We're Eating Our Seed Corn

What will break is not as predictable as the reality that the current trajectory is untenable and unsustainable.

If we're limited to our income, there's only so much we can spend on consumption and servicing existing debts, and invest / save to build capital / future income.

If we have access to the miraculous elixir of credit, we can expand our spending / investing by borrowing more money. This boosts our consumption and perhaps our investing, but it also increases our debt service--the interest that must be paid on debts old and new.

When interest rates are near-zero / less than inflation, this burden is light. Once interest rates return to historic norms, however, large debt loads generate large interest payments, and the elixir of credit becomes a toxin sapping th borrower of income and an unencumbered future: rather than having the option of saving income to invest in the future, the borrower must devote an increasing share of income to debt service.

Unless income is rising faster than debt service, the tapeworm of debt service starves the borrower. This dual nature of debt--elixir and toxin--is scale-invariant, meaning that it functions in the same manner on the small scale of households all the way up to nation-states.

The vast horde of cheerleaders of debt always claim "we'll grow our way out of debt": by investing the borrowed money in wonderfully productive things, the economy (and household income, corporate profits, etc.) will grow so smartly that the debt service will remain a paltry and inconsequential percentage of spending.

The rosy forecast is the U.S. is investing in reshoring / re-industrialization / energy transition, and all these will jump-start growth for decades to come. Yes, we're borrowing trillions of dollars, but these dollars are being wisely invested in future productivity and improved national security.

The cheerleaders point to the history of the past 60 years as proof that this dynamic of "growing our way out of debt" can be counted on into the future.

Nice, but the cheerleaders forgot what happened in the 1970s, a decade of high inflation, rising costs and uneven expansion. The conventional explanation for this stagflation focuses on the "oil shock" of sharply higher oil prices in 1973-74, the rise of global competition and rising bond yields / interest rates.

But as I explained in The Forgotten History of the 1970s (1/13/23), a major contributor to the stagflation was the enormous investments that were poured into cleaning up America's polluted air and water, and re-engineering the nation's industrial base to be cleaner and more efficient.

The eventual payoff was huge, but it took decades to reap the rewards, which in this case included restored waterways (The 1970s: From Rotting Carcasses Floating in the River to Kayak Races 1/22/23) and a more efficient industrial base.

Note that this enormous investment did not generate more corporate profits or consumption. From the point of view of "growth," it was a monumental money-pit, for the pay-off--a cleaner environment--did not generate profits or growth until far down the road.

The same dynamic will play out in the vast sums that must be sunk into reshoring / re-industrialization / energy transition, a process that raises costs for years or even decades before the eventual benefits outweigh the enormous costs.

Given higher rates of interest, borrowing trillions to fund both consumption and investment is in effect eating our seed corn as consumption isn't an investment that generates a return, and the return on vast investments with payoffs far down the road will jack up interest payments and other costs without generating the "growth" cheerleaders count on.

Gordon Long and I discuss what happens when "growing" consumption and investments are dependent on increasing debt faster than income in Is a 70% Consumption Economy Sustainable? (43:53 min).

The federal government has many obligations and many constituencies. Seven decades of economic expansion has raised expections of every constituency for more federal funding. This has generated what I call the Savior State, a central government tasked with meeting every constituencies' needs with few limits.

If borrowing and debt service rise faster than the returns on investment, the borrower goes broke before the return on investment catches up with the soaring cost of servicing the skyrocketing debt. Historical studies suggest problems of solvency and crimped spending arise once the national debt exceeds the national output, i.e. GDP. When debt rises above GDP, the nation starts consuming its seed corn to maintain consumption.



Savior States have an unsolvable problem: their social pension and healthcare programs were designed for economies with five full-time workers for every retiree. Now the ratio is closer to two-to-one: two workers (134 million full-time wage earners) for every retiree / recipient (67+ million recipients of Social Security and Medicare).

As this chart shows, social pension / healthcare programs are 44% of the federal budget (Social Security, Medicare and Medicaid).



As the cohort of beneficiaries increases and costs of healthcare increase, federal spending will rise regardless of any other factors. Since federal revenues don't cover expenditures, the Treasury is borrowing trillions of dollars, guaranteeing the interest payments of the government will rise significantly. This chart shows the projected growth of each segment, not the current expenditures.



Here's a breakdown of federal revenues and expenditures.



Can we maintain a 70% consumption economy without bankrupting the nation? Combine the vast requirements for investments with minimal immediate financial payoffs with social pension / healthcare obligations designed for an economy that no longer exists, the expectations that consumption "should" keep expanding regardless of debt / interest payments and the impossibility of funding all this out of revenues, and the answer is: something's gotta give. What will break is not as predictable as the reality that the current trajectory is untenable and unsustainable.

Is a 70% Consumption Economy Sustainable? (43:53 min).

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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

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 Counterculture Everyone Forgot

Rather than mocking the Counterculture, we would benefit from re-acquiring its values that favored frugality and the ownership of skills, work, enterprise and land.

