Friday, March 15, 2024

Why Social Trust Is Cratering: The Difference Between Elites and Commoners

We trust what we own / control, and the difference between elites and commoners is the elites own / control the wealth and power that dominate our daily lives.

It sounds too obvious to be profound: we trust what we own / control. Of course we do. But it becomes profoundly consequential when we add the shadow half of the statement: we don't trust what we don't own / control without constant feedback providing verifiable evidence that it is worthy of our trust.

Absent this positive verifiable (i.e. factual evidence based on both data and personal-anecdotal experience) feedback, we have good reason to assume whatever we don't own / control is primarily serving the interests of those who do own / control it. And since this means the product/service's trustworthiness is suspect despite claims that it serves our interests, we must seek a steady flow of feedback substantiating that the product/service is still providing the value the owners / managers are claiming, either explicitly or implicitly.

In other words, hands-on knowledge about the inner workings of the product/service generates trust. Absent this experiential knowledge, we're flying blind as to the true value of the product/service. If the actual value is less than the owners / managers claim, both the owners / managers and the product/service they're providing are unworthy of our trust.

Consider a simple example: the food we put in our mouths to sustain ourselves.

When I collect fruits and vegetables I've grown here in our yard, I have direct knowledge of what went into the care and nurturing of the plants/trees/soil, so I know that there are no pesticides or herbicides and there are an abundance of micronutrients in our food due to the careful management of compost and fertilizers.

The food we eat from our homestead is therefore trustworthy.

We get lettuce and beets from a longtime family friend who has been farming for decades. He takes great pride in his produce and works extremely hard to raise te highest quality produce. Though I don't have direct knowledge of his day-to-day practices, I know and trust him and I can see the vibrancy of his produce and taste its quality.

These are the people in our trusted personal network.

You see the gradient of trust: first level is first-hand experience/knowledge, second level is trusted personal network.

Compare this to produce labeled "organic" in a supermarket. We are making a great many assumptions about the produce this label is attached to. We assume the agency monitoring the actual farm practices is thorough and accurate, but this is quite stretch in the real world. Are inspectors onsite every day? What exactly do they test? Where are the results posted?

Produce, organic or not, is a commodity, and nobody is testing the nutritive content of the produce. Maybe one field hasn't been depleted of micronutrients, while the rest have been over-farmed and depleted of the micronutrients we need to be healthy.

Since all produce is a commodity in global markets, they're all interchangeable: one kilo of organic tomatoes or wheat is interchangeable with any other kilo of organic tomatoes or wheat, so there's no way to tell if the "organic" produce or meat has high or low nutritive value. All that's being claimed is that no pesticides or herbicides were applied and whatever compost and fertilizer were applied were organic. That's entirely different than claiming the produce/meat is high in nutritive value.

Plants have immune systems, too, and a healthy plant provided with sufficient nutrients and water will resist insect infestations, fungi, bacteria, etc. far better than plants raised in depleted soils. Anyone with experience in actually growing fruits and vegetables is keenly alive to signs of nutrient deficiency or infestation.

The point is "organic" doesn't mean the produce or meat is packed with nutrients. It just means the minimal guidelines qualifying the product as organic (or "bio") were met. Those guidelines don't guarantee a product packed with micronutrients. That takes extra care and tracking that isn't done in a commoditized economy.

Consider efficacy claims and side-effect labeling on pharmaceuticals. If you actually study the Phase III trial data (I have), you find that the medications were not actually tested in conjunction with other commonly consumed medications. The potential interactions are completely unknown. You also discover the statistical legerdemain that goes into claiming efficacy that may be just barely above random results.

Since we have very little knowledge or control of all the medications deemed "safe" by untrustworthy agencies, all these medications are intrinsically untrustworthy until proven otherwise by multiple independent sources over a decade.

How Two Pharmacists Figured Out That Decongestants Don't Work: A loophole in FDA processes means older drugs such as those in oral decongestants weren't properly tested. Here's how we learned the most popular one doesn't work.

