt. This is the real world. I have personally replaced the motherboard in a name-brand dryer that failed in a few years. The plastic part had a few cheap circuit boards and commodity chips, total value $20 at the most, and it cost $180 plus shipping. Add in labor (if I hadn't been able to do the task myself) and the cost equaled the price tag of a new dryer.

Our name-brand washer and fridge both expired within the last year after less than a decade of service. If you talk to the staff in a big-box appliance department, they'll tell you 7 to 8 years is about the norm now. In many cases, that's not reality. We have many firsthand reports from family and friends of expensive, fancy fridges failing within three years.

Is this progress? No. The collapse of durability and quality is a catastrophic decay of progress and prosperity. Waving charts of GDP or photos of rockets doesn't reverse this decay of everyday life.

Here's my direct experience in the real world: a building permit that once took a day to issue now takes six months. Same basic plans for a modest starter house as forty years ago when I dropped the plans off in the morning and picked them up, stamped and approved in the afternoon, so what changed?

It's certainly not the way houses are built. That hasn't changed enough to affect the permit process. What changed is the functionality of the institution issuing the building permits. The functionality has fallen off a cliff. This is not progress or prosperity. It is a startling decay of everyday life.

Is declaring the real world negative and depressing part of a productive problem-solving process? I don't think so. I agree that knotty, interwoven problems are difficult to tease apart and reverse. Many of these problems are embedded deep inside institutions, where they are difficult to see.

What I write about are solutions, but to write about solutions first requires making realistic assessments of the problems. That we respond to difficult problems by feeling they're negative and depressing is understandable. But we have a choice: do we follow the elite Romans in placing our faith in the comforting idea that difficult adaptations made in the past will magically manifest now without us having to do anything? Or do we set aside our emotions and reluctance and start doing the hard work of dealing with polycrisis?

I think it's more productive to go with Plan B: set aside our emotions and reluctance and start doing the hard work of dealing with polycrisis. I am hopeful about reversing the decay of everyday life, and I've written books about how to do so. But please don't think that waving charts of GDP or EV sales is doing anything other than distracting us from the tasks at hand.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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So Sorry, But Every Inch of You Is Toxic

Your toxicity will fall to manageable levels as long as you keep spending money.

I'm so sorry to have to tell you this, but let's face it: every inch of you is toxic and you urgently need to detox literally everything.

Have you looked at what's in your gums under a microscope? Please don't, you may faint from the horror. Your whole mouth is a cesspit of toxicity, but your gums are off the charts: if you were to spit into a tidal pool, everything would die: corals would bleach, fish would go belly-up, jellyfish would explode, every bit of seaweed would shrivel up. Yes, it's that bad.

But fortunately there's something that will knock down the toxicity of your gums: Crestfallen Pro-Health Gum Detoxify. Load your toothbrush with this amazing product three times a day--four if you have a midnight snack--and the toxins in your gums will diminish.

If you stop using the product--oh please don't be that foolish--then all that toxicity will return overnight, and you'll be back to square one.

As for the rest of your body, sorry, you're a walking sack of toxicity. You're stuffed to the gills with microplastics and forever chemicals to the point that you should be declared an environmental-hazard Superfund site.

As for your digestive tract, I'm not sure you're up to hearing just how toxic all that stuff is in there. You need probiotics by the truckload just for starters, cleansing enemas and a couple dozen supplements taken daily for the rest of your life to keep the inflammation and toxins down to levels where you're not a danger to yourself and your loved ones.

The toxicity of your compulsions is pegged to 11. I mean, what aren't you addicted to? There's the media, "likes," social media, your phone, tablet, TV, Twinkies, TikTok, painkillers, porn, gambling, buying zero-day expiration call options, trolling, gaming, the candy aisle in Walmart, speed-dating, chaos theory, Gilligan's Island re-runs--let's face it, it's like you're Living On Reds, Vitamin C And Cocaine, and All A Friend Can Say Is Ain't It A Shame.

What goes on in that head of yours--oh lordy-lord, if the aliens abduct you and hook their sensors up to your brain, your toxic thoughts and emotions will have them oozing purple goo from every orifice and emitting unearthly sounds of dreadful distress. They'll drop you back on Earth like a hot potato.