Mention the Counterculture of the 1960s and 1970s, and the memory stored in popular culture is of drug-dazed, half-naked hippies dancing to rock music. There was a slice of that, to be sure, but there was much more that's largely been forgotten:

The Counterculture was primarily a response to the meaningless debt-dependent consumerism that had already taken hold of our society and economy. The core values of the Counterculture Everyone Forgot were:

1. Learning how to make and repair things oneself

2. Frugality

3. Rejection of debt

I submit that the value of these life precepts will become increasingly visible and necessary. As I've explained before, reliance on debt incentivizes the most destructive and unsustainable traits of human nature: choosing the painless, sacrifice-free option of pushing costs into the future, the removal of any incentive to become more productive and efficient, and the optimization of the illusion that the future will painlessly be able to not just service the current mountain of debt but an entire mountain range of debt that will pile up as our borrowing increases.

The emptiness and meaningless of consumerism has reached levels which are now actively destroying our health, as I laid out in gory detail in The Profitable Destruction of Americans' Health. The optimization of maximizing profit via monopoly/cartel profiteering, planned obsolescence and shrinflation (getting less while paying more) has stripped products and services of durability, so everything we buy is on a conveyor belt to the Landfill--the perfection of our Waste Is Growth Landfill Economy.

This conveyor belt of squandered wealth looks sustainable as long as debt can skyrocket at near-zero rates of interest. But those days are gone, never to return. Borrowing more money now costs money, and so long after the unrepairable, low-quality gew-gaw is rotting away in the landfill, the debt used to purchase it lives on, eating the borrower alive.

The secular bible of the Counterculture was the Whole Earth Catalog, a collection of quality American-manufactured tools and products designed for durability and productive use. In other words, things that aren't consumed, they're used to generate value. This concept has largely been lost: human beings are not productive beings, we're consumers, whose very identity anf existence flows from buying more of everything: I shop, therefore I am.

The depravity of borrowing money to squander on things of questionable or temporary value was visible 60 years ago, and the depravity will soon consume all those who believe this system is sustainable. What's the opposite of a depraved dependence on debt to buy stuff of questionable or temporary value? Buying tools with cash and learning how to use them to create value for oneself, one's household and one's community, and consume / share / sell what one produces.

The Counterculture questioned the value of debt and consumerism, and sought to return to the bedrock skills and values of the pre-debt/consumerism era. These included frugality--waste not, want not--in service of saving up and paying cash for everything rather than borrowing money, and in reducing dependence on the exploitive system of labor, where one sells their time (i.e. their life) for the dubious benefits of a wage.

The favored Counterculture alternative was to own your own work, own your own tools and own your own land. And by "own" we mean "own free and clear," i.e. zero debt.

One of the more popular books of the Counterculture era was How to Live on Nothing (1/1/71), an exaggeration of course, but nonetheless it offered a practical guide to spending as little as possible, for it was understood that frugality equals freedom and debt equals servitude.

In my own work, I've strived to offer alternatives to piling up debt / servitude. My book Get a Job, Build a Real Career describes an alternative to accepting a lifetime of debt /servitude for a university degree of questionable value--learn how to accredit yourself.

My book Self-Reliance in the 21st Century lays out a framework for increasing self-reliance by reducing exposure to systemic fragilities and vulnerabilities, and assembling real-world skills and assets rather than pile up more debt or depending on a government funded by debt.

Our first house was a micro-house constructed with hand tools as there was no electrical service onsite. Those who know how can do quite a bit with a sharp handsaw and other basic tools. A few years later, when we were 26 years of age, we built a "real house" ourselves, subcontracting the electrical and plumbing asd required by local building codes. We took out a local bank loan for $5,000 to finish the house and paid it off in less than two years. (In today's money, that's $17,500.) Then the house was ours, free and clear.

Frugality in service of saving and paying cash for durable value really is freedom. So is knowing how to do things so you don't have to pay others to do what you could have done yourself.

Rather than mocking the Counterculture, we would benefit from re-acquiring its values that favored frugality and self-reliance, the ownership of skills, work, enterprise and land, sharing knowledge with others and a rejection of debt as needless servitude.

These values don't disappear with financial success, for they are the bedrock of financial success. Here are my work slippers and my dress slippers, for going out into the world looking my best:

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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

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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Our Neofeudal, Neocolonial World

Once the chasm widens a bit more, the "efficient market" cover story bridge collapses into the abyss.

In the conventional view, Neofeudalism and Neocolonialism are mad fantasies: the world is an efficient market of buyers and sellers guided by the invisible hand of self-interest, overseen by a fair referee, the State.

This is of course exactly what those benefiting from Neofeudalism and Neocolonialism would say: since I'm doing great, everyone's doing great.

The view from inside Neofeudal, Neocolonial monopolies is more realistic. Inside the Big Tech monopolies, the leaders quite rightly compare their digital empire to that of the East India Company, which ruled most of India as a private corporation so powerful that it was in many way its own State, even as the duties on its massive commerce funded the British state and expanded the British Empire by other means.

Two books offer insight into corporate colonialism and by extension, into corporate neocolonialism:

The Anarchy: The Relentless Rise of the East India Company by William Dalrymple

Empire, Incorporated: The Corporations That Built British Colonialism by Philip J. Stern

In other words, private empires extend national empires which in turn empower private empires. The Big Tech corporations operate as Network States, a new iteration of the corporation-as-empire model. The Big Tech monopolies don't need private armies like the East India Company maintained, or a merchant fleet; they operate in the digital world as global fiefdoms.

Those beholden to these digital empires also have a more realistic view. For example, Anupam Mittal, founder and CEO of People Group, in reference to Google's new billing system, called the company the "Digital East India Company" and its policies "neocolonialism at its worst."