Now consider social media sites such as Facebook or X/Twitter. You may have noticed that what appears in your feed/scroll changes. These changes are not within our control or transparent; we presume the algos are being tweaked to maximize the income being generated by our content and our attention.

When Big Tech notifies you that your content "violated our community standards," the violation is not specified, and if you ask, you won't get a reply or explanation. We have no idea who is seeing what we post, or what's being done with our attention-data. We have no knowledge or control of these algos and processes, and so they are intrinsically untrustworthy.

If we examine all the agencies, institutions, monopolies and cartels that control the vast majority of our lives, we find that we have near-zero knowledge or control of any of their inputs, processes or outputs, and so all of these agencies, institutions, monopolies and cartels are intrinsically untrustworthy until they consistently prove themselves trustworthy in some verifiable fashion.

Few of these agencies, institutions, monopolies and cartels provide this feedback.

Consider the labels on processed foods for humans.
Anyone caring for animals knows the labeling on food for animals is far stricter and more detailed than food for humans, for a good reason: those profiting from selling processed "food" to humans might have a harder time selling their low-quality products if we knew more about the low quality ingredients, high sugar and salt content, etc.

This is why commoners have lost trust in the nation's agencies, institutions, monopolies and cartels, while the top 1% elites that own and control these entities still trust them: they trust them because they serve their interests.

The commoners intuitively sense these entities do not serve their interests, they only claim to do so to maximize profits / "shareholder value" or to divert attention from the poor quality service/products. We know the claims being made are false because we experience the absence of transparency and accountability first-hand, and the abysmally low quality of the products and services first-hand.

The only viable solution is to own/control as much as you can, and nurture our own trusted personal networks. The only way to escape being stripmined and shorn by the entities owned and controlled by the top 1% elites is to abandon those agencies, institutions, monopolies and cartels as much as possible. That is the essence of what I call self-reliance.

We are blind to the decay of the hierarchy of trust because we've been trained to trust sprawling, unaccountable agencies and corporations without actually having any evidence that they are trustworthy.

At the top is owning / controlling the products/services ourselves. We trust our produce because we grew it. We trust our home repair because we did the work. Very few of us own or control anything other than our house or financial abstractions controlled by others.

The second level is personal trusted networks. Very few of us have personal trusted networks that provide the essentials of life. Virtually everything essential to modern life is commoditized and globalized; it comes from far away and we know nothing about its origin, quality or value.

The third level is local enterprises and agencies that are local enough to generate feedback we can access simply by listening to our neighbors and peers. On a very practical level, most communities once had local dairies and bakeries and broader networks of local businesses that provided services that are no longer available: shoe repair, etc.

The fourth and lowest level is commoditized feedback from a variety of sources that can be compared for completeness and accuracy, feedback that enables us to assess the relative trustworthiness of commoditized products and services sold by private monopolies and cartels theoretically monitored by unaccountable sprawling state agencies.

Our essential public services are also provided by other unaccountable sprawling state agencies that can fail in every way but are not influenced by their failure because we have no alternative to the DMV, tax office, etc.

These public-private monopolies and cartels provide very little feedback, and what little is available is itself suspect due to self-interest.

We control and own so little of what we need to live and what impacts our lives, and very few of these essentials are produced locally. We receive very little if any trustworthy feedback about the mega-entities (universities, hospital chains, Big Ag, Big Pharma, government agencies, Big Tech, Big Finance, Big Retail, etc.) that dominate our economy and our lives or the quality / value of the products and services they provide.

Professional elites still trust these mega-entities because they serve the interests of the elites who own / control them. The commoners no longer trust these entities because there is no reason or evidence to generate trust while there is a wealth of evidence supporting distrust.



We trust what we own / control, and the difference between elites and commoners is the elites own / control the wealth and power that dominate our daily lives.