You want the honest truth, don't you? Of course you do. You're one of three things:

1) a toxic parent

2) a toxic kid

3) both

You need a truly massive, sustained detoxing, starting with a couple dozen self-help books, immersion detoxification, previous lives regression, karmic detox, hallucinogens, guided tours to holy sites, heat treatments, cognitive therapy, a couple decades of talk therapy, biometric feedback, and a container load of medications, of course--the works.

This is going to cost you, but it will all be worth it. Your toxicity will fall to manageable levels as long as you keep spending money.

Or you could be kind to yourself and others and call it good. But then our economy would crash, unleashing a veritable tsunami of toxicity.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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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.

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Thank you, Curtis S. ($70), for your monumentally generous subscription to this site -- I am greatly honored by your support and readership.

Thank you, Gerald B. ($70), for your superbly generous subscription to this site -- I am greatly honored by your steadfast support and readership.

Read more...

The Anxiety Economy

We're told to stop being so darn negative even as the tsunami of inequality washes away the beach chairs of the bottom 90%.

The disconnect between the happy story of the economy is growing healthily, so all is well and the insecurity and stagnation experienced by the bottom 90% of wage earners has been widening since the wheels fell off in 2008. One would be forgiven for assuming that a smartly growing economy would increase the general sense of security and reduce the general awareness of precarity. But alas, this assumption is false: the sense of precariousness is rising as the sense of security has slid off a cliff.

Welcome to the Anxiety Economy, a term coined by longtime correspondent Bart D., who describes the term thusly:

"By my reckoning the Anxiety Economy is an adjunct to (and perhaps to some degree a product of) the Landfill Economy model.

There was a time when the economy was designed to provide surety and stability. Jobs were stable, opportunities to create increasing wealth (particularly small business creation) were uncomplicated and products were designed to be genuinely better and longer lasting with every iteration. I think this typified the late 1800s to the early 1970s.

Since the 1970s we've seen stable jobs drastically reduce along with the durability and usefulness of new product iterations and trying to comply with the massive regulatory burden of businesses as simple as washing dogs or growing vegetables has become mind bending and expensive.

We get bombarded in news and other media with stories of house fires, chronic illnesses and car crashes in places very far away and disconnected from us (interspersed with, and no doubt sponsored by, marketing for insurances of every kind) that make us feel that the risks we face of loss of assets and health are waaaay bigger than they actually are. So that we buy expensive insurances.

All of this means we feel far less certain about long term income, our ability to run business and create wealth, we understand that everything we buy will fail pretty fast and needs to be replaced and we have a wildly over exaggerated sense of the need for expensive insurances.

These things make for very high anxiety about sustaining our lifestyle. Adding to this is the shift in economic activity from making things of merit to commodifying (and rendering taxable and insurable) the things families once did for each other--most significantly child rearing and aged care. We feel we can't rely on family to care for us or are made to feel guilty/a burden on family if we lean on them to look after us in old age.

The economic system is now designed to make people feel:

--Uncertain about our ability to meet the cost of future needs

--Locked into a constant and ever shortening cycle of replacement for what should be 'durable goods'

--Inadequate in their abilities to do business and make wealth

--Over-exposed to risk

--Unsure about their future health and care.

You mentioned the need to simplify our lives--Amen to that! And this is a growing sentiment I'm hearing from many people. The issue is the Anxiety Economy makes it very hard to achieve that simplification. It actively blocks people from disengaging. Because once that movement takes hold, the power of wealth will decline dramatically."

In other words, the Anxiety Economy benefits the few at the expense of the many--the definition of a broken, exploitive economy that is optimized to generate enormous asset-inflation wealth for the top 10% who own the vast majority of income producing assets while sapping the purchasing power and security of wage earners.

The status quo's high-profile, highly paid cheerleaders have a quiver full of tricks to mask the Anxiety Economy's soaring inequality. One old trick that still works on the unwary is to tout average household income and average household wealth. This is a trick because stupendous sums of income and wealth accrue to the very top of the wealth pyramid in the U.S., and this massively distorts the average income.

Median income also fails to capture the extremes of income inequality that characterize the American economy, but it's less distorted than average income.

In 2022, the average US household income was $105,555, while the median was $74,580.

As this St. Louis Federal Reserve chart shows, the top 0.1% of households--130,000 households out of 130 million--own 15% of the nation's financial wealth.



This wealth is highly concentrated within the top 0.1%. While I cannot vouch for the accuracy of the statistics cited in this graphic, the general idea is simple math: strip out the apex of the income-wealth pyramid, and the average income-wealth numbers plummet to Earth.