The mad fantasy isn't Neofeudalism / Neocolonialism, it's the absurdly self-serving mirage of an efficient market of buyers and sellers blah-blah-blah, the cover story used by every apologist for monopoly since the late 1700s to cloak the harsh reality that markets are opportunities for monopolies and cartels and the profits and wealth generated are asymmetrically distributed not by some invisible hand but by the very visible hands on the levers of Neofeudalism / Neocolonialism.

These hands don't really care what currency you use to pay them; gold is fine, bitcoin is fine, gold-backed currencies are fine, it doesn't matter what you use to pay, but pay you will.

I've engaged in several illuminating discussions with well-read readers about the nature of feudalism. They've questioned my use of neofeudalism in ways that have helped clarify the meaning of the phrase in today's world-structure.

One key difference between feudalism proper and today's corporate-state neofeudalism is the bond between the nobility and their serfs, and the role of the Church in mediating the bond. The long transition from the relationships of citizens and slaves to the centralized power of Rome in the imperial era to the feudal ties of serf to noble is explored in The Inheritance of Rome: Illuminating the Dark Ages 400-1000 by Chris Wickham.

In effect, the system of centralized benefits, coercion and redress of the Western Roman Empire slowly devolved to a decentralized structure of weak monarchies and powerful localized nobles whose serfs were bound to them by legal and practical bonds.

The Catholic Church acted as a centralized power that enforced laborers' days off for religious services and festivities, and rewarded nobles' gifts of land and wealth to the Church. The nobility had the power and the rights, but there were obligations to the serfs as well, the source of the term noblesse oblige, the obligations, both inferred and in practice, of the nobility to their serfs.

In today's neofeudalism, the corporate fiefdoms have offloaded all the obligations to States, while maintaining the mutually beneficial ties of State and Corporate Empire of the colonial model. The only obligation the corporate fiefdoms have is to their owners (shareholders) and secondarily, the obligation to grease the palms of their lackeys within the State: the elected and appointed officials who oversee the smooth functioning of the corporate-state bond that is the foundation of both Neofeudalism and Neocolonialism.

The problem is the State cannot afford both the bread and circuses obligations to modern-day serfs and its obligations to corporate fiefdoms to keep the profits and wealth flowing to the owners. These asymmetries have reached such extremes that now both the social and economic orders are unraveling.

As the unraveling accelerates, the apologists claims that it's all an efficient market of buyers and seller ruled by self-interest is going to look increasingly detached from reality. This cover story can be understood as a bridge over a widening chasm. Once the chasm widens a bit more, the "efficient market" cover story bridge collapses into the abyss.






New podcast: Leafbox Interview: Charles Hugh Smith (73 minutes, full transcript)

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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

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

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The Profitable Destruction of Americans' Health

Who needs a healthy populace rich in well-being when you can have trillions in annual corporate profits?

The destruction caused by decay is just as catastrophic as the destruction wrought by calamity. The difference is we don't notice the decay until it's too late. When a wood-frame house is knocked down by a hurricane, earthquake or bulldozer, we are stunned and mortified by the destruction. But when termites or dry-rot eat away the framing for years until the house collapses, no single event triggers a response: we set aside evidence of the eventual negative consequences and reckon we can deal with it later.

The collapse of Americans' health has proceeded in much the same fashion. According to Diabetes in 1964: A World Survey, the global rate of diagnosed diabetes in 1964 was estimated to be around 1% to 2%. In the US, 1% of the populace was diagnosed with diabetes (11 diagnosed cases per 1,000 people), and an estimated 8 cases per 1,000 were as yet undiagnosed.

Recall that "Type 1 diabetes is typically found in children and makes up roughly 5% of all diabetes cases. Its cause is unknown. Type 2 diabetes makes up approximately 95% of diabetes cases and is more common in adults." ( source)

In other words, the vast majority of diabetes cases are caused by lifestyle factors such as diet, fitness and sociological / cultural changes rather than solely by genetics.

Today, 10% of the American populace has been diagnosed with diabetes and another 3-4% or estimated to be undiagnosed. This is an astounding ten-fold increase in diagnosed cases. In raw numbers, there were 2 million diabetics in the US in 1964 when the population was 194 million, and today there are over 37 million diabetics in a population of 330 million.

Today, the global rate of diabetes is around 10%, also roughly ten-fold the 1964 rate. Statistics vary, but Diabetes Rates by Country 2023 lists both the U.S. and China at an 11% rate of diabetes. (As noted, an additional percentage may have diabetes but have not yet been diagnosed.)

The number of adult Americans who are prediabetic, i.e. at risk of developing diabetes as a result of metabolic disorders, is estimated to be 38%. So more than half of America's adult population is diabetic or prediabetic.



The estimated total of diabetics in the US is between 13% and 14%:



We all know what causes metabolic disorders, prediabetes and Type 2 diabetes: being overweight / obese due to a nutrient-poor diet and low level of fitness. Statistically, 13% of Americans were considered obese in 1964 according to this article: US obesity rates have tripled over the last 60 years.

But if you look at TV programs and news reels from the early 60s, most Americans looked like Dick Van Dyke and Mary Tyler Moore in 1964.



The net result of lifestyle and sociological changes since 1964 is almost three-fourths of adult Americans are either overweight or obese, leaving slightly over one-fourth of the population being normal weight.