As I noted in A Low-Trust Society Is an Impoverished Society, our only positive option is to regain as much ownership and control of our lives as we can manage, and nurture trusted personal networks and local enterprises and organizations. As I put it a few years ago: Tune in (to self-reliance), drop out (of hyper-consumerism and debt-serfdom) and turn on (to relocalizing capital and agency).



This essay was drawn from my Weekly Musings Reports sent exclusively to subscribers, patrons and Substack subscribers. Thank you very much for supporting my work.


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 $1/month patron of my work via patreon.com.

Subscribe to my Substack for free





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, RS ($5/month), for your magnificantly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, John S. ($50), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership.


Thank you, Sigma Metalytics ($50), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Laura D. ($50), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Thursday, March 14, 2024

America the Snackable

There is only one pathway to health and sanity: stop consuming snackables of any kind.

Everything in America has become snackable: devoid of value, easily consumed, intentionally addictive, and ultimately destructive to all that is healthy for individuals, communities and society at large.

The core features of edible snackables are self-evident yet worthy of a closer look due to the severity of the consequences:

1. The snack is made of highly processed ingredients.

2. The snack has high concentrations of sugar, salt and unhealthy oils/fats.

3. The snack has low nutritional value (empty calories) and is not beneficial to health.

4. The snack is packaged in small quantities so the price appears cheap but is revealed as expensive when converted to price per pound.

5. The snack's "serving size" may be deceptively presented: a 4-ounce package may have a calorie count based on a "serving size" of 2 ounces, as if the package contains two servings when everyone knows a single individual will consume the entire snack.

6. The snack is a legal addictive product as the snack has been designed to hijack humans' innate receptors for sugar, salt and fat and satisfying mouthfeel. (Bet ya can't have just one.)

Highly processed, highly addictive, low nutritional value foods are a key driver of America's declining health. All these foods share the same characteristics of the manufactured snackables: they are heavily marketed, highly profitable and contribute to obesity and metabolic disorders.

When only one-quarter of the adult populace is normal weight, this leads to a host of chronic health disorders including higher risks of heart disease and many cancers, as well as the spectrum of metabolic disorders such as diabetes and prediabetes. Here are the facts: over 73% of adult Americans are overweight or obese.



Given that almost 3/4 of adult Americans are overweight or obese, it shouldn't surprise us that 52% of adult Americans are diabetic or prediabetic. This is a sobering trend, one that won't be reversed by $1,000 a month weight-loss medications which cease to be effective once they're no longer consumed. These medications don't change the patients' diets from highly processed foods to only unprocessed real food, and so the benefits are inherently narrower than advertised.



The snack and beverage aisles take up an astounding amount of space in America's specialty-groceries and supermarkets. These are the profit-generators, and so the processed-food manufacturers and grocery retailers are constantly seeking to entice more addicts with new novelties. For example: Trader Joe's Has Been Releasing A Ton Of New Products Lately.

Consuming this kind of high-fat, empty-calorie snack isn't going to generate a healthy lifestyle.



The marketing of novelty is as refined and devoid of value as the snacks being manufactured and sold:



As those with any knowledge and experience of fitness know, the notion that it's possible to burn off the empty calories of snacks with a bit more exercise is a fantasy--hence America's bulging waistlines and declining health.



The enormous profitability of edible snacks is mirrored in all the other manifestations of America the Snackable: our daily lives are now composed of one bite-sized addictive snack of social media, novelty memes, political opinion, financial data-snacks and pundits' opinions and snackable videos after another.

Attention spans and the ability to grasp complex issues have withered to snack-size, and whatever is being marketed as "ideas" are as devoid of value as an empty-calorie snack.



All share the same characteristics: they are addictive, bite-sized, packaged deceptively, marketed as novelty, devoid of value, destructive to human health and most importantly, astoundingly profitable. So the edible snacks generate chronic illnesses which then provide fodder for highly profitable medications, while the inherently deranging snackables of social media, videos, entertainment, political opinions and memes-du-jour fuel mental disorders which provide fodder for a vast spectrum of highly profitable medications.