According to the Bureau of Labor Statistics (BLS), "Real average hourly earnings increased 0.8 percent, seasonally adjusted, from May 2023 to May 2024. The change in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek resulted in a 0.5-percent increase in real average weekly earnings over this period."

Assuming the official inflation statistics are actually accurate (try not to bust a gut laughing), that's a mighty thin dime of additional earnings for those earning $20/hour. Whoopie. Now consider the completely unprecedented enormity of the debt-funded stimulus (never mind the Federal Reserve's $4 trillion in stimulus and open-ended goosing of the stock market via proxies) since 2020--$22 trillion in new borrowing since Q1 2020--and we see just how paltry the gains were for wage earners. Here's Federal debt, up $12 trillion:



And here's total debt, up $22 trillion.



And to show how sustainable income increases failed to materialize, here is a chart of real (adjusted for inflation) median personal income. Note the collapse that occurred after the Global Financial Meltdown of 2008, and that personal income never recovered the trendline other than a brief pandemic-stimmy-induced spike that quickly faded.



In summary: wage earners never recovered from the 2008 meltdown. No wonder the gap between the cheerleaders' delusional insistence that we're all getting richer in every way, every day and the lived reality of the work force who didn't have the means to buy stocks at the 2009 bottom or buy a portfolio of rental houses in 2010.

We're told to stop being so darn negative even as the tsunami of inequality washes away the beach chairs of the bottom 90%. The Anxiety Economy is remarkably profitable for the top few and remarkably unhealthy for everyone else. They're pleased to prescribe us meds to take the edge off the Anxiety Economy, but meds won't fix what's broken in our economy or social order.

Podcasts: Crisis, Sacrifice and the New Economy, with Emerson Fersch (1 hour)

Financial Nihilism, Inflation & The Collapsing American Dream.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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A Most Dangerous Assumption: Mining the Future to Spend More Today

What the cheerleaders are actually claiming is the process of adding zeroes to "money" is limitless, but there are limits on the utility of devaluing currency, too.

How prosperous would the world be if we hadn't collectively borrowed and spent $315 trillion----333% of global GDP? We all know the answer--not very prosperous at all, for production, consumption and profits would all be mere fractions of their current totals if we could not borrow money and could only spend cash on hand. Global Debt Hit $315 Trillion In Q1 2024.

All this money that's been spent/invested has effectively been mined / extracted from future resources, labor and capital. The basic idea is that the interest that must be paid on this debt will be paid out of earnings generated by the productive use of resources, labor and capital in the future. Once the debt matures and the principle must be returned to the lender / bond purchaser, this principle must also be mined / extracted from assets available in the future.

Mining / extraction is the appropriate analogy because nothing is unlimited in the real world. Imagination--yes, it's unlimited. Denial and delusion: yes, both are limitless. But tangible resources that can be recovered at costs the economy can bear, productive labor and capital are not limitless. If we mine the future too intensively, there won't be enough left in the future to spend/invest at the level we enjoy today.

The fundamental assumption behind mining the future is that the pool of resources, labor and capital will continue expanding forever, effortlessly funding the interest and principle due on today's borrowing and leaving more than enough to consume and invest in the future.

But what happens when the resources, labor and capital available to mine in the future shrink? If the productive economy contracts, there will be fewer resources and less labor and capital available to split between servicing the ballooning debt and the consumption / investment needed to support the future economy.

Two mind tricks enable our faith in the sustainability of ever-expanding debt to fund our spending / investing today. One is the inaccurate assumption that Moore's Law--the constantly accelerating advancement of technological / digital mojo and efficiencies--apply to the entire real world: just as computing power has risen 10-fold every few years, so too will all other technologies.

This leads to the comforting but false belief that there will never be any resource constraints because technology will leap every boundary: we'll simply dig deeper and more efficiently to extract the minerals and energy we need to fund debt, consumption and investment.

This conveniently ignores the chemical and physical limits of the real world. A rocket powerful enough to lift a payload into orbit and on to the Moon is not 100 times smaller now than it was in 1969, or even 10 times smaller: it is roughly the same size due to the chemical / energy density limits of the liquid fuels needed to power the rocket.

Engineering advances do not cancel out the fact that digging / drilling deeper in remote, hostile environments costs more in energy, labor and capital than the easy-to-extract resources we've already consumed. Setting aside the mind trick of "money," it takes more energy and physical materials to extract resources far from paved roads and deep-draft harbors, in remote, difficult terrain and far deeper than easy-to-extract minerals and energy we've already taken and consumed.

As the productive labor force shrinks, there are fewer workers and wages to support debt service. If the resources, labor and capital we're mining are contracting, that will not only constrict additional borrowing in the future, it will also leave insufficient reserves to fund both debt and consumption.

The second mind trick is adding a zero to all "money" via currency devaluation / inflation. Here's how devaluation magically reduces the burden of debt: say household income is $10,000 per year and the home mortgage is $100,000. Add a zero (over a few decades, of course, so nobody notices the trick) to the income, which is now $100,000 a year for performing the exact same hours of labor as in the past. Now the mortgage has shrunk from 10 times income to 1-to-1. That makes servicing the debt much less of a burden on the household, and on the economy,

If the interest earned over the decades exceeded the rate of inflation / devaluation, the owners of the debt made up for the stupendous decline in the purchasing power of their principle when it is finally paid in full. The mind trick of reducing the burden of debt service by adding a zero to "money" ceases to work if the interest paid to lenders falls under the rate of inflation/devaluation, as lenders catch on and refuse to originate loans that destroy capital, albeit slowly enough few notice in the short-term.

As this chart of total debt in the US (public and private) shows, devaluing the currency soon outpaces the expansion of the real-world economy that's being mined to fund our spending today. Over time, the expansion of "money" accelerates inflation/devaluation into a self-reinforcing feedback that pushes interest rates above the point at which the economy can support both debt service and consumption and investment: something has to give, and that something isn't debt service--it's consumption and investment.

Welcome to the world of stagflation, a world in which mining the future is no longer sustainable as the pool of future earnings and resources available to mine is shrinking, even as our voracious appetite for borrowing more now to fund more spending today expands.

Many people reckon there's a third trick that's completely painless: a debt jubilee that wipes out all debts and re-sets the system so we can start mining future earnings and resources again with gleeful abandon. But this isn't how reality actually functions. Every debt is somebody else's income-producing asset, and in a world of $315 trillion in debt, that's a lot of assets that will be written down to zero by the debt jubilee and a lot of income that will drop to zero.

That money goes to money Heaven, never to return. In the happy story, lenders and bond buyers pile right back in and start funding trillions in new debt to start the cycle anew--no harm, no foul, right? Not quite.

We seem to be forgetting that the $315 trillion in assets and trillions in interest income went to money Heaven. Where is all the cash going to come from to fund new issuance of debt? And who would be dimwitted enough to loan money at low rates of interest, knowing that when things get iffy--which they inevitably will-- another debt jubilee will wipe out all of one's debt-based assets overnight?

The short answer is no one. Interest will be set high enough to offset the risk of a future debt jubilee sending all the money that was loaned out to money Heaven.

The net effect is borrowers will have to mine even more from the future to afford the higher interest. As resources become costlier to extract and the demographics already set in stone reduce the workforce that supports all future debt service, consumption and investment, all the mind tricks no longer work.



The future will need all the available resources, labor and capital for its own use, leaving little to none for us to mine today to fund our profligate consumption and gambling (sorry, "investing"). Cash will be King, and borrowing from the future to spend freely today will no longer be possible.

Impossible! Shout the cheerleaders of mining the future: the real world will always expand in endless growth. Sorry, but there are no guarantees that the limits of chemistry and physics can be jumped. What the cheerleaders are actually claiming is the process of adding zeroes to "money" is limitless, but there are limits on the utility of devaluing currency, too.

Podcasts: Crisis, Sacrifice and the New Economy, with Emerson Fersch (1 hour)

Financial Nihilism, Inflation & The Collapsing American Dream.

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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The Glue Binding Democracy and a Free Economy Has Melted

And that's how democracy and a free economy die.

An astute reader asked me to clarify the difference between individual sacrifice and shared sacrifice in the context of the Common Good, which as he rightly noted, dictatorships use as the justification for oppressive enforcement of a regime that benefits the few at the expense of the many.

In a democracy with a free economy, the Common Good is the responsibility of the citizenry, not a dictatorship. In the current zeitgeist, the Invisible Hand of free markets is understood as a magical force that automatically generates the Common Good out of the churn of everyone aiming to get rich or die trying.

In other words, the Common Good is somebody else's responsibility: there's no need for shared sacrifices, the economy and society take care of themselves as we all get rich or die trying.

This isn't how a society actually works. Somebody has to mind the store of social capital that enables us to focus our energy on individual sacrifices made on our own behalf.

The single-minded pursuit of greed does not magically organize the economy or society to serve everyone's interests equally. As Adam Smith explained, capitalism and the social order both require a moral foundation, which in a free society takes the form of civic virtue: it is the responsibility of every citizen who is able to contribute to the social capital that serves us all to do so not in response to an oppressive state but of their own free will.

The Founding Fathers understood this and feared the decay of civic virtue as a threat to democracy. This was one reason why many of those active in the early decades of the American Experiment favored restricting voting to the class of citizenry who had the biggest stake in maintaining the nation's stock of social capital: the landed / commercial elites.

Commentators such as Christopher Lasch have described the steady erosion of civic virtue and the nation's stock of social capital since the 1970s. Lasch and fellow critics across the ideological spectrum understood that civic virtue is the glue that binds democracy and a free economy: once civic virtue and the responsibility to contribute to the nation's social capital are gone, both democracy and the free economy enter terminal decline.

Social capital, civic virtue and the Common Good are not easily defined or measured. They cannot be reduced to numbers like GDP. This confuses ideological purists, left and right, as social capital, civic virtue and the Common Good cannot be distilled down to simplistic ideological formulations.

This is why Lasch's work cannot be pinned down as "left" or "right": ideologues on both ends of the spectrum find references in his work they agree with. He was addressing issues larger than political or economic ideologies.

The glue of America's social order--civic virtue--has melted away, and few have even noticed. The concept of voluntary attention to the common good--an attention that requires shared sacrifice--has been jettisoned as unnecessary: all we need to do is focus on getting rich by any means available.

This has led to a complete breakdown of the moral foundations Adam Smith identified, and a breakdown of the nation's shared social capital. If our sole responsibility has shrunken down to getting rich by any means available, then quite naturally we bribe politicians, crush competition to establish cartels and monopolies, degrade the quality of our goods and services to increase profits and addict our customers to rake in steady profits.

Consider the difference between Old Money and private equity. Private equity slavishly worships at the altar of mobile capital and increasing shareholder value. Private equity assembles mobile capital from the ends of the Earth--Dubai, London, Hong Kong--and swoops in when it detects an asymmetry between the potential market value and the current valuation of an asset.

Unlike Old Money, which is anchored in a place embedded in a specific culture and social order, private equity has no sense of place or responsibility for contributing to a locale's social capital. Private equity swoops in, buys the asset, sells off pieces to the highest bidders, reorganizes what's left, slaps a quick coat of paint on it and then cashes out via a public offering of equity or debt or a private sale.

The damage done to the local economy, populace and its stock of social capital by this stripmining is of no concern to private equity: get in, maximize profits / gains and then get out, and start circling the planet for the next "opportunity to increase shareholder value." (Hence the term "vulture capital.")

Old Money, rooted in a place and its history, does care about the local economy, populace and its stock of social capital. Yes, Old Money makes money with its money; that is the nature of capital. But Old Money understands that stripmining assets with zero concern for the wreckage left behind does not support either democracy or a free economy that offers a somewhat level playing field to all participants.

This is why it's wise to relocate to a place where Old Money still resides and still maintains an active role in maintaining the social capital of their home base. Living in places dominated by the culture and values of private equity is voluntary servitude in a rotting ship without a compass or leadership.

Old Money keeps an eye on the stock of social capital, and voluntarily engages in using its wealth and influence to preserve or enhance it. Mobile capital flits around the globe, happy to fund a university building here and there to enhance their personal "brand." They don't actually care about any place; that's someone else's responsibility.

And that's how democracy and a free economy die. The glue of civic virtue, of doing the hard part of maintaining the stock of social capital and devoting some care to the common good in this place and in this time--those are somebody else's responsibility.

Me, I'm busy: my underlings located an asset just begging to be dismembered, offshored, stripmined, and we're going to make a killing. Then I'm off to my flat in London, then to my getaway in the South Pacific, and then to a quick meeting in Shanghai. I'm busy making a killing.

Yes, a killing. What died is democracy and a functional economy of equal opportunity. Once the glue melts away, things fall apart. Welcome to what's left of the 2020s and the 2030s.



Podcasts: Crisis, Sacrifice and the New Economy, with Emerson Fersch (1 hour)

Financial Nihilism, Inflation & The Collapsing American Dream.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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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.

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Thank you, James H. ($70), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

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