A great many factors have been implicated in this staggering decline of health--food deserts, the need to work more hours, leaving fewer hours for meal prep, the relentless consolidation of farming, food and meat processing and distribution, and many others--but what we put in our mouths accounts for 70% of the causal factors. A study publish in Nature analyzed the varioue dietary deficiencies' impact on the rising prevalence of diabetes: Incident type 2 diabetes attributable to suboptimal diet in 184 countries.

"70.3% of the total, were estimated to be due to suboptimal intake of the 11 dietary factors. Excess intake of six harmful dietary factors jointly (refined rice and wheat, processed meats, unprocessed red meat, SSBs, potatoes, fruit juice) contributed a larger proportion of the total global diet-attributable burden (60.8%) than insufficient intake of five protective dietary factors (whole grains, yogurt, fruits, non-starchy vegetables, nuts and seeds) (39.2%)."

In other words, consuming highly processed, low-nutrient, high sugar / fat / salt content junk food accounted for 60% of the negative consequences, and the other 40% were the result of inadequate consumption of healthy real (i.e. unprocessed) food. This aligns with the obvious cultural shifts that occurred from 1964 to the present:

Most meals were prepared at home 60 years ago, fast-food was a rarity, eating out was a treat reserved for special occasions, snacks and sugary beverages were rare treats, cold cereals contained little or no added sugar, high fructose corn syrup was unknown, local grocery stores stocking real food were common and genetically modified crops were not yet in use. Dairies and meat production were still local rather than nationally centralized.

It's not as if people in 1964 were health fanatics. The typical diet was light on whole grains and heavy on processed meats like hot dogs and bologna, and "going to the gym" was only a thing for high school and college athletes. But food was more likely to be locally sourced, and snacks tended to be real food items such as apples or carrot sticks. The memories of the Depression were still sharp and "waste not, want not" was the zeitgeist.

Going out to eat was a luxury generally viewed as a rare splurge, as it was obviously "a waste of money." This value system made a brown-bag lunch for students and adults alike the common choice.

Kids were encouraged (or ordered) to play outside. Many households limited the hours kids could watch TV, because it was obviously "a waste of time."

Now, children spend much of their waking hours on social media, gamimg and other screentime entertainment. Adults manage to log 7 or 8 hours in front of non-work-related screens as well. Addictions to social media, gaming, pornography, etc. are ubiquitous.

As for food: fast food meals are now the norm for many, along with the purchase of sweet, calorie-rich drinks and salty-greasy snacks, highly processed foods that are designed to hijack the pleasure centers of the brain to the degree that they're addictive: Study: Foods like ice cream, chips and candy are just as addictive as cigarettes or heroin.

Eating out is widely viewed not as a luxury but as a common right. Meals prepared at home are often highly processed frozen or packaged foods loaded with salt, low-quality fat and sweeteners, and lacking fiber and other nutrients.

Though millions of people watch elaborate cooking programs, a home-cooked meal made from scratch with real ingredients has become a relative rarity.

Rather than eating real food, people consume highly processed junk food, starving themselves of the nutrition they need and deranging their bodies and minds. Advertising and marketing reduce the consuming of sustenance from a healthy enjoyment to an infantile obsession with salty-sugary-fatty mouthfeel: "it tastes so good!" So does real food, once we lose the addiction to highly processed junk food.

The result is the decay of America's health to the point of collapse.

For this reason, in my view, "A healthy homecooked family meal is a revolutionary act."

Left unsaid in all the statistics and handwringing is the obvious truth: all this unhealthy junk food is immensely profitable. No competing power conquered us and forced us to destroy our health with addictive junk food and addictive tech platforms. The Martians didn't land and enslave us. We bought the decay and reveled in it, and now look for solutions anywhere but the source of the decay: the elevation of corporate profits as the only metric of the nation's "health" that matters.

Making us ill is extremely profitable, and so is alleviating the symptoms of the resulting lifestyle diseases. Just watch a few hours of trash TV and count how many Big Pharma adverts you see, touting some costly medication to alleviate the chronic diseases directly attributable to the highly processed junk food that is #2 in adverts behind the Big Pharma ads.

As the old saying put it: "They get you coming and going." Eat this highly profitable junk food, become chronically ill, and then spend the rest of your life consuming highly profitable meds.

Isn't the entire point of having a Neocolonial Empire to improve the well-being of the home populace at the expense of the nations being exploited and pillaged? Instead, America's Corporate Neocolonial Empire first pillaged the health of the home populace as a test audience, and then exported the addictive products overseas.

Who needs a healthy populace rich in well-being when you can have trillions in annual corporate profits? Once the maximization of profits by any means available became the sole goal and measure of national prosperity, then generating illness and addiction became highly lucrative and reliable profit centers.

This is the Neofeudalism and the Neocolonial-Financialization Model I've been discussing since 2012.

Other links on obesity and diabetes:

How do diabetes rates vary by country?
China currently has 140.9 million people with diabetes, which is set to increase to 174.4 million by 2045. Experts estimate there are also 72.8 million people in China with undiagnosed diabetes.

Obesity and Overweight (CDC)
Percent of adults aged 20 and over with overweight, including obesity: 73.6% (2017-2018)

National and State Diabetes Trends (CDC)

Overweight & Obesity Statistics (niddk.nih.gov)


New podcast: Leafbox Interview: Charles Hugh Smith (73 minutes, full transcript)

---

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Read excerpts of all three chapters

Podcast with Richard Bonugli: Self Reliance in the 21st Century (43 min)


My recent books:

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

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

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Lowering Risk as We Enter Forced Frugality

If things unravel, these risk-reduction strategies quickly shift from "nice to have" to "essential." But by then, it will be too late to put them in place.