There is only one pathway to health and sanity: stop consuming snackables of any kind. Yes, the only solution is cold turkey, baby, and like all addictions, it's painful at first, and then it becomes a great relief to be freed of the addictions.



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 $1/month patron of my work via patreon.com.

Subscribe to my Substack for free





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, Brian H. ($50), for your magnificantly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Lewis R. ($50), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership.


Thank you, Fabian C. ($50), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Bonds ($50), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Thursday, March 07, 2024

A Low-Trust Society Is an Impoverished Society

The sole remaining reservoirs of trust in American life are personal networks, local enterprises and local institutions.

It's not exactly news that social trust has declined significantly in the United States. Surveys find that public trust in institutions and the professional classes that dominate those institutions has cratered. (see chart below) Social trust--our confidence that other people are trustworthy--has also fallen to multi-decade lows.

This was not the case in decades past. Americans maintained high levels of trust in their institutions, government and fellow citizens. The decline in social trust is across the entire spectrum: our trust in institutions, professional elites and our fellow Americans has declined precipitously.

The causes of this decay of social trust can be debated endlessly, but several factors are obvious:

1. Institutions forfeited the trust of the citizenry by withholding / editing realities to serve the interests of hidden agendas and insiders' careers. The Vietnam War was pursued on fabrications, as was the second Gulf War to topple Saddam. Watergate eroded trust on multiple levels, as did the Church Committee's investigation of America's security agencies' domestic spying / over-reach.

2. The managerial / professional elites at the top of the nation's institutions no longer put the citizenry's interests above their own. The public's trust has eroded as institutions are primarily viewed as vehicles for self-enrichment and career advancement: healthcare CEOs pay themselves millions, higher education is bloated with layers of non-teaching administration, defense contractors and the Pentagon have greased the revolving door to the benefit of incumbents and insiders, and so on, in an endless parade of self-serving cloaked with smirking PR claims of "serving the public."

The shift from a high-trust society to a low-trust society is consequential economically, politically and socially. Low-trust societies have stagnant economies, as nobody trusts anyone they don't know personally or through personally trusted networks, and nobody trust institutions to function effectively or fulfill their stated mission to serve the public good.

Faced with incompetent, unaccountable, corrupt bureaucracies and a culture overflowing with scams, frauds, imposters and get-rich-quick schemes, people give up and drop out. Rather than start a business and accept all the risks just to get dumped on or ripped off, they don't even try to start a business. Given the financial insecurity that is now the norm, they decide not to get married or have children.

The vast trading networks of the Roman Empire were based on personal trusted networks and trust in Rome's functionaries / institutions. The owners of trading ships dealt with trusted captains and merchants, who then paid duties to Roman functionaries in Alexandria and other major trading ports.

In other words, tightly bound personal trusted networks work well as long as the state institutions that bind the entire economy are trusted as fair and reliable--not perfect, of course, but efficient and "good enough."

But when public institutions are viewed as unfair, unreliable, corrupt or incompetent, the entire economy decays. Even personal trusted networks cannot survive in an economy of unfair, unreliable, corrupt or incompetent state bureaucracies and private institutions.

The American economy is now dominated by enormous privately owned and managed monopolies and cartels that are the private-sector equivalent of self-serving state bureaucracies. Big Tech, Big Pharma, Big Healthcare, Big Ag, Big Finance, etc., are even worse than state bureaucracies because there are no legal requirements for transparency or recourse. Try getting a response from a Big Tech corporation when you've been shadow-banned or sent to Digital Siberia.

The sole remaining reservoirs of trust in American life are personal networks, local enterprises and local institutions. These are not guaranteed, of course; in many locales, even these reservoirs have been drained. But in other locales, enterprises and institutions such as the county water utility, the local newspaper, the local community college, etc. continue to earn the trust of the public by performing the services they exist to provide effectively and at a reasonable cost.