I would summarize the economic flow of recent events as:

2020-21: massive stimulus and pandemic restrictions build up household savings and generate a stock market "meme stock" bubble.

mid-2021-22: "Revenge Spending" splurging generates massive spike in consumption, profiteering and inflation.

2023: Renewed bubbles in housing and stocks, a classic "rebound / echo" bubble. Splurging wanes as savings and credit are tapped out, and higher interest rates finally start affecting behavior.

2024: Forced frugality as jobs are slashed, profits fall, inflation stays sticky, credit dries up, businesses close, Federal Reserve stimulus wanes and soaring government borrowing costs crimps government spending.

I've often discussed that the economy and society are cyclical. Nothing stays on the same trajectory forever.

History shows that when prices rise sharply, they rarely return to their previous levels as participants quickly habituate to the higher costs. Taxes, fees, rents, etc. rarely decline. Owners will keep prices high until they go broke rather than lower prices, as their own costs are also sticky.

So what's the best way to reduce the risks of forced frugality manifesting as recession / depression that affects us?

As those of you who've read my book on Self-Reliance know, my approach to Self-Reliance is to differentiate it from self-sufficiency by focusing on:

1) lowering our exposure to the risks created by deglobalization, definancialization, instability and forced frugality

2) taking control of our resources / assets rather than leaving them exposed to the excesses / errors of asset managers, the Federal Reserve, politicians, etc.

These are of course related: by taking control of our skills / resources / assets, we're accepting responsbility for their management, and the responsibility of lowering the risks of our assets being impaired by events outside our control.

The basics of lowering risk are common-sense:

1. Lower expenses, needs, expectations, obligations: it's easier to get enough of whatever you need if you need very little.

2. Eliminate debt: Uncertainties abound in our net income, but debt payments are certainties. Fewer bad things can happen to us if we're debt-free.

3. Have plans in place to respond to much more severe challenges / crises than the mainstream reckons are possible.

4. Avoid relying on speculative gains to provide income and security: easy come, easy go.

The status quo is optimized to function at a low simmer. There are only a handful of first responders and minimal resources available at any one time, and limited institutional know-how to deal with crises that overwhelm the narrow boundaries of "normal" consumption, supply chains, etc.

The wind-driven firestorm that consumed Lahaina on Maui is a tragic example of how thin resources are spread, and how they're optimized for conventional risks (doe example, a single building on fire). The immediate overwhelming of response resources is only the first domino. All the follow-on responses are equally ill-equipped for any contingency above a low-level event, or series of events.

Consider the limited staff and capabilities of the Maui County planning and building permits department. How is this small staff and limited system going to issue permits for the 1,900 structures that were destroyed?

Even the capacity of larger regions is quickly overwhelmed by even a blip in permit demand. The Malibu (California) fire in 2018 burned 600 residences to the ground, and five years later, fewer than 300 homes have been built or permitted. Bureaucratic inertia and over-regulation are factors that there are few incentives to overcome.

600 homes is a tiny blip of signal noise in the vast megalopolis of LA. Yet even this insignificant number has fatally log-jammed the status quo.

Households, businesses, institutions and government agencies are no longer very resilient. The vast majority depend on global supply chains and services performed by others for virtually everything. Once those break down or are overwhelmed, the majority are helpless as they have few real-world skills, few planned responses and few real-world resources.

4. As I have often noted, many locales are highly vulnerable to disruption because they're almost totally dependent on long global supply chains for essentials as they lack local sources. Moving out of such locales to places with at least some local resources (water, energy, food, manufacturing, etc.) and a cultural-social memory (values and connections) of self-reliance, self-help, community and sharing reduces risks and increases our options for influencing what happens to us.

I have long held that the "bug-out cabin" is not a resilient option: The Art of Survival, Taoism and the Warring States (6/27/08) Self-reliance is much better served by becoming a useful member of a productive, trustworthy network of productive people and local enterprises in a functioning community.

5. Diversifying our assets is the basic strategy to reducing risk. Much of the investment field is aimed at the top 10% who own most of the financial wealth, so "diversification" means distributing a large nestegg of wealth into conventional "boxes": some in precious metals, some in income-producing real estate, some in dividend-paying stocks, some in bonds, etc.

The problem with this approach is two-fold:

1. Not every household has a large nestegg of financial wealth that can be divvied up in passive investments.

2. All of these passive asset classes could be distrupted by authorities responding to financial/economic crises. Precious metals, stocks and bonds could be restricted, frozen, heavily taxed or expropriated by one means or another, and rental real estate could be restricted by rent control. Authorities have few limits on their responses, and their desperation to keep the status quo glued together by whatever means are at hand will be near-infinite.

Many such options are time-tested and legal. A "windfall tax" on profits and capital gains is legal, for example, and there are no upper limits on such "special levies." Local authorities can forcibly acquire property via imminent domain, and should real estate valuations plummet, the "fair value" paid for the property might be minimal.

The wealthy will have targets on their back, as the bottom 90% will support "wealth taxes" because they won't have to pay them. The authorities will leave assets the majority own (the family house) alone to avoid the risk of political blowback / disorder. The top 10% are the natural target as they 1) own 90% of the income-producing wealth 2) are a minority and 3) politically vulnerable to charges of rigging the system to their own benefit.

Not all assets are of equal utility. A house will continue to have utility as shelter regardless of its market value. It doesn't matter of the house is worth $1,000 or $1 million if it's owned debt-free and provides shelter.

Not all assets generate income we can actually control. Renting out a studio or room in our house is unlikely to face much regulatory risk, and we control who we rent to and under what conditions. In previous eras, taking boarders was a common path to generating income for widows who had lost their husbands and their income.

The core concept here if you have few resources or assets, invest them in an enterprise you own and control that has the potential to generate more income than passive investments.

For example, the capital gains / income potential of $5,000 invested passively in precious metals, bonds or stocks is negligible. But this modest sum could go a long way in setting up an enterprise based on skills, networking, etc., i.e. an enterprise whose value is generated not by the sum invested but by the skills and social capital leveraged by the modest financial investment.

One of the points of my book on self-reliance is to highlight the lack of basic life skills in today's populace when compared to the populace in Emerson's time (1840s). I admit to being stunned by how many people do not know how to change the oil in their car, make minimal mechanical repairs, nurture plants / trees, do basic home repairs, prepare simple, real-food meals from scratch, etc. Many people don't even know how to put air in the tires of the vehicle.

In an economy optimized for efficiency and profitability, tasks are segmented and specialized. Jobs where we're paid for having a spectrum of broad-based skills are rare. We're paid to be specialists, and encouraged to pay other specialists to do everything for us.

Many people are finding it difficult to find a handyperson who can do a variety of small repairs. Those who are available are often overbooked and pricey. I've heard some online sources claiming a handyperson can make $1,000 a day. Even if that overstates reality, the trajectory is clear: the number of people with a broad range of skills is narrow, and further narrowed to those willing to put up with all the hassles of running an enterprise and dealing with customers.

In an era where risks are multiplying and hard to assess, optimizing our lives for broad-based life skills, zero-debt, direct control of our assets, and becoming valued contributing members of networks of productive, trustworthy people will lower our exposure to risk and increase our security.

If the status quo manages to continue on its present course, none of these strategies reduce our enjoyment. Reducing risk by adding skills and enterprise works just as well in good times. If things unravel, these risk-reduction strategies quickly shift from "nice to have" to "essential." But by then, it will be too late to put them in place. As the Chinese saying put it: when you're thirsty, it's too late to dig a well.

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Our Mutually Reinforcing Crises: Not All Polycrises Are Equal

That's the difficulty with nonlinear, mutually reinforcing crises: our over-confidence, hubris and refusal to consider sacrifices will be our undoing.

Back in 2017 when I composed this graphic of overlapping crises, the word polycrisis was not yet in common use. Polycrisis has various definitions for example: "the simultaneous occurrence of several catastrophic events."

But this doesn't explain the truly dangerous dynamic in polycrisis, which is the nonlinear, mutually reinforcing potential of disparate crises to generate effects much larger than the initial causes. This definition is closer to the mark: "Many different problems happening at the same time so that they together have a very big effect."

Put another way: 1 + 1 + 1 doesn't generate an effect of 3, it generates an effect of 9.

You'll notice the crises on my graphic are internal socio-economic dynamics: state-cartel centralization, demographics, soaring debts, Imperial over-reach, technological disruption, disunity in elites and diminishing returns on financial predation. Many don't see these as crises; they're seen as factors, not as potentially catastrophic dynamics. This is the linear analysis: none of these dynamics is actually threatening to the stability of the US.

The nonlinear analysis is: considering each one as a discrete dynamic, that's true. But these are mutually reinforcing crises because the status quo "solutions" to each one become mutually reinforcing problems which generate much larger effects than most believe possible.

Note that external factors such as war and climate change are not shown. These conditions are not entirely controllable by US policy decisions. They affect the entire world, not just one nation-state. That said, external crises add additional nonlinear influences to the polycrisis.

Not all polycrises are equal, and it's worth noting the different types of crises, and how the "solutions" can turn the crisis from controllable to uncontrollable. One way to understand crises is supply and demand: if there are supplies on hand and the problem is a lack of money to pay for the supplies, governments can print or borrow the money to ease the crisis.

In other cases, a scarcity of supply can be ameliorated by drawing upon reserves that were set aside for just such a shortage.

But if there's insufficient supply and no substitutes or reserves, the crisis can quickly overwhelm the system. Consider fresh water. A short-term drought can be managed by tapping water stored in dams or drilling deeper wells. But once the drought becomes long-term, there are no longer any reserves or substitutes available. Water is heavy and costly to transport, and it's not feasible to import it from other countries.

Once borrowing or printing more money can't solve the problem, or become the problem, the wheels fall off. We've lost the ability to solve any problems that can't be resolved painlessly and without elites and incumbents making any sacrifices.

Printing or borrowing money can't solve the problem. The entire edifice of the market economy is based on the assumption that there's always a substitute available if there's enough money to buy it. Markets no longer function when there are no substitutes, as the wealthy will buy up whatever is available and everyone else will do without.

What's the market solution to moral decay and the decline of civic virtue? There isn't one. Markets assume price will be discovered by supply and demand, and so corruption becomes a "market" of bribes and favors, an auction that "works" as a market even as it undermines civil society.

The sacrifice-free "solutions" approved by the self-serving status quo elites end up generating self-reinforcing dynamics that generate new crises. Borrowing or printing money is every elites' favorite "solution." but if "free money" doesn't solve the crisis in short order, the excess of "free money" becomes its own problem.

In other words, doing more of what's failed because that's what worked in the past becomes a self-reinforcing crisis as the elites cling to whatever is easiest and demands the least sacrifices.

Put another way: the system is broken beneath the surface, but these structural failures only become visible when they reinforce each other in a polycrisis. Elites and institutions have grab-bags of "solutions" based on prior crises, grab-bags which are inadequate when new, mutually reinforcing crises emerge.

But since they're constrained by what's acceptable to elites, interest groups and incumbents, their "solutions" are limited to "safe" responses that don't demand any sacrifices of elites, interest groups and incumbents. These policy tweaks are simply too limited to address the problem, and so they exacerbate the problem rather than solve it.

Nobody in positions of responsibility believes the systems we depend on can unravel. This belief in the permanence of systems that are actually inherently fragile cripples those in charge, as their crisis responses are completely inadequate to the scale of the effects generated by mutually reinforcing crises.

The erosion of accountability doesn't seem to matter now, but it will matter when things start unraveling. Everyone will have an excuse, call another emergency meeting and demand that somebody somewhere else do something to make the pain stop. But the decay of accountability is consequential, and there won't be anyone available to "save the day" because those who demanded accountability of others have been cashiered or sent to bureaucratic Siberia.

Everyone believes they'll have plenty of time to craft a response, but time is what becomes scarce in rapidly delaminating nonlinear crises. We're prepared for discrete events that occurred in the recent past, but not for self-reinforcing / mutually reinforcing dynamics.

The system is designed to handle one challenge at a time, but not a long-term multiplicity of challenges.

And as noted above, the status quo is unaware of its own systemic flaws because sclerosis and corruption are all anyone has known. A broken system can still function when the demands placed on it are modest. But when things get serious, the system breaks down, and everyone who ignored or denied the structural weaknesses is caught off guard.

Not all polycrises are equal. Those that can be resolved by borrowing or printing money are controllable, at least until the expansion of :"free money" itself becomes a self-reinforcing crisis. But problems that can't be resolved painlessly with more "free money"--systemic sclerosis and corruption, moral decay, warring elites, demographic decline, diminishing returns on financial predation, state-cartel strangleholds on the economy, supply scarcities for which there are no substitutes--have the potential to reinforce one another to the point the system's structural rot becomes visible. By then, it's too late.

How could this be happening? Indeed. How could this be happening? That's the difficulty with nonlinear, mutually reinforcing crises: our over-confidence, hubris and refusal to consider sacrifices will be our undoing.

---

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

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We Need a Change: Taylor Swift for President

Once leadership of this nature is properly understood, Ms. Swift is eminently qualified to be President.

Before we indulge my flights of fancy, let's stipulate that Taylor Swift is far too smart to have any interest in public office, as the world is her oyster and there is no upside--none--to accepting public office.

Having established that it's not in the realm of possibility, let's explore the "what if" of Taylor Swift assuming the US presidency. To start, let's note that she turns 35 years of age--the legal requirement to be President--on December 13, 2024, so she will be 35 for her inauguration in early January, 2025.

There are obvious upsides to Ms. Swift assuming the presidency. One, we will finally break free of the gerontocracy that currently rules the nation. Aren't we collectively tired of having doddering, tottering old folks in charge? Wouldn't it be a welcome change to have a vibrant, smart, young president who as a bonus, is essentially apolitical?

Two, imagine having a superstar as the US president. Imagine the impact when President Swift vists a foreign capital of oldsters who still dye their hair jet-black with dollar-store hair coloring in a laughable simulacrum of youth. "The president of the United States will now perform a song." If that doesn't bring a smile, then you've been watching too many doddering, tottering old geezers cling on to power globally.

Here we are, still sending poor 100-year old Henry Kissinger off to Beijing on a diplomatic mission. Wouldn't it be refreshing to send President Swift instead?

Three, Ms. Swift has displayed a truly formidable financial acumen. She has re-recorded and re-issued previously issued material to establish rights to her music, and will soon join Sir Paul McCartney as a music-made billionaire.

Four, she is not a divisive, corrosively partisan figure seeking office to mint millions. Isn't anyone else tired of politicians claiming to "serve the public" while piling up immense personal fortunes in office, or shortly after leaving office? Isn't anyone else tired of politicians actively seeking to create even more partisan divisiveness as an election ploy?

Ms. Swift is widely admired for being down-to-earth and responsive to her fans. Character matters, and it would be remarkably refreshing to have a president who wasn't a phony.

The initial response to this "what if" is: but she's not qualified. That depends on what failed model of leadership you're clinging to. The current model of leadership globally is autocracy--autocrats, elected or self-appointed, issuing diktats and commands to underlings.

There is another, more effective model of leadership that's tailor-made (ahem) for Ms. Swift: the figurehead leader who stays above the fray, and whose primary job is to channel public pressure on the self-serving bureaucrats and legislators to get it sorted--to set aside the partisan grandstanding and do the work to incrementally advance the interests of the citizenry, with negotiations, diplomacy and compromises, and by imposing accountability on currently unaccountable officials--in other words, how things actually get done.

The figurehead leader generates the positive spirit that enables the incremental work to move forward. By channeling public demands, figurehead leaders force recalcitrant officialdom to do the work to move the nation forward, and hold those in positions of responsibility accountable for their dithering incompetence. Get it sorted.

The figurehead leader appears to be "doing nothing" while they're actually leading. Leadership isn't just being a clumsy autocrat issuing endless decrees; it's establishing goals and conducting oneself in a way that fosters an environment in which the citizenry demand that things actually get done by those who were elected or appointed to do the work.

Once leadership of this nature is properly understood, Ms. Swift is eminently qualified to be President. Isn't anyone else tired of the autocrat model of "leadership" which is ultimately a simulacrum of actual leadership?

We need a change rather desperately, not just in leadership but in the model of leadership. A youthful superstar would offer a unique opportunity. Too bad it's not a realistic option.

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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)

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Downward Mobility and Life on the Margins

We can anticipate a sharp reduction in conventional financial security in the next decade as the waste is growth / Landfill Economy runs out of cheap materials to throw away.

There are many pathways to life on the margins of the economy and society. Let's consider three:

1. Our character and upbringing leave us unable to fill the work slots valued by employers. Constitutionally incapable of fitting into the conventional slots, we find our way to (or end up in) the margins. (I raise my hand here.)

2. Opportunities to lock in the security of steady work that can support a family are scarce in one's locale, class, caste, etc. Most people are thus relegated to life on the margins.

3. Circumstances change, and the foundations of our security melt into air. The conventional socio-economic slots that provide security become scarce and we slip-slide from predictable security to the insecurity of the margins. This is downward mobility, a slide accelerated by high-cost lifestyles that require reliably high incomes.

Those who find themselves incapable of fitting into the conventional slots still have to support themselves (unless they chose their parents wisely and are trust-funders living off family wealth). Despite their unconventionality, the unconventional still dream of conventional success (recognition, admiration, earning lots of money, etc.) arising from their creative endeavors.

A relative handful of creators manage to mint millions, as many sectors of conventional economy need "something new" to sell to meet the ceaseless demand for novelty to separate the avant garde and the wealthy from the merely aspirational bourgeois. (The acquisition of status is a struggle through shifting sands that is highly profitable to those selling the latest must-have signifier.)

Creative success follows a brutal power-law long tail distribution. The few at the top reap the vast majority of the royalties, recognition, etc., a small percentage earn a conventional middle-class income and the vast majority earn too little to support themselves.

To sustain their creative endeavors, they must find some other source of income, preferably part-time (so they have time to create) and doing work that doesn't demand adherence to (what seem like nonsensical) standards. These moe informal sources of paid work include much of the restaurant-food-service industry, light construction, non-profit organizations in the arts and social services, delivery and other 1099 gigs, etc.

These more fluid sectors offer more opportunities to take control of one's work and life even as they offer minimal security and pay. There are always tradeoffs, and taking control of one's work and life is never free.

The money is rarely enough to live large, and so the creatives live on the margins in seedy housing, scrounging cheap food, riding a bicycle or scooter when weather allows, etc.

A few manage to acquire a specialized skill that enables them to earn a good living working part-time. These tend to be professional or trade skills that command high hourly wages.

Others endure work they loathe until it breaks them. After they burn out and accept they're not cut out for the conventional slots, they drift to the margins. The security offered by conventional slots came at too high a price.

Those in the second category--the economy has too few opportunities for conventional security and status--must scrape by on the margins, or they must move to a place with more opportunities. This is rarely easy, and despite their best efforts, they may end up on the margins in the new locale.

But life on the margins can be much better in places with more nooks and crannies in the economy and more affordable shelter and services--more niche enterprises, quirky corners, etc., better public transport that offers affordable mobility, and a wider diversity of like-minded people to connect with. Networks in the margins offer the same advantages of networks in the conventional economy: more connections means more opportunities to find work and collaborate, share one's creative endeavors, etc.

We can anticipate a sharp reduction in conventional financial security in the next decade as the waste is growth / Landfill Economy runs out of cheap materials to throw away and the credit needed to buy replacements for what broke/became obsolete and was tossed out. Financialization and globalization have both hit intrinsic barriers to further expansion and so they're stagnating and reversing.

Global asset bubbles inflated by financialization and globalization are bursting and cannot be reinflated a fourth time.

How many jobs can actually be replaced by commoditized (i.e. nearly free) AI is unknown, but even if it's only 10% of the number projected by AI boosters, it may contribute to a systemic decline in the white-collar slots that were considered "safe and secure."

When credit-fueled expansion reverses and asset bubble burst, this will trigger the breakdown of all the systems that only function if there is an endless expansion of credit, consumption and asset valuations. This includes many if not most systems considered integral to the status quo foundations of conventional security.

As a result, a great many people will experience downward mobility as the foundations of their financial security evaporate or crumble. Those who need less and control more of their life (the essence of self-reliance) will manage life on the margins much better than those who need high incomes to survive and who control very little of their lives.

Those with robust personal networks, few wants/needs and a wide spectrum of skills will find the margins are sufficient, or they may even thrive in the less structured churn of life on the margins.



How Regulatory Capture is a Net Negative to Society (28:34 min)

Michael Douville and I discuss: 2008 Redux? Warning! (19:42 min)

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My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

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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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