The larger the institution and the greater its wealth and power, the lower the social trust--for good reasons. The greater the influence of the managerial elites, the greater the disconnect from the everyday experiences of the citizenry and customers, and the more extreme the self-serving PR.

Sure, I trust Big Tech, Big Pharma, Big Healthcare, Big Finance--to rip me off, profiteer, send me obfuscating bills, jack up junk fees, make it impossible to contact them, and send me to Digital Siberia if I complain.

The divide between the elites and the commoners should prompt us to examine the low-trust path we're sliding down:



In a society in which everything is phony, low quality or fraudulent, you're taking a chance trusting anyone you don't know personally--and even that can be risky now that self-aggrandizing flim-flam is the last remaining path to financial security for non-elites.



A low-trust society is an impoverished society, economically stagnant and socially threadbare. That's where we are now, and the more fragmented, greedy, self-serving, desperate and deranged we become, the lower the odds that we'll find the means to rebuild trust.

Sadly, we already know that anyone claiming to "rebuild trust" is spouting PR designed to mask self-enrichment. We also know that the vast army of well-paid flacks, factotums, enforcers, happy-story apologists, lackeys, toadies and sell-out minions are declaring "everything's great!"

Just mumble, "Uh, sure" and continue to Tune in (to degrowth), drop out (of hyper-consumerism and debt-serfdom) and turn on (to self-reliance and relocalizing capital and agency).





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 $1/month patron of my work via patreon.com.

Subscribe to my Substack for free





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, Tdoudiet ($50), for your magnificantly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, R.K.B. ($50), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership.


Thank you, MVB ($50), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Bill J. ($50), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Wednesday, March 06, 2024

Global Recession's Winners and Losers

The few winners of global recession will use the decline as a means to break the chokehold of unproductive BAU elites.

That the global economy is slipping into recession is self-evident. What's not yet known is the eventual depth and length of the recession. Given that the extreme policies needed to avoid recession over the past 15 years have reached extremes that are now the problem, not the solution, there won't be any more fiscal-monetary "saves" this time around.

What's also not yet known is how far the few winners will advance and how far the losers will fall. Recall that when it comes to wealth and power, what matters is not absolute gains or losses, but relative gains or losses: how well we do in relation to our peers and competitors.

For example, among 10 households with $1 million in assets, if one household experiences a decline in net worth to $900,000, that's an absolute drop of $100,000--not exactly welcome. But if the other 9 households experienced losses of between $500,000 and $900,000, leaving their net worth between $100,000 and $500,000, the household that lost only $100,000 gained tremendous ground in relation to the rest of their peers.

This will also play out on the grand stage of nation-states and alliances: those nations / alliances that weather a deep, lengthy global recession with modest losses will be much stronger post-recession that those who suffered losses that cannot be replaced that then tipped the nation into destabilization and eventual collapse.

I have long held that in this sense, recession can be weaponized by those with superior core assets in resources, flexibility and adaptability: Weaponizing Global Depression (2/23/23).

Every nation can print money, but the trick is to be able to do so without unleashing currency debasement / hyper-inflation. There are only a few levers that can be pulled to get away with printing money out of thin air to support one's economy in recession, and none are easy to sustain:

1. Print the money by issuing bonds that pay higher yields than competing bonds. Capital flows where it's treated best, and higher yields are attractive--but only if the following two conditions are met:

2. The bonds and the currency are highly liquid and can be traded in size so major players can enter and exit at will. Illiquid securities are inherently risky, as when the time comes to sell and the exit door shrinks down to the size of a dormouse, hefty gains reverse immediately to catastrophic losses.

3. The collateral for the newly issued bonds--the underlying economy and governance structures--are transparent and trustworthy. The collateral for newly issued bonds and currency is the nation's economy and governance structures: the greater the diversity of economic resources and activity, the more transparent the markets, data and regulatory structures, the greater the trustworthiness of the collateral and thus the lower the risk profile and premium.

This is why nations with poor transparency, narrow economic bases and regulations that change without warning with regime zig-zags have to pay extraordinarily high bond yields to attract capital: the risks of default, regulatory reversals or illiquidity are intrinsically high.

You see the problem: it's impossible to broaden one's economic base and establish trust overnight. It takes years or even decades to establish liquid, trustworthy markets that remain trustworthy even as political winds shift.

Those nations that have broad economic bases and trustworthy financial systems are few, and their choice is simple: either squander this collateral by using the newly issued money to prop up unproductive, rentier BAU (business as usual) elites, monopolies and cartels, or use the recession to divert resources and money away from dead-weight BAU and invest it productively.

Those nations that create money to prop up rentier BAU will slide into potentially terminal stagflation as creating new money and giving it to unproductive monopolies, cartels and elites increases the supply of money available to "invest" in asset bubbles--unproductive elites outbidding each other for the pool of productive assets--without increasing the productivity of the economy. This deflates the value of the currency (what we call inflation) even as it guarantees systemic malinvestment that keeps growth of productivity stagnant.

The trick is to use the newly created money wisely, which requires limiting the greed and power of BAU elites--something few nations (if any) can manage, as the BAU elites put their own interests above the interests of the nation and its citizenry.

Those nations that are largely self-sufficient in energy, food and technology will obviously weather recession better than those that depend on other nations for the essentials of life. Those nations that depend on selling resources such as oil and minerals for their national income are also extremely vulnerable, as recessions depress demand which then leads to lower commodity prices. Those selling the resources can attempt to restrict supply to keep prices high, but a deep global recession will suppress demand to the point that restricting supply may not be enough to keep prices high enough to maintain Business As Usual.

Since the easy-to-extract resources have already been exploited, what's left is more expensive to extract. The costs of extraction remain stubbornly high while revenues plummet, leading to a severe compression of net income. Those nations that depend almost entirely on selling resources will face a collapse of net income that will test their status quo to the breaking point.

The story of civilization is BAU elites will do everything in their power to maintain the status quo as it is because this configuration is the source of their wealth and power. Given the power of their self-interest, this configuration is brittle and thus prone to cracking in unpredictable ways.

To survive challenges like deep, lengthy recessions, nations must have the structural flexibility to enable competing elites to replace the BAU elites whose exploitive, unproductive grip has fatally weakened the nation's social, political and economic orders.

Just printing money to prop up a brittle, exploitive, unproductive BAU elite of bureaucracies, monopolies and cartels will not reverse the recession, for just squandering new money can't fix what's broken. Rather, creating more money to maintain the corrupt, extractive BAU can only increase the brittleness and the risks that stagnation and rising debts will lead to unanticipated stresses that break the status quo.

The few winners of global recession will use the decline as a means to break the chokehold of unproductive BAU elites and divert resources to more productive uses. The losers will squander their diminishing resources on propping up the source of their national decay: self-serving BAU elites.



New podcast Vision Series: AI Job Challenges and Trends (34:54 min)





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 $1/month patron of my work via patreon.com.

Subscribe to my Substack for free





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, Gary N. ($50), for your magnificantly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Billy ($5/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership.


Thank you, John B. ($50), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Tomasz G. ($5/month), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Monday, March 04, 2024

These Four Themes Will Define the Next Decade

Everyone at the trough believes that the transition from liquid water (free flowing credit) to ice cannot possibly happen. So when it happens, everyone will be surprised.

Morgan Stanley recently came out with their 3 Themes that will impact markets for many years: longevity, AI tech diffusion, and decarbonization, i.e. the transition from hydrocarbon fuels to so-called "green energy."

That's the status quo: everything's great! Pills that cost $1,000 a month will make us live longer, AI will increase corporate profits (which is the entire point of the economy, of course) and those who invest in the "green energy" transition will be rewarded with fabulous wealth.

That all sounds peachy, but the real world will be defined by four much different themes: sclerosis, dysfunction, debt saturation and power asymmetry.

Sclerosis: the same old nodes of power cling onto power and so nothing changes because nothing can change: those in power must maintain or expand their power, regardless of what comes along, and that sclerosis is the systemic problem that cannot be resolved.

2. Dysfunction: nothing works due to the consequences of sclerosis: those who cling to power do so by eliminating every dynamic of open, self-correcting systems: they get rid of competition (every sector is dominated by monopolies, cartels or state-cartels), they get rid of transparency (information asymmetry is how they maintain power) and they have a lock on regulatory complexity / capture: first jump through all these hoops and maybe we'll let you propose some worthless policy tweak that leaves our power intact. Or we'll co-opt you by inviting you to become one of our flunkies, PR flacks, factotums, enforcers, lackeys, etc.

In a system rigged to maximize the profit and power of the few at the expense of the many, nothing works because the system is no longer capable of self-correction.

3. Debt saturation: 15 years of expanding credit has created the illusion we can pay for everything, no matter how costly, from future earnings, basically forever. So we need trillions to transition to "green energy," no problem, we'll borrow it. We need more trillions to pay for an aging, increasingly sickly populace, no problem, we'll borrow it. We need to borrow more trillions to fund all the status quo grift and graft, no problem, we'll borrow it.

And since we can pin interest rates to zero forever, we can borrow whatever tiny sums we need to pay the interest on hundreds of trillions in new debt, no problem. Except for one little dynamic called debt saturation: future earnings are not guaranteed, and at some point the income cannot sustain both the eternally expanding consumer and state spending needed to keep the Waste Is Growth Landfill Economy from imploding and the rising debt service on the ballooning debt.

We can afford only one: either borrow and spend to keep the Waste Is Growth Landfill Economy humming, or we can devote that income to servicing rising debt. We can't do both, so one or the other will collapse: either consumer/state borrowing and spending or the Palace of Debt.

This reality increases risk, and capital eventually demands a real return. Interest rates can't stay at zero, so the costs of servicing the soaring debt rises rapidly. At the same time, the immense expansion of credit--money borrowed from future income to be spent today--generates inflation, as the flood of credit needed to keep a sclerotic, dysfunctional status quo afloat outpaces the value being generated by all the trillions being borrowed and blown.

No one at the trough of "free money" will give up their place, and so the system is rigged to fail: we have to keep borrowing trillions to keep all the incumbents, entrenched interests and those collecting benefits happy, but as interest payments rise, we need to borrow more trillions just to pay the interest. And so on, in a self-reinforcing feedback loop.

4. Power asymmetry is my term for the structural inequality and bondage that characterize the global status quo. The many have very little power over anything, while the few hoard the power to make sure they keep what they have and to protect their perquisites from competing elites and populist movements. Debt serfdom is a good example of bondage--you need to borrow to live--and power asymmetry: debt-serfs have essentially zero power in the economy, society or the sclerotic systems of governance.

No amount of AI or new technology will change any of this, because all those tools serve those already in power. In effect, AI and all other new technologies simply serve to solidify power asymmetry and thus sclerosis and dysfunction. And since the system demands "free money" borrowed from the future to keep everyone at the trough happy, it also guarantees debt saturation, which eventually triggers a phase change much like liquid water (liquidity) suddenly freezing into ice.

Everyone at the trough believes that the transition from liquid water (free flowing credit) to ice cannot possibly happen. So when it happens, everyone will be surprised. What do you mean, there are limits?



New podcast Vision Series: AI Job Challenges and Trends (34:54 min)





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 $1/month patron of my work via patreon.com.

Subscribe to my Substack for free





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, Solitaire ($5/month), for your magnificantly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Ryan K. ($5/month), for your marvelously generous subscription to this site -- I am greatly honored by your support and readership.


Thank you, Ian J.G. ($5/month), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.

 

Thank you, Bob ($5/month), for your superbly generous subscription to this site -- I am greatly honored by your support and readership.

Read more...

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP