Pride of Failure and the Fall


“It was a miserable damn performance, just like it always is. These people won’t listen. They make the same mistake over and over again in the same way”.

— John Paul Vann after the battle of Ap Bac in South Vietnam, 1963

 

One of the great themes of the ongoing unraveling is the establishment’s tendency toward failure and the choice taken — usually with great cynicism — to adopt over-elaborate and punitive strategies in the place of simpler, less destructive alternatives. At the same time, this failure strategy is almost always hidden behind a scrim of public theater which by itself indicates the managers understand the choices yet purposefully make the wrong ones.

Administrative failure isn’t new or a monopoly good of the current regime, nor is it entirely the by-product of our current unraveling. Failure is the 600-year-old stepchild of modernity. Along with contrived ‘scarcity’, failures of past regimes are offered as reasons to justify modernity’s expansion into every area of human- and non-human life. Without failures there are no reasons for more ambitious follow-ups. The cans are kicked; the latest- and greatest expedients are duct-taped into place on top of all the others. Complexity isn’t designed, it grows like a fungus; as failures emerge there are more complex responses which reveal more failures which in turn give birth to more complexity.

Permanently eliminating the sources or cause for failure is always judged to be ‘costly’ or ‘difficult’, it ‘takes too long’ or discomforts wealthy clients. Structural adjustments are rejected when the choice endangers some precious aspect of modernity. Because making minor reforms risks the entire enterprise, we hesitate and the status-quo becomes institutionalized.

Failure inhabits military adventures gone awry, policies that pitch the small- but self-sufficient enterprises into competition with gigantic- but credit dependent varieties, decrees which encourage evasions of the law rather than compliance, processes that demand the worst from people other than their best. Failure emerges from money- and credit policies that enrich lenders at the expense of borrowers, support asset prices rather than incomes, that sacrifice the future to the insatiable present. Waiting for us at the end of the road is the entropic failure for which there are no possible antidotes; the light at the end of the tunnel is a grave marker. “Here lies modernity” … when the entire edifice of patched and tattered expedients collapses with a sigh of exhaustion and disillusion.

The ‘Modern America’ the world’s citizens inhabit in 2013 sprang almost fully- formed from the US’s victory over Germany and Japan in World War Two. We defeated two military superpowers in two different parts of the world at once; this was our first- and defining, ‘If we can put a man on the Moon’ moment. Americans were competent; we did things right, we were efficient yet (somewhat) humane and civilized. Our armies triumphed without massacring prisoners or raping and pillaging, they gave candy to the enemy’s children. America succeeded in spite of internal differences and a crushing economic environment. After saving the world from Nazism and Japanese militarism Americans believed they could do anything including remake the debauched old world in their own, atomic-powered, tail-finned image … and to the large degree they succeeded.

America’s failure regime emerged twenty years later in Vietnam; which gave birth to ‘Blunder, American-style’. Vietnam war is the template for our subsequent- and ongoing failures: policy-making as play; denial, the over-commitment to faulty premises and propagandistic marketing, institutionalized stupidity and sadism, fetishized violence and technology, complexity for its own sake; the refusal to consider limits, preening arrogance and intellectual dishonesty; colossal/heedless waste of irreplaceable social capital — Americans’ narcissistic idealism and naive patriotism — all of this for non-existent gains. Ambitious, corrupt men set about to satisfy trivial personal ambitions; even as they failed, the country was broken: red versus blue, old vs. young, hawk versus dove, urban against rural, liberal/conservative. Beavis vs. Butthead … The great failure in Vietnam sits like Carlos Castaneda’s death upon the left shoulder of the United States. Everything the US does and has done since 1968 has been a desperate effort on the part of both the establishment and culture to re-write history; to find a different outcome to the Vietnam War.

Enter the monetary policy failure …

… enter Janet Yellen. It’s not hard to feel sorry for Yellen because she has absolutely no clue what she is about to step into …

 
Triangle of Doom 110313(1)

Figure 1: The sublime Triangle of Doom: both Bernanke’s and Yellen’s cognitive failure is that they ignore the ongoing exchange relationship between money and petroleum, where both are priced regardless of interest rates. Central banks cannot ‘print’ crude oil, they cannot print jobs or value … they cannot even print money. Central banks can only refinance existing loans, they can witch-doctor and pantomime.

Yellen’s eligibility has less to do with her ordinary talents as an economist, rather more with her ability to meet public expectations of what a Federal Reserve System Chairman is supposed to look, act and sound like. Yellen is a placeholder, a technocratic character set to operate within an elaborate bit of post-modern Kabuki. Her signature characteristic to date has been unswerving support for Bernanke’s monetary accommodations, including zero-percent policy rate and securities purchases and asset swaps with commercial lenders. As Bernanke’s backup samurai, Yellen promises more of the same: more accommodation, lowest of all possible interest rates, more QE (quantitative easing or asset purchases).

That this policy is a self-evident failure does not matter! It will continue until the entire monetary/fiscal regime collapses under its own weight. How long will that take?

 
LR-stimulus-Fig-5

Figure 2: The thin, dashed line @ the middle of the chart is the amount of GDP gained by way of the amounts of credit indicated by the red line at the top since 2008; <$1 trillion of GDP gained from the +$35 Trillion in ongoing accommodation/rescue (Doug Short/Lance Roberts, click on for big). Soon enough Inevitably, there will be negative growth gained from accommodation, then what? There is no ‘Plan B’.

Enter the US healthcare flop, (Zero Hedge):

 

Total Healthcare “Enrollment” As A Result Of Obamacare: -3.9 Million

By Tyler Durden

“We fumbled the rollout on this health-care law,” could be President Obama’s understatement of the century. In the month-or-so since Obamacare was unleashed 106,185 people enrolled (based on a loose re-definition by the White House). However, in that same period, the WSJ reports a stunning 4.02 million people received policy cancellations. So, in a month, a total of 3,918,205 fewer people are now ‘enrolled’ in a heathcare plan than before Obamacare. So far, California, Florida, and Washington are suffering the most under Obamacare…

 
20131115_obamacare1

Figure 3: State net enrollment in the Affordable Care Act including policy cancellations, (ZeroHedge/Wall Street Journal). Failure is built into the strategies the government chooses, so is corruption, (Washington Post):

 

Health-care Web site’s lead contractor employs executives from troubled IT company

By Jerry Markon and Alice Crites

The lead contractor on the dysfunctional Web site for the Affordable Care Act is filled with executives from a company that mishandled at least 20 other government IT projects, including a flawed effort to automate retirement benefits for millions of federal workers, documents and interviews show.

A year before CGI Group acquired AMS in 2004, AMS settled a lawsuit brought by the head of the Federal Retirement Thrift Investment Board, which had hired the company to upgrade the agency’s computer system. AMS had gone $60 million over budget and virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee.

The thrift board work was only one in a series of troubled projects involving AMS at the federal level and in at least 12 states, according to government audit reports, interviews and press accounts. AMS-built computer systems sent Philadelphia school district paychecks to dead people, shipped military parts to the wrong places for the Defense Logistics Agency and made 380,000 programming errors for the Wisconsin revenue department, forcing counties to repay millions of dollars in incorrectly calculated sales taxes.

Lawrence Stiffler, who was director of automated systems for the thrift board at the time and a 25-year veteran of IT contracting for the federal government, said AMS was highly unreliable. “You couldn’t count on them to deliver anything,” he said.

In the years since the purchase, CGI has grown rapidly in the United States, dramatically expanding its role as a federal and state contractor. Agencies that tapped CGI Federal often rehired the company and, in the past two years alone, the company has been awarded contracts with at least 25 federal agencies worth $2.3 billion.

 

The failure of the health insurance scheme isn’t simply a matter of poorly executed software. It would have been very simple for the government to expand Medicare to cover every American. Too simple … doing so would have rendered precious insurance companies redundant so it was not even considered. No health insurance approach can succeed without cost controls — patent reform, salaries for medical professionals, the end of piecework payments and malpractice awards, breakup of medical cartels — none of these were considered, either.

Enter home mortgage modification programs, (Town Hall):

 

The Stunning Failures of Obama’s Mortgage Program

Kevin Glass

Way back in 2009, President Obama’s Treasury Department launched the Home Affordable Modification Program, a massive authorization to help homeowners struggling with their mortgages in the wake of the financial crisis. 1.2 milllion people participated in the program at a cost to taxpayers of $4.4 billion.

A report [pdf] dropped this week from the Office of the Special Inspector General for TARP (SIGTARP) that HAMP has a stunning failure rate. Of the 1.2 million HAMP participants, 306,000 have re-defaulted on their mortgages, at an additional cost to taxpayers of $815 million. What’s more, another 88,000 homeowners in the HAMP program have missed payments and are at risk to re-default.

The mortgage modification schemes share many of the characteristics of the health care enterprise: complexity for its own sake, denial regarding the extent of the problem and capture by the same industries that caused the original breakdown in the first place. HARP is another failed home mortgage modification program, (Examiner);

 

HARP loan program has been a dismal failure

Shelby Bateson

December 13, 2009

The HARP loan refinance program, which was supposed to have aided four to five million home owners with a streamlined refinance of their existing mortgage has been a dismal failure.

The HARP (Home Affordable Refinance Program) program was designed to help those with loans owned by either Fannie Mae or Freddie Mac, but underwater, refinance their mortgages to lower prevailing mortgage rates. The program was rolled out in April 2009 with lots of anticipation that this program would free up cash for those home owners and help the economic recovery.

The end result is that only 116,677 loans, as of September 30, 2009, have been modified. The problem has not been a lack of interest by home owners, but a lack of interest by lenders. As originally rolled out, lenders were able to refinance loans up to 105% underwater on the first mortgage, regardless of the amount of a second mortgage.

As home values continued to fall, during the summer, the ratio underwater was raised to 125%, but almost no lenders permitted the increased ratio. And, in fact, lenders found almost any reason under the sun to decline these loans.

Enter foreign development failures, (World Affairs Journal):

 

Money Pit: The Monstrous Failure of US Aid to Afghanistan

Joel Brinkley

More than half of Afghanistan’s population is under twenty-five, which shouldn’t be surprising since the average life span there is forty-nine. But the United States Agency for International Development looked at this group and decided it needed help because, it said, these young people are “disenfranchised, unskilled, uneducated, neglected—and most susceptible to joining the insurgency.” So the agency chartered a three-year, $50 million program intended to train members of this generation to become productive members of Afghan society. Two years into it, the agency’s inspector general had a look at the work thus far and found “little evidence that the project has made progress toward” its goals.

The full report offered a darker picture than this euphemistic summary, documenting a near-total failure. It also showed that USAID had handed the project over to a contractor and then paid little attention. Unfortunately, the same can be said for almost every foreign-aid project undertaken in Afghanistan since the war began eleven years ago.

 

Deja vu all over again … (Washington Post):

 

Top Democrat: Obama’s red line strategy on Syria ‘not well thought out’,

By Aaron Blake

The top Democrat on the House Armed Services Committee says President Obama’s decision to draw a “red line” when it came to Syria using chemical weapons “was not well thought out.”

“I don’t think you draw a red line like that, that is not well thought out,” (Representative Adam) Smith said during an appearance at the Council on Foreign Relations on Thursday. “You do not say, ‘If you step across this line, we will commit U.S. military force,’ unless you really mean it, unless you know the full implications of it.”

Smith also accused the administration of not working with Congress on foreign policy and of making it look like it was developing that policy “on the fly.”

 

There is the failure to craft responsible energy policy and climate policies … instead there is denial, (Bloomberg):

 

U.S. to Be Top Oil Producer by 2015 on Shale, IEA Says

By Grant Smith

The U.S. will surpass Russia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations, the International Energy Agency said.

Crude prices will advance to $128 a barrel by 2035 with a 16 percent increase in consumption, supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil, the IEA said today in its annual World Energy Outlook. The role of the Organization of Petroleum Exporting Countries will recover in the middle of the next decade as other nations struggle to repeat North America’s success with exploiting shale deposits, the agency predicted …

U.S. crude production rose to 7.896 million barrels a day in the week ended Oct. 18, the most since March 1989, according to the Energy Information Administration. West Texas Intermediate futures dropped as much as 83 cents to $94.31 a barrel in trading today on the New York Mercantile Exchange and was $94.83 as of 11:36 a.m. in London.

Global oil demand will expand by 14 million barrels to average 101 million a day in 2035, according to the IEA report. The share of conventional crude will drop to 65 million barrels by the end of the period because of growth in unconventional supplies, the IEA said without providing current data …

Brazil will triple output to 6 million barrels a day by 2035 as it exploits deep-water reserves, an expansion that will account for one-third of the increase in global production and make the nation the world’s sixth-largest oil producer, according to the agency.

 

How goes Brazil, really?
 
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Figure 4: Brazilian net exports by way of BP/Mazama Science Who knows what will occur twenty years from now when the promoters have retired and cannot be held accountable for their misstatements? Right now Brazilian demand is rapidly outstripping diminishing Brazilian supply. Putting cars on the highway — in Brazil as elsewhere — costs a lot less than extracting oil from oil reservoirs under thousands of feet of ocean water, (FT).

 

From burgeoning start-ups to Brazil’s own state-controlled behemoth Petrobras, many of the industry’s players are struggling to live up to the heady expectations of five years ago when vast offshore oil discoveries promised to transform the country.

Brazil’s 2007 pre-salt finds, estimated to contain up to 100bn barrels of oil, came as oil prices soared towards $150 a barrel and capital began to pour into emerging markets, creating a sense of euphoria in the industry that has gradually turned to disappointment.

“There was the idea that Brazil would solve all its problems with the pre-salt oil and this optimism contaminated the market, creating a large speculative bubble,” says Adriano Pires, founder of the Brazilian Centre of Infrastructure and a former member of the country’s oil regulator ANP.

 

The International Energy Agency says Brazil will more than double its production while the Brazilians themselves are unable to hold the modest level of production they already have; Brazil looks to have entered terminal decline, its oil fields have ‘vast’ potential but apparently little accessible oil …

 
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Both climate change and energy depletion are serious as a heart attack. Meanwhile, Americans are unwilling to even consider make the needed material sacrifices so that the human race might escape the consequences of dumping billions of tons of carbon- and other gases into the atmosphere. As in Vietnam, we refuse to face reality, we believe our machines will save us rather than destroy us contrary to all available evidence.

 

Surviving Climate Change

Is a Green Energy Revolution on the Global Agenda?

By Michael T. Klare

A week after the most powerful “super typhoon” ever recorded pummeled the Philippines, killing thousands in a single province, and three weeks after the northern Chinese city of Harbin suffered a devastating “airpocalypse,” suffocating the city with coal-plant pollution, government leaders beware!  Although individual events like these cannot be attributed with absolute certainty to increased fossil fuel use and climate change, they are the type of disasters that, scientists tell us, will become a pervasive part of life on a planet being transformed by the massive consumption of carbon-based fuels.  If, as is now the case, governments across the planet back an extension of the carbon age and ever increasing reliance on “unconventional” fossil fuels like tar sands and shale gas, we should all expect trouble.  In fact, we should expect mass upheavals leading to a green energy revolution.

What is a ‘green energy revolution’? It sounds like all the other energy revolutions, more waste and another opportunity for people to fool themselves …

ADDENDUM: The lesson of Vietnam

Americans in Vietnam believed that it was impossible for the US military to be beaten by poorly equipped Vietnamese farmers and tradesmen. Yet, they were beaten, and the reason was the tremendous advantages that the Americans had over their Vietnamese adversaries — of money, economic power, intelligence gathering, transport, technology and weapons. In Vietnam and elsewhere, the greater the advantages = greater certainty of defeat.

Advantages were the American’s undoing because they relied on them to the exclusion of everything else and became over-confident. The Vietnamese communists cleverly planted false information regarding communist infiltrators inside neutral- and pro-South villages and towns, this was picked up by US military intelligence networks which led to the Americans launching artillery and air strikes so as to harass the infiltrators. These attacks caused the deaths of many civilians who quickly turned against the Americans. Over a three-year period beginning in 1963, most of South Vietnam changed from being pro-South Vietnam and pro-American to pro-communist due to compromised intelligence and indiscriminate American bombing and shelling. Once the marginal citizen in South Vietnam become an adherent of the communist North, the war was effectively lost for the Americans. Past that point, it didn’t matter how many Vietnamese the Americans killed, more deaths simply tilted the balance against the Americans and their Vietnamese adjuncts. Toward the end, the frustrated Americans were reduced to waging a genocidal air campaign against their putative allies.

The same manner, our technological advantages are the root cause of our ongoing economic, social and political failures. Use of technology incurs costs which add up, eventually costs become greater than any possible benefit that can be gained by the technology. In the beginning the costs are so modest to be invisible, they aggregate over time, like the rate of depletion in oil fields or amounts due as interest. Eventually, the costs become breaking, like our debts, taken on to pay for and operate our precious — and money losing — machines.

The Chinese philosopher Sun Tzu remarked, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

In Vietnam the Americans had false ideas about themselves and contempt for the Vietnamese citizens whom they were intended to support; Americans also had purposeful ignorance about the enemy. The Americans did not know themselves or their enemy; as a result they succumbed despite a vast expenditure of treasure, materials and millions of lives.

We don’t bother to know ourselves right now, we prefer to live within bubbles of distraction that emerge from the television and from in front of the windshield of a car. We have made the world and all it contains into our enemy at the same time! We can’t bother ourselves to know anything about the world, we have contempt for it. This leaves us with a choice that is rapidly becoming barren: we can stop fighting, lay down our advantages and become peaceable. We will be uncomfortable but we need not “fear the result of a hundred battles” as Sun Tzu would say … because we would not fight any. Alternatively … we can be crushed, just as we were in Vietnam instead by the world we have taken up arms against.

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107 thoughts on “Pride of Failure and the Fall

  1. eeyores enigma

    Here is the GREEN revolution we will get;

    “Increasing Toxicity of Algal Blooms Tied to Nutrient Enrichment and Climate Change”

    So first we will get massive algae blooms that will cover much of the open water of the planet but the good news is that then it will die off, sink to the bottom and eventually form new fossil fuel deposits so we start all over again.

    1. steve from virginia Post author

      I seem to recall somewhere reading that tropical seas were overrun with Salvina which is a kind of floating fern. As these died and sank they decomposed into carboniferous layers … things just run in cycles. More carbon, less carbon. Don’t forget the sulfur.

      I’m so leery of the ‘easy solutions’ because none of them involve any give-backs. It’s all ‘taking slower (more efficintly)’. Taking, nevertheless.

  2. Ellen Anderson

    Most people are not at all concerned with climate changed and will pitch a fit if they are asked to give up their modern lives – in particular their cars.
    Now my refrigerator is broken…. shall I try to make one of those low energy fridges by retrofitting an old chest freezer? Lots of plans for that on the internet. Has anyone tried and succeeded?

      1. Ellen Anderson

        OK powering down – Sub Zero with custom cherry doors out you go! The best thing about a power outage is always not hearing its compressor and/or fan.
        I had better recycle the cherry doors so relatives are not overly concerned about batty old lady doing damage to “resale value of house” though, don’t you think, JB?

        Nicole Foss says that solar panels are not what they used to be. Ideally I would use solar panels with a DC powered appliance and not have to use a wasteful inverter but DC powered appliances are super expensive, inverters are unreliable and I need to start small due to lack of $$. I still haven’t been able to do the hot water heater project.
        I think I will start with grid-tied power and an old freezer and see how it goes. My big problem is keeping milk cool so, if worst came to worst I could make ice in the freezer and transfer it to the conversion turning it into an old fashioned ice box.
        This sounds like a pretty good solution to long term carrot storage too. In the root cellar they have to be buried in damp earth and it is a pain.
        I will let you know how it goes. It is still pretty modern though, I am afraid. I have a big crock of veggies fermenting that we will taste next weekend. That is more medieval but with enough hot sauce I am sure I can deal.

      2. Jb

        Ellen,

        Unfortunately, replacing (or not replacing) the SubZero with anything of lesser value (fashionable appeal) immediately gets you labeled a ‘batty old lady.’

        If everyone else is crazy, does that make us sane?

      3. Ed

        What is a chest freezer?

        This is really the biggest problem I have personally with this “powering down” stuff. I have so little experience with it that I can’t even get the most basic comments. I have to start from scratch.

      4. steve from virginia Post author

        A chest freezer is a stand-alone appliance that opens at the top like a Styrofoam cooler rather than at the front as with conventional refrigerators.

        The chest freezer is refrigerated but designed to operate at near-zero temperatures, people buy them for long-term cold storage. With a controller they can be used as refrigerators. Because the cold air doesn’t leak out every time the door is opened, chest freezers make excellent refrigerators capable of operating at very low cost

    1. eeyores enigma

      I built a walk-in fridg by super insulating the back 8′ of a 24′ modular portable job-site office I bought at auction for cheap. Installed an 8000 btu ac unit with a coolbot controller

      http://www.storeitcold.com/

      Keeps the 7’x7′ walkin around 38 degrees for a fraction of what a regular walk-in compressor would take.

      Keeps all the farm produce, spud cellar, some house groceries, beer/wine, everything cold for about the monthly expense of a regular fridg.

  3. The Dork of Cork

    Perhaps the only purpose of Vietnam was to introduce $$ in that area of global banking operations.
    Destroy the village through military operations but also destroy it via more insidious means.
    Reading the book 20 Years a growing is recommended.
    http://books.google.ie/books/about/Twenty_Years_A_Growing.html?id=bCsKEEyRCAsC&redir_esc=y

    In that almost non monetary island of the British isles the island economy was transformed from the surplus goods created because of the British Keynesian experiment.
    Instead of catching a few rabbits & mackerel to eat , the stored goods from those torpedoed ships was traded for monetary units.
    Life became easy…..money traded for those goods bought stuff not sunken on the boats.
    The Great war was the good times for the island.
    But wars eventually end…..people became more dependent on tokens and less on their old habits.
    When the emerging Irish state scaled up in its modest way centralized activity forced many beyond Dingle town , to Dublin and the civil service whose job it was to manage the still small monetary vortex
    Within a few decades the state evacuated the place.
    It was perhaps the beginning of the end.

    I am in the conspiracy camp – I believe we are dealing with tremendously sophisticated players.
    Vietnam was a success story – they make cheap shirts for “us” now.

    1. Ellen Anderson

      Nah – I think the world is run by entitled, arrogant “Gentleman’s C” students. Probably drunk to boot.
      Steve is spot on when he says that their impulse is to deal with each failure of a complex system by making it more complex thus dazzling and confusing critics.

      1. ben

        wrong placement again, for my comment above.

        dork, i agree with you. organic people think small. THEY have a big-society agenda and this is the information age. they are sick and they are ‘tribal.’ the longer modernity runs goes the more mature control systems theory gets. if THEY are not doing all the conspiring themselves, then THEY are getting ambitious and materialistic underlings to do the conspiring for them, whether the underlings are conscious of their roles or simply neoliberal and dead to the world, unaware of the urban, absurdist slip-slide of modernity; that what was left is now progressive, what was progressive is now center-left, and what was center-left is now center-right. along with anti-modern radicals such as ourselves and somewhat more bizarre strains like aryanism, it is only the elites, always and forever center-right, that not just understand this but feel it in our bodies, the radicals as cancer, the sick and elite as dopamine.

        i know nothing about it, steve, but before reading dork’s comment i was going to ask how you would disassociate the vietnam war from the fact that vietnam is now cheaper than china. is the economic colonialization a separate product of globalization or were vietnamese ruralism so frayed by the destruction that they came, like i believe dork suggested, (industrial) salvage society dependents.

  4. The Dork of Cork

    @Ellen
    If you listened to Larrys latest speech you may find he knows a thing or two.

    The magic of compound interest (now on a global banking scale rather then as individual banking / nation units ) flowing towards centers of financial power concentrates capital.
    That capital cannot be consumed by consumers as the product produced is not optimized for local use or there is inertia in the nature of the product which means some vital cog is missing from the production / distribution / consumption loop.
    It needs to be destroyed.
    God bless him but Larry knows how to do it.
    As keeper of the gate he is rewarded for his good deeds.
    The relative wealth disparity is maintained between the insiders and the outsiders.

    Its a fantastic global scheme – very well executed.
    You could clearly see they were loving every minute of it.
    The chutzpah was self evident.

      1. Jb

        So….the underlying very serious problem hasn’t gone away….and their efforts to further contain the financial crisis isn’t returning people to employment…and we should get used to deteriorating circumstances for potentially many years…before we do whatever we did before to fix the problem.

        It sounds like the plan is to close the banks for 2-3 months and restructure. Anyone have any insight on what they did ‘before?’

      2. steve from virginia Post author

        Banks failed all over the world after Creditanstalt collapsed in 1931. There was a gigantic run, depositors demanded gold which the holders were loathe to give up. The result; velocity cratered which increased the demand for circulating money which was in turn held more tightly is a vicious cycle.

        Creditors called loans, borrowers who retired their loans saw their repayments extinguished. This is how the money-creation process works: money appears when it is loaned into existence then extinguished when the loan is repaid. The demand for currency was increasing even as currency supply was being diminished; the result was a scarcity premium attached to money. It became impossible to find enough of the expensive currency to retire the remaining loan balances … this in turn caused defaults and decline in worth of non-money assets in yet another, complimentary vicious cycle.

        By 1934, most US banks were permanently closed except for those in two states. When Roosevelt was inaugurated he declared a state of emergency and ordered Congress to prepare for an all-out effort to end the banking crisis. The Congress and FDR quickly authorized a seven-day bank holiday which provided time for the Treasury to print $700 million in currency; this was then flown to the Federal Reserve banks for distribution to commercial banks. This cash infusion allowed the banks to reopen and pay circulating money to depositors (who could then turn around and repay their own loans).

        Repayments to depositors were limited to currency as it could be printed rather than dug out of the ground or ‘bought’ with cripplingly high interest rates in the international market. FDR and Congress took specie out of circulation (it was already hoarded out of circulation and most gold holders were banks or speculators) and outlawed the (predatory) gold clause in contracts. The dollar was depreciated 40% against gold (as well as European currencies that were still pegged to gold). Without a gold peg to defend or gold hoards to increase, US interest rates retreated and nominal commodity prices (including agricultural goods) increased. The US stock market reached its lowest level (inflation adjusted or nominal) and began to rally. FDR had bailed out the banks, and by doing so he bailed out much of the rest of the US economy!

        After the immediate bailout, the government insured bank deposits, began to regulate Wall Street trading, separated ordinary deposit banking from finance underwriting, insurance and other forms of gambling. FDR also used federal money to employ some of the millions of young, unemployed men and women. His most successful programs were Works Progress Administration, Tennessee Valley Authority, Civilian Conservation Corp, the pro-union Wagner Act, Social Security, then later the Agricultural Adjustment Act.

        Today, the entire banking system is insolvent w/ banks’ non-government assets being worth far less than their face price. What keeps banks and bank-like entities afloat is dishonest accounting/mark to fantasy and the central bank lending against these assets @ near-par. At some point these assets will be carefully measured and their fantasy worth will be rejected. The result will be a massive hit against banking system liabilities which will result in banks closing — as during the 1930s.

        In the 1930s, bank balance sheets were lopsided; assets were often stocks bought during the Great Bubble or accumulated immediately after the crash (collected by way of margin calls). Assets also included inflated mortgages on now-worthless land. Bank liabilities were minuscule relative to the pyramid of assets; the loss of only a small amount of asset worth wiped out bank capital and impinged on liabilities. Banks closed rather than hand out their remaining deposits, some of which wound up in the Treasury and the central bank as non-balance sheet custody items. You can say the Treasury got a good deal, for $700 million in public currency the Treasury gained control over billions, at the same time it retired claims (liabilities) that would have otherwise bankrupted the entire system.

        What would bankrupt the system today is situational awareness, the recognition of systemic insolvency. Right now the Depression-era depositor guarantees protect against one or two banks failing due to insolvency and over-leverage, not against all the banks being insolvent and over-leveraged at the same time. Ordinarily, if one bank fails, liabilities are shifted from the failed bank to other, solvent institutions. If the entire system is over-leveraged, shifting funds from one failed bank to another is futile; all the banks are in effect a single, giant bank; depositor funds are trapped therein. Unlike in 1934, it would take far more than $700 million to refloat the system by making depositors whole with currency; it would take years for the government to produce even the smallest part of total liabilities (insured deposits) in paper money. There is over $7 trillion deposited @ banks, there is less than $1 trillion in currency, 40% of that is overseas. Seven trillion dollars is seventy billion $100 bills, there isn’t enough paper or ink! This is the problem with the post-modern bank run; depositors are unable to gain currency/circulating money because there isn’t enough time/resources to print it. On the other hand, shifting funds from one depository to another is pointless because all of them are bankrupt.*

        When the central bank begins to offer unsecured loans and to leverage its collateral thereby, then the entire system from the largest to the smallest bank is insolvent. Afterward, the Treasury — with its massive imbalance of debits vs. liabilities as well as incompetent, criminal management — becomes insolvent. I’m not making this up, Irving Fisher described the process in 1933.

        One possible fix would be to forget trying to print the needed amounts of currency and turn deposits into a federalized form of Bitcoin, instead. That way, deposits could be held by individuals on their own personal computers rather than at failed-and-failing banks. That this might be a real strategy is indicated by Fed/Treasury interest in Bitcoin … not to shut it down but to make use of it.

        Make no mistake; if the banks fail in the US and money becomes unavailable as it was in Argentina in early 2000s, there will be disturbances in this country. Americans have put their entire faith in money, it has been elevated in the place of families and extended communities: this is the big difference between USA in 2013 and USA in 1933. Take away the money flows — even for a little while — and there are instantly very serious problems … panic, loss of confidence, public rage and sense of ‘nothing to lose’.

        There would be tremendous backlash against the bankers. It’s one thing for the bankers to steal from the middle class stealthily as they have been doing since 1980, but stealing at once in broad daylight would be too much to bear.

        * BTW, attempting to make depositors whole with insufficient banknote capability allows for the printing of ‘unconventional’ notes of very high denominations, such as the famous RM 100,000,000 note. Banknote insufficiency is therefor a component of hyperinflation that must be kept in mind at all times. If a depositor demands $100,000 there is the temptation on the part of the government to offer him a $100,000 bill instead of a thousand $100 bills. After the first large bill there are others which are superseded by ever- larger bills (as nominal currency demand increases along with nominal deposits in yet another self-reinforcing cycle).

  5. Reverse Engineer

    “We” did not map out this direction, and “We” have never had any control over its development. The Industrialized society has been under the control of a very small group of powerful people going right back to the beginning of the Industrial Revolution.

    The world is governed by very different personages from what is imagined by those who are not behind the scenes.-Benjamin Disraeli 1844

    “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”-Woodrow Wilson 1916

    “The real truth of the matter is, as you and I know that a financial element in the larger centres has owned the government since the days of Andrew Jackson.”-Franklin D. Roosevelt 1933

    Inexorably, by controlling the monetary system, land and means of production and enforcing that control with the largest Military Machine ever created we have been force fed Industrialized living as all the options for living any other way were progressively removed, unless you went REALLY remote and even that is quite difficult to achieve because even the Commons are under the aegis of the Parks Departments.

    The complete inability of the average person to effect any change through choice of Goobermint eventually led to people simply giving up trying to fight it. MANY people saw through the mirage in the 60s and 70s, but they were cowed through Police State Violence and bribed with the Great Society to carry on with “Morning in America”.

    Call it “Fashion” if you like, but it is Fashion handed to us by an Elite of Banksters and Industrialists who built this society for their own self-aggrandizement. THEY created this society, WE did not.

    RE

  6. Ellen Anderson

    The creation of our current fractional reserve banking system seemed at the time to be the only way to control the boom/bust cycle of the 18th and 19th centuries. I am sure you have read the excellent book, The Money Men, by Brand.
    Once the distributist/agrarian model was rejected (and not by just a few men) our fate was sealed. As Brand says, when the north won the civil war it was really money that won.
    So, if the only question is how to manage a centralized moneyed economy then the range of answers is quite narrow and involves increasing levels of complexity and waste. For me, the central question of political economics was asked by Paul Goodman. It is ‘what should be centralized and what should be decentralized’ (read localized)? Which choices should be made at the household level and which at the level of the sovereign? In order to frame the discussions we need to have we need to share a system of values that we are lacking. We need have to be able to agree upon what is good and what is evil. That is what we cannot do. What kind of an insane society can’t even agree about what a person is? Who would take an artificial creation of the state (corporation) and say that it is a person?
    I don’t disagree that decisions are made by elites. I just think that they could not make or enforce these decisions if the vast majority of citizens weren’t on board. Who was it said that you can conquer with bayonets but you can’t sit on them?

    1. Reverse Engineer

      “I don’t disagree that decisions are made by elites. I just think that they could not make or enforce these decisions if the vast majority of citizens weren’t on board.”-EA

      You couldn’t be more wrong.

      Why do you think the Elite control such a large military and police surveillance state? Why do you think they control a mass media propaganda machine dishing out Bernays style propaganda every day?

      There have been attempts to break free of this control going back to the Luddites and further. Here in the 1920s-30s you had the Wobblies, crushed by the Pinkertons with Extreme Prejudice. Pinkerton was a private police force of the Elite which eventually morphed into the FBI.

      The vast majority of people are kept in ignorance on purpose. As Henry Ford said:

      “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

      Those who do understand are forcibly put down if they attempt to rebel or even educate others.

      The myth that “we are all to blame” is Bernays Brainwashing by the Elite which captures you into perpetual slavery. We are NOT all to blame. There is a Cancer which infects the body of our society, and that Cancer is the Elite. Our society can never be healthy so long as this Cancer sucks up everything, preventing the Healthy Cells from gaining nourishment. These sick tumours which parasite off the body must be cut out and ablated.

      RE

      1. Ellen anderson

        Tempting metaphor but it doesn’t fit. We aren’t innocent victims of some alien disease. We could stop this system in its tracks if we refused to borrow and buy and waste. The system would tumble down.

      2. Reverse Engineer

        “We could stop this system in its tracks if we refused to borrow and buy and waste.”-EA

        You are living in fantasyland EA. You can’t opt out of the monetary system and live without waste. Do you know what happenned to the Potlatch system First Nations people used? It was made illegal and Prison sentences were handed out for living through gifting. Subsistence farmers are pushed off their land through price manipulation of commodities when they cannot pay their taxes. This has been going on since the consolidation phase began in the aftermath of the collapse of the Roman Empire, but vastly accelerated with Industrialization in the aftermath of the Great Depression.

        That we could stop this juggernaut simply by being refuseniks is a conceit of people who find violent revolution repugnant. If it could be done that way, it would have been long ago.

        The only way to make any dent in this is to first hand Termination Notices to the folks who are running the show and send them on a Permanent Vacation. After that, you can begin the necessary re-education and de-programming from the Brainwashing that “We” are all responsible you buy into in your enslavement. Then we can begin the work of Building a Better Tomorrow. 🙂

        RE

      3. Ellen Anderson

        We are probably both living in fantasy land. But, assuming the conceit that “we” (which means our small band of disaffected activists,) could actually do anything, it is my opinion that violent revolution and “cutting out cancer” are techniques even less likely to succeed under these particular circumstances than dropping out and trying to live sustainably.
        And, it has the additional advantage of teaching human values of cooperation and non-violence to the folks who will have to pick up the pieces.
        Violence, war and bloody revolution lead to more of the same as we can clearly see by looking at our recent history (starting with the French Revolution).
        When righteous indignation turns to anger it becomes destructive, if not self-indulgent 🙂

      4. Reverse Engineer

        “it is my opinion that violent revolution and “cutting out cancer” are techniques even less likely to succeed under these particular circumstances than dropping out and trying to live sustainably.”-EA

        Your opinion has been duly noted and filed under “unrealistic”.

        The fact of the matter is both dropping out AND cutting out the cancer will be necessary parts of the reformation, since dropouts won’t be able to keep their patch of land without fighting for it.

        As Uncle Joe Stalin said, “You Can’t Make an Omellette without Breaking a Few Eggs”.

        RE

    2. ben

      “The creation of our current fractional reserve banking system seemed at the time to be the only way to control the boom/bust cycle of the 18th and 19th centuries.”

      Ellen, that’s not my understanding, which largely derives from bill still’s ‘the money masters,’ which recounts the back and forth between public and private money systems in the US. it was only every time (3 as i recall) the banking families gained control that the debtonomies were blown.

      1. Ellen anderson

        Sorry can’t understand your last sentence. I was talking about the creation of the federal reserve but maybe I was not clear.

      2. ben

        sorry, Ellen. the boom-bust is a private banking (and tactical) phenomenon, not public; that it the case because the bust is much more profitable much more quickly, even, than the bubble blowing, such as has been evident to us for the last five years. my understanding is the so-called founding fathers were divided, with some loyal to the financial crown, others not. i forget who was who. franklin and washington, and maybe hamilton, were among the sell-outs. was hamilton even a founding father? from 1776 to 1913 control of the banking system went back and forth, three times in public hands, i believe, and twice into the private hands of the money masters. periodically there were public uprisings and brutality, because of the financial bubbles (the debtonomic blowing) and misallocation, resulting in an epic struggle in congress over the issue, and the attendant political shenanigans. lincoln, modern man, presided over one of the periods in which money belonged to the masters and, as you aired previously, was probably murdered for attempting to wrest control from them with greenbacks and the force of his personality, so that he himself could effect murder, and on his own terms, and supposedly on those of ‘the people.’ this year is the hundredth anniversary of the jekyll island hijacking, with which they gained control for the third time. the shareholders of the unfederal and unreserved, none of whom have ever been made public, but all of whom it stands to reason are also the top shareholders of its conduits the primary dealers, are celebrating to the tune of 85B a month.

    1. steve from virginia Post author

      It appears we are reaching the end of the ‘hype’ period, next up is the ‘Come to Jesus’ period.

      1. Jb

        The often repeated statement that we are ‘approaching’ energy independence’ goes overlooked. I’m ‘approaching’ old age unless I get run over by a bus tomorrow.

        Yesterday I met a fellow who makes a living as a consultant ‘helping customers discover energy solutions.’ When I asked him if he factors demand destruction into his savings projections (upon which his fee is based), he told me he was unfamiliar with the term.

        I asked him if he had seen the IEA’s 2013 Report showing shale gas disappearing as a source sometime after 2020. He had never heard of the agency.

        Truly, ignorance is bliss.

      2. steve from virginia Post author

        “Energy Solutions” always means someone else coming up w/ the energy solutions. If someone had any sort of (popularly desired) energy solution they would be all over the TV like ‘Mr Tesla Dude’. Of course, the real energy solution is conservation but those who promote that particular ‘solution’ are not seen on TV; this is because they don’t have any products that can be advertised. It’s hard to sell, “Don’t buy anything”.

        Pop culture suggests that someone is ALWAYS out there … with the needed ‘energy solution’ … it will soon emerge as an ‘App’, or on Twitter, or as a Facebook Friend or part of a secret, underground government program, like the Manhattan Project.

        “Approaching energy independence” never means what it says, that Americans will be independent of (presumably fossil fuel) energy because there won’t be any that is affordable! The media suggests we will have superfluous amounts to squander which is a lie.

        ‘Energy Independency’ also leaves out the time frame: it implies ‘forever’ … rather than squander for an instant or two, then the abyss. We’re squandering with ferocious intent right now so the concept extends or extrapolates into the future. Energy independence; long enough for some bean counter can say on a Facebook Post (if there is a Face Book) that the US (if there is one) was indeed energy independent for a few days back in 2022 (or never, the whole bit is wishful thinking).

        Kicking that can, after an instant of energy independence someone (else) will certainly have come up with the needed energy solution so that the can can be kicked some more.

        The Can Can … turning common rocks into gasoline!

  7. Ellen Anderson

    @jb thanks for the youtube link. Industrial Workers of the World were very cool and I love their songs but they were still industrial. Did you see the little girl with the sign “I want a happy xmas?” What were they fighting for? Was it worth it?
    Until we are utterly revolted and disgusted by the wasteful consumerism that underlies “Xmas” such that we stay out of the stores there is no hope for us and we will all be punished and we deserve it. Bankers, rioters, farmers, all of us.

    1. Jb

      “Riots are but one degree removed from civil war and must be regarded as such.” 6:04 min. mark

      Nothing like history repeating itself.

      Ellen, I humbly suggest that the vast majority of people in the west will not be ‘disgusted by wasteful consumerism’ until they are so poor that they are willing to set upon innocent people riding around in cabs, or shatter plate glass windows of abandoned buildings. Like our great grandparents, we will externalize our disillusionment in a fit of anger long before we succumb to the humility of our predicament. I believe this is what our history, and the little girl with the sign, tells us.

      1. Ellen Anderson

        You may well be correct. However, it won’t have any more positive outcome this time as it has ever had. Those rioters were either killed or bought off. Gigantic corporations continued to grow and swallow up the earth. You cannot fight them with guns. I think we need to let them collapse of their own weight, giving a push if we can. Refusing to borrow and spend might help. Talking might even help. Otherwise why would we be here on this blog site?
        I wish that we could post just the first chapter from Schumacher’s ‘Small is Beautiful’ but it is protected by a copyright.
        What Schumacher said about waste of the natural capital upon which our lives depend is pretty much what Steve L. is saying. Very few others are saying it in a way that people obsessed with the financial system can comprehend. Look at all of the discussion on Naked Capitalism. Nearly all of it misses the point.
        Rioting in the streets appeals to rogue males and even I, as a non-male, can understand the temptation. But it doesn’t get you anything worth having.
        IMHO you have to try to get as much out of the mainstream as possible and wait for everyone else to catch up. By the way, all of Schumacher’s predictions about the cost of nuclear waste disposal are spot on.
        Instead of casting around to find someone to blame for all of this we should be finding examples of our predecessors who saw the light all through the industrial age. They are our true martyrs and we should acknowledge their efforts. Instead we glorify war and warriors.

      2. steve from virginia Post author

        Small is Beautiful.pdf:

        http://www.ee.iitb.ac.in/student/~pdarshan/SmallIsBeautifulSchumacher.pdf

        We humans glorify fighters rather than asking, ‘what do the fighters win?’ Fighting becomes the end rather than one of many means to winning. We need to start asking ourselves, ‘what is it do we want (to win)?’

        A step forward in the human science experiment will occur when people stop believing there is something to be gained by aggressiveness. We can’t even figure out why we (as a country or people) succeed. We invent lies in order to massage our insecurities, elevating aggressiveness into a virtue. Right now, America has never been more powerful militarily relative to others or as aggressive; America has never been closer to collapse.

        The same was true of the Soviet Union right before it unraveled, also the various European colonial powers during their various heydays. Aggressively powerful = failure.

        Why do we succeed? Do we know? The answer is no: Rome built a gigantic empire in spite of its legions, not because of them; its armies were no better than the other countries’ armies. Rome succeeded because its farmers had better agriculture techniques, its farmers were far more productive than the other countries’ farmers. This meant a larger and more profitable marketplace for agriculture products: more production meant fewer farmers and more division of labor. Participation in the Roman Enterprise became very appealing to non-Romans, becoming a participant did not require coercion.

        Growing barley is not particularly exciting or dramatic, there are never equestrian statues in the capital of plowmen or grain merchants. We read about the generals and their victories (defeats) everything else is forgotten or swept aside.

        Countries succeed or fail due to their abilities to feed their citizens as well as their livestock animals. Ag failures include USSR with a massive military/security complex + nuclear weapons but farmers who could not grow wheat on fertile, ‘black soil’ Ukrainian bottom-land. Soviets had to buy food on world markets, once they ran out of hard currency (low petroleum prices) they were finished.

      3. steve from virginia Post author

        I missed it … he has his own website, BTW: http://www.garalperovitz.com/

        One of the interesting outgrowths of the current state of decay is the (overdue) rehabilitation of Carl Marx: from David Harvey to Steve Keen (with a dash of Minsky) … have to add Alperovitz.

        I’m banned over @ NC as well, probably for pointing out that Europeans hate Jews (they hated them enough to have a body count and nothing has changed since 1945).

      4. The Dork of Cork

        Ha
        Steve you crack me up.
        You seem to treat your blog as if it was a central bank.
        I.e. You prevent the production of a few home truths so as to maintain the moral credit (as defined by our present morality makers) of the site.

        One problem with this……….it does not conform to reality on the ground.
        Notice the book 20 years a growing was not talking about anything but the village and its orbit with a very real lack of Bullshit present in the Irish language pages translated to preserve the syntax of the language by Greek scholars and the like.

        As for Larry and his sisters …..if I was in a boardroom meeting with that large piece of shit I could not imagine me not jumping across the table and knocking his fucking head in.

  8. Ric

    We defeated two military superpowers in two different parts of the world at once; this was our first- and defining, ‘If we can put a man on the Moon’ moment. Americans were competent; we did things right, we were efficient yet (somewhat) humane and civilized. Our armies triumphed without massacring prisoners or raping and pillaging, they gave candy to the enemy’s children. America succeeded in spite of internal differences and a crushing economic environment.

    “We” also had lots of domestic oil for warfighting.

  9. ben

    “Your opinion has been duly noted and filed under “unrealistic”.

    The fact of the matter is both dropping out AND cutting out the cancer will be necessary parts of the reformation, since dropouts won’t be able to keep their patch of land without fighting for it.

    As Uncle Joe Stalin said, “You Can’t Make an Omellette without Breaking a Few Eggs”.”

    you want unrealistic?

    RE, I don’t believe, in my experience, that your thinking has ever reached criticality. i’m as certain as you are that it’s your self- and acolyte-pampered ego that has stunted your development; to wit, you’re a communist but you’re a cheapskate; you claim to be the napalm king of your sphere of influence but you substitute CAPS for content; your ideology radical but your various prescriptions ludicrously incompatible with each other; for example, you celebrate true tribalism but you want to establish an intentional community funded by a tiny fraction of your money, grants from the foundations of multinational corporations, and for-profit businesses. you may think this financially practical, and it may just be in a very conventional sense, but in the most important sense – attractiveness to noble-driven people – it is an absolute dud.

    i’m trying to be helpful: there is simply no there there in your vision. if you want to promote a fantasy movement with an actual cultural component to it, then it’s time you conceive of it because you can’t just cobble shit together and expect results. rather than the pride of failure and the fall it’s gotta be the full package. for fuck sake, man – it’s the little things that count; pick something; promote eating with spoons and include some historical enthusiasms for the art.

    so start here; this website, for all its tragic discombobulatedness, at least has vision; fyi, buddy:

    1. go to aryanism dot net
    2. click on ‘politics’
    3. scroll down and click on ‘intentional communities’

    1. Reverse Engineer

      “RE, I don’t believe, in my experience, that your thinking has ever reached criticality. i’m as certain as you are that it’s your self- and acolyte-pampered ego that has stunted your development…” -Ben

      Nobody’s PERFECT Ben. LOL.

      However, the new SUN website is nearly done and we’ll be doing the Grand Opening pretty soon, week or two more should do it.

      Rome wasn’t Built in a Day.

      RE

    2. steve from virginia Post author

      No spam for Nazi websites over here, please.

      One unmistakeable bits of evidence for the imminence of our unraveling is the world-wide rising tide of Nazi-Ustashe-‘pro-Aryan’, racialist political hate parties and associated propaganda.

      1. ben

        this message is brought to you by the economic undertow.

        what? we can’t hang with the militant vegans? it may be hard for you to believe, but they actually are into honorable concepts like attachment parenting, and ahimsa, and limiting reproduction by other means: culturally, that is, rather than by financial coercion such as you have suggested in the past.

        god forbid the possibility that someone here might want to draw attention to unfiltered aryanism, and possibly even learn a thing or two because of it.

      2. steve from virginia Post author

        Basically, you get one warning then you are banned as a spammer.

        Feel free to promote whatever you like on your own web site, thanks.

        All the messages here are brought to you by Economic Undertow.

  10. Georgia Meyers

    Steve…not only do you maintain a unique and insightfull website ; you are a good egg as well……the world is going to need a lot of that soon enough.

    1. Ellen Anderson

      That is so true! However, your description of a run on our banking system is probably the scariest thing I have read in a long time. For one thing, it implies that saving dollar bills in the mattress bank is a pretty silly thing to do.
      Do you really think that there is anyone out there in the government or the military who has a clue about what to do in case of a run on the banking system (which I think is the same thing as a ‘sudden stop?’) Bitcoin might work for those who actually have a positive net worth with worth in the form of bank deposits but they say that 75% of Americans need to get a paycheck every week or so and the people who issue those paychecks will be out of business.
      I am pretty sure that local authorities, even at the state level, are not even thinking about such things but you seem to have a lot of interesting sources of information. What do you think?

      1. geo from maryland

        Dunno, I think the “mattress bank” would look pretty good in a situation like that. At least one would have cash in one’s possession, outside the banking system. Hmm, I think I will start saving dollar coins and burying them in the back yard…

      2. Ellen Anderson

        Be sure you tell someone – but not too many! They are still finding the gold coins of property owners in the Roman provinces.
        I knew that we would be short of currency in a crisis but I hadn’t focused on how much would have to be printed and that it would be a physical impossibility. Virtual currency would be a choice but, of course, it might not continue – probably would not continue – to be easily exchangeable for oil.
        I wonder what other strategies would be available.
        It makes me nuts that towns are not at least stockpiling a several week supply of some sort of food – even Twinkies or boxes of raisins! This time since 2008 has given us the opportunity to try to make the future less awful and we not only do nothing, we make things worse!
        Plus it is shaping up to be a nasty winter on the East Coast. I am depressed.

      3. steve from virginia Post author

        I suspect the central bankers know but they aren’t talking about it, although the recent Chicago Fed paper on Bitcoin was by itself illuminating. It speaks to- without actually putting into words that the central bank is aware … of something it would rather not be aware of.

        http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf

        We are very near the point when the central banks are no longer able to effect outcomes. You should be very concerned but filled with fortitude and strength as well.

  11. Reverse Engineer

    Nesting was getting Nasty above, so I am restarting from Steve’s FABULOUS post to ask another Question.

    ” Unlike in 1934, it would take far more than $700 million to refloat the system by making depositors whole with currency; it would take years for the government to produce even the smallest part of total liabilities (insured deposits) in paper money. There is over $7 trillion deposited @ banks, there is less than $1 trillion in currency, 40% of that is overseas. Seven trillion dollars is seventy billion $100 bills, there isn’t enough paper or ink! This is the problem with the post-modern bank run; depositors are unable to gain currency/circulating money because there isn’t enough time/resources to print it. “- SfV

    True enough they couldn’t print Notes fast enough, but hardly anyone uses Notes anymore here in the FSoA, everybody uses Plastic Debit/Credit cards. Helicopter Ben or Dammit Janet can instantly “print” Digibits to load onto anybody’s Plastic.

    So how does it work if the FDIC is simply used to load up a Debit card with the $200K that was Guaranteed, assuming a person had that much or more in their account?

    RE

    1. steve from virginia Post author

      @ RE:

      “Helicopter Ben or Dammit Janet can instantly “print” Digibits to load onto anybody’s Plastic.

      … how does it work if the FDIC is simply used to load up a Debit card with the $200K that was Guaranteed, assuming a person had that much or more in their account?”

      The card doesn’t hold the money, a bank does on its spreadheet. The card provides instructions to the bank as to whose accounts should be credited or debited.

      Think of a bank as a hat store, think of 21st century electronic money as a special kind of ‘hat’ that is only wearable inside the store; when users exchange hats they simply shift them between boxes inside the store. Jamie Galbraith says the monetary system cannot run out of money (hats), he is wrong! The system is effectively out of money when the users all demand the special kind of hats that can be worn outside the store. When this occurs, the store runs out quickly and is closed. The rest of the users cannot get their hats because the store has run out. At the same time, the hats that are useful inside the store cannot be accessed because the store has closed. The longer people don’t get what the want, the more unhappy (riotous) they become and the less credibility the store (establishment) has. Eventually, the people are frustrated, they realize their hats have been stolen, the system breaks down, along with the hat shortage there are the other unhappy shortages: food, gasoline, electricity, etc.

      The question you have to ask is who puts ‘money’ on your ATM card during an emergency? Is it the government? Against whose account(s)? The depositors of the same broken banks? If it against the central bank there must be collateral, or some lesser form of ‘money’ that can be held as security by the central bank. Who offers this collateral? The depositors’ funds cannot be collateral because it is already pledged and re-pledged: the funds are gone from the bank (hat store) which is why it is insolvent in the first place.

      Why would the government or anyone else put money on your ATM? As with TARP, the government’s first impulse would be to stiff depositors and ‘bail-in’ the bankers. It would take weeks — at best — for our inept government to sort out the issue of ‘who to bail’. Herbert Hoover & Co. wasted two years trying to figure it out … and they failed. Since 2011 the Europeans are attempting to sort the same issue and they are failing as well. Funds flow from the outside toward the well-connected, not the other way around.

      Any ATM flow rate would be equal to the amount of new currency the Treasury could make available. ATMs = available cash currency. In Argentina, the peso crisis lasted for years, which was the currency withdrawal rate from ATMs in that country. Because of inflation the real rate of return was negative so the more people used ATMs the further they fell behind, most depositors in that country lost everything.

      A central bank cannot issue without collateral. Should it do so, the central bank becomes another over-leveraged deposit bank. At that point the system is entirely insolvent with the central bank without the ability to support asset prices. The central bank would be a wing of the hat store … broken along with all the others.

      If the government/Treasury issues funds by way of debit cards chances are it would be chaotic like the ACA rollout. The Treasury has its own bank (the FDIC is not a bank) but the amount under controversy — multiple trillions of dollars — is not a bagatelle. Systemic insolvency includes national treasuries falling bankrupt and people losing confidence in the money system. Once gone the confidence doesn’t flood back because some boss says it is the thing to do. Systemic insolvency is not a panic, it is a consequence. It doesn’t end overnight.

      People would continually demand cash — hats wearable outside the store — which would continually destabilize the process. The ‘crisis’ would last as long as the public demand for cash continues: more cash demand => more crisis => more demand for cash. Meanwhile, there would be severe limits to how much Treasury ‘cash’ people would have access to; this would force the crisis to accelerate faster than the Treasury can produce cash … this assumes the Treasury is inclined to produce cash in the first place.

      It is hard to see people having the patience to put up with something that isn’t a immediate return to the ‘old’ normal or a new system that restores their lost funds (which they would then immediately withdraw).

      To summarize: the ATM card will either allow cash withdrawals subject to the limitations discussed earlier, or it will move your invisible hat from one side of the banking hat store to the other. If the system breaks down that means the hat store is closed and nobody will able to access their hats.

      Crypto-currencies do not have this problem as ‘deposits’ are held by the owner instead of a 3d party; every one is their own hat store, the exchange system is ‘outside the stores’. Coded public signatures verify payments instead of 3d parties. That is the theory, anyway. The central bank is looking into crypto-currencies which suggests they are aware of a problem they would rather not discuss. Sadly, the only way to possibly address the solvency issue is to discuss it plainly and deal with panic impulse in an adult fashion rather than hide from it.

      1. Ellen Anderson

        If all national treasuries are insolvent and the “reset” button is hit, then the political entities with the most stuff (and ability to use it) “win.” Is that right in a very crude way?
        But are all national treasuries insolvent?

      2. steve from virginia Post author

        The ‘crisis’ will sneak up on everyone and the critical period will pass before managers are aware; at that point the establishment will be stranded. Our relationship to resource capital assures that every economic entity is bankrupt — right now — even as the same entities continuously attempt to find more resources to feed upon; this is what passes for a reset.

        What passes for ‘stuff’ is demand, a negative entity or liability … as useful as a drill on a leaky boat.

      3. Reverse Engineer

        Forget the Cash Currency entirely, no ATMs. And yes I know the balance is held in a database, not on the card itself.

        Assume Treasury has access to all the DBs of all the Banks, so knows what everybody’s Balance was prior to a Lockup.

        Treasury consolidates all the DBs into a Single DB, which all the Debit Cards are linked to. If your balance showed say $100K, that is what the card accesses when you go to Walmart and swipe it. Your digibits now get transfered off your balance sheet and onto Walmart’s.

        You don’t need any Hats in the Store at all, as long as Walmart will take Fictitious Hats for their merchandize, and Walmart can use the Fictitious Hats to buy Chinese Junk.

        What stops this from operating, at least for a while?

        RE

      4. steve from virginia Post author

        The Treasury can credit private sector debit accounts with public funds (ledger repayments) but the banks would have to play along. They might not b/c any such payments would amount to repudiation of ‘national obligations’ even though these same sorts of payments are why Treasury debt is ‘risk-free’.

        The banks would have to accept publicly created funds along side debt-money funds; the banks would have to surrender their precious — and profitable — money-creation monopoly. The banks would hold depositor funds hostage. When banks are out of cash, they are able to do this — hold depositor ‘funds’ (empty promises) — at very low cost.

        The strategy would be for the Treasury/Fed to force (all) the banks into receivership/de-facto nationalization. If there was a system run and a breakdown of flow-of-funds the banks would likely be subject to nationalization anyway the same way the nation’s banks were effectively nationalized in 1934. At the depths of the Depression crisis, the system was so beaten down that a few more weeks and the government would have been just as bankrupt as the banks it was hoping to rescue. Part of bailing the banks included bailing itself at the same time. Hoover had squandered all credibility …

        Seeing how Treasury & Co. have botched the Obamacare health system, it isn’t likely the government could set up an alternative payment regime any faster than they could print 70 billion $200 dollar bills … OOPS! $100 dollar bills.

        “Damn! We have to print them all over again!”

        Setting up a peer-to-peer crypto-currency would be more elegant and take less time and effort to bring into being … that is, if it would work at all, if the Internet would still work and whether the set up would take less time than printing all those bills.

      5. Reverse Engineer

        Well, bitcoin or debit card, both require the Internet to stay up and running, and one wonders how long that will last with commerce breaking down.

        Here’s another idea though…

        Instead of Treasury Printing the Bills, YOU print them on your home computer!

        Treasury issues them with a Bar Code and some type of Encryption to prevent counterfeiting. Of course, to read the bar code and check authenticity again the net has to be running…

        OK, forget it, we are fooked.

        RE

  12. Ellen anderson

    @ RE. I think that the “currency” on a debit card couldn’t be authenticated and so counterfeiting would be a problem once it started to “circulate.” Each bit coin can be authenticated once it has been created. Of course both of these options require a supply of electricity.

  13. Reverse Engineer

    Currency on a debit card is easily authenticated. That is what the system does. When you slide your card at the checkout counter, the machine authenticates whether there is “money” in the account.

    The question is not of authentication, but whether anybody ACCEPTS those digibits as “money”. Bitcoins not much different there, you ACCEPT because a Bitcoin is Unique it has some value. But really, it is just a number on a computer.

    The question here is, IF Dammit Janet made good on the FDIC insurance by posting up $200K in digibits to individuals, how would this affect the market overall?

    RE

    1. steve from virginia Post author

      Because deposits are not pledgeable assets within the banks (the banks have already pledged them) any funds from the central bank would be unsecured. By offering a depositor guarantee, it would instantly render the guarantee inoperative. In other words, the only way the Fed or another central bank could guarantee liabilities is to promise never to guarantee liabilities. It guarantees the bank, instead.

      If the Fed offers unsecured loans, there is effectively no more central bank, only a giant, insolvent commercial bank with too much leverage. The central bank + the commercial banks together = one giant bank.

      The central bank will offer reserves which the bank can deploy to the degree that this reserve is cash in the vault. Once that is exhausted, there is nothing more to offer. Fed credit has to be shifted ‘somewhere’ … from the Fed to its client, to another bank. If that third bank is insolvent … or fourth or fifth bank … there is nowhere for the reserves to go … or for the depositors’ funds to flee to.

      This is a currency trap, not to be confused the the ‘liquidity trap’ we are stuck in now. The currency trap is when there is insufficient currency to meet the demand for it so that ‘non-cash’ liabilities are extinguished when the banks that hold these liabilities fail.

      When Nicole Foss talks about loss of confidence, this is what she means. There are also variations of the theme: money can be trapped within the bank system by capital controls, as in Iceland and Cyprus … or in Argentina post-2000. The original scenario described systemic bank run and closures as during the early- 1930s. It can certainly happen again.

  14. Ric

    I think RE raises a valid point and would like to hear Steve’s (and other commenters’) thoughts on it. The Fed/gov punt on trying to print circulating currency and just make good on FDIC insurance “digitally.” ATM machines are perpetually out of cash, you can’t withdraw cash from your local bank branch, but if you have an ATM/debit card (and a positive amount in your bank account), you can purchase from vendors that can process card transactions (and are still open for business). People would still hoard cash, and cash transactions plummet. Maybe “the authorities” would even outlaw cash transactions?

    1. Jb

      The government wouldn’t have to pass a law if cash disappeared under mattresses. People need to eat so they’ll use whatever they have to secure calories. Farmer’s markets would become black markets.

      And what would OPEC have to say? Wouldn’t this create an international panic and backlash much worse than Nixon’s fiat declaration? Furthermore, wouldn’t other countries have to implement similar programs?

      And we all know the dangers of credit/debit cards: it’s easy to spend every digital penny very quickly and overdraw. Look at the stories of people sitting in the parking lot at Walmart waiting for their cards to show new SNAP balances. I think people would panic and start hoarding. A few empty store shelves and panic turns into chaos.

      On the other hand, I’m sure the big banks have already figured out they could make even MORE money if the government implemented a digital currency. 🙂

  15. Ellen Anderson

    I think that only the treasury can print money in the way that we are contemplating here. The fed can make loans. Obviously, the treasury would have to step in if there were a currency collapse but how they could do that without crashing the entire petrodollar regime I cannot imagine.

    1. Ellen Anderson

      Also, bitcoins aren’t just printed. They are “mined” in some virtual sense so there is theoretically a limit to the size of the overall money supply. This makes people believe that the monetary system is independent of the political system. I think it sounds really creepy.

      1. Reverse Engineer

        Indeed, as mentioned bitcoins are “mined”. Mining them takes extraordinary amounts of computer time. So obviously, anyone with access to a Super Computer can “mine” up way more than you or I can on our trusty laptops.

        Then you have the question of what in the “real” world defines the value of a Bitcoin? Will Saudis take Bitcoins for Oil? Will the Farmer at the Farmer’s Market take a Bitcoin for a Tomato? Will the Black Marketeer take a Bitcoin for a package of Diapers?

        Right now the value of a Bitcoin is denominated in Dollars, like everything else. If the dollar is rendered worthless, what is the value of a Bitcoin?

        I find it hard to imagine that the typical J6P would see much value in a string of 1s & 0s. Similarly, I find it hard to imagine how TPTB could agree on the value of a Bitcoin to get a mass system up and running.

        Then there is the question of who CURRENTLY “owns” large quantities of Bitcoins? Do you think the Chinese would agree to Bitcoins as a currency if they have few but Geeks around the world have most of them?

        How do current large holders of Bitcoins get them out into circulation? Do they “loan” them out at interest?

        Anyhow, bottom line on this deal is it is WAY too complex, and WAY too dependent on other complex systems to run very long here. The day the Lights Go Out, you are INSTANTLY BROKE!

        I suspect more likely is a simpler system. Like Barter.

        RE

    2. steve from virginia Post author

      Ellen, you are illuminating some of the problems. As we get to the bottom of the pickle barrel we find there is less and less room to maneuver.

      At the same time it would be a freak show if the Treasury Department started discussing a post-dollar currency regime or any other alternative to the status quo. We have bound ourselves to the past; the bosses are 100% fully invested in the Titanic not sinking. Anything but docking in New York City is perceived to be fatal. What that means is BAU has to die, first.

      In a smarter world, the bosses take responsibility/the hit and behave like adults: the Titanic is sinking, what next?

      1. Mansoor H. Khan

        Steve,

        You keep talking about bankruptcy of the banks and bankruptcy of the central bank. But at a high level an economy is not bankrupt when the accounting ledgers say debts cannot be paid. An economy is bankrupt when production of goods and services ceases.

        Debts are accounting and insolvency is accounting. Think about the great depression. At that time there was no issue with availability of raw materials or labor shortage or even peace to conduct business and produce goods and services.

        During GD deflation caused currency shortage and reduced demand. The real problem during GD was debt-based money.

        The real problem now is debt-based money AND fossil fuel depletion.

        A 100% reserve digital currency would allow the money-stock in circulation to be matched to the economy’s capacity much easier. Yes banks would lose their money creation privilege but at least we will avert a mad max scenario which a deflationary spiral will certainly lead to.

        Even with a 100% reserve digital currency most of current debts will not be repayable. This means that economic relationships in our civilization will have to be re-structured.

        My main point is this ==>

        Insolvency on a national balance sheet does not equal a bankrupt national economy (usually). All it means is that economic relationships in our civilization will have to be re-structured to match the productive capacity of the economy (that is debts needs to be discharged, forgiven, re-negotiated, assets liquidated and divided up, etc).

        We always have had a distribution problem when the rate of production of goods and services skyrocketed due to the use of fossil fuels. Specially since the start of the industrial revolution.

        This distribution problem was masked by growth. Growth did provide opportunities for most in society to get enough money to not revolt and get too upset (at least in the industrialized countries).

        We now must solve this distribution problem and we must keep in mind the dwindling fossil fuel supplies which has powered our material production/modernity so far.

        I suggest the following:

        A) we start a social credit/Social dividend/guaranteed income program and give every U.S. citizen $500 per month regardless of income or regardless of any public assistance they currently receive.

        B) Increase taxation to keep inflation in check. Increased taxation should include stiff consumption tax to discourage too much consumption by the rich and upper middle classes.

        D) Start stringent energy conservation and run a low-grade industrial civilization with less yearly fossil fuel consumption.

        C) This will buy us time to develop another cheap energy source and possibly resume growth or if we don’t find another another cheap energy source we will have time to learn how to live without machines, fertilizers and pesticides.

        Mansoor H. Khan

      2. Ellen Anderson

        I agree that the real world will still be there after a sudden stop – provided, of course, that the stop isn’t the result of a nuclear event or war. I also agree with most of what you say about the industrial age covering up perennial issues within the political economy.
        The problem of how to get from where we are to where we need to be is the real problem for me. What should/could we be doing right now, not as individual survivalists but as a society, to frame the problems and consider solutions?
        RE talks about barter as an initial solution, but what do most people have to trade? I try to think through real world examples. Say I have some eggs for sale. I can trade them to someone who has some grain. Or I can trade them to someone who will be willing to clean my kitchen (that would take a lot of eggs.) Eventually, though, I will run out of eggs and I will not need what a lot of people find they have to offer. So I will either not be willing to part with my eggs or I will begin to take promises to pay. Then some people may even get so angry or hungry that they steal my eggs. You can see that barter only works for a few people for a short time.
        A lot of people – I don’t know how many of them are reading this particular blog – have been trying to prepare at a local level. They have been met with either anger or ridicule. Or they are met by people who tell them that it is hopeless so just go get a gun and ammo. Still, I am convinced that, since the impacts of economic dislocations are felt at the local level, it is there that the discussion should take place.

      3. Mansoor H. Khan

        Ellen,

        We should ration the fossil fuels we have left with justice and mercy that is what the following recommendation is all about:

        A) we should start a social credit/Social dividend/guaranteed income program and give every U.S. citizen $500 per month regardless of income or regardless of any public assistance they currently receive.

      4. Ken Barrows

        I think Graeber’s book gives us an idea. It’s not just barter but reciprocal gifting. Can we form the communities to make it work? Hmmm, maybe or maybe not.

  16. rcg1950

    The kind of bank run described in this thread would be the result of a gigantic loss of confidence … about the system and it’s institutions, the future, just about everything. Once that’s shot I can’t imagine getting it back with some monetary tricks so the system quickly returns to functioning in something like a normal fashion. That would be akin to coming home to finding your presumably faithful spouse of 40 years in bed with a stranger and expecting the marriage to get back to normal with a couple of marriage counseling sessions. Not going to happen.

  17. Ellen Anderson

    It is alleged that we came very close to such a collapse in 2008. Congress passed the TARP over the objections of the vast majority of their constituents, presumably because they were told what would happen next if they did not.
    I find it hard to believe that there is not some high level discussion taking place somewhere about what to do if/when it happens again. I guess that you may be right, Steve, that any public discussion about what to do could bring on a panic – not only here but among our “trading partners.”

    1. Ken Barrows

      Moyers-Giroux interview: I enjoyed listening to it, but no mention of the Federal Reserve. After all, isn’t QE exhibit A in the dominance of finance capital?

      1. steve from virginia Post author

        Giroux leaves out that industrialization cannot pay its own way, that it requires a constant debt-subsidy. This subsidy cannot come from the central banks — they are collateral constrained — but only from private sector finance, which can make the needed unsecured loans. Finance does not need central bank ‘help’ in order to lend even now; only moral hazard and the demonstrated willingness of the system managers to sacrifice everything else … to preserve the bankers’ prerogatives.

        Whether the sacrifice process is effective or not is never examined. That the sacrifices are pointless and gratuitous is evidence that the system and its components have failed (Bagehot).

        Dominance of finance capital is evidenced by the barrage of lies that are told to justify its operations. Telling the truth about industrialization and its dependence upon debt would render it — the entire industrial enterprise — untenable. It is one thing for us to acknowledge we are destroying our life-support system; we must believe we are gaining something better, making ‘a profit’ by doing so.

        The lie that QE ‘helps’ is told by the central bankers and the financiers themselves, who are thankful for the public distraction. The lie that QE has ill-effects is told by shills like Peter Schiff, Ron Paul and his camp followers, Zero Hedge, the various so-called ‘Austrians’ followers of Hayek and von Mises … what is interesting is that all of the above are extremely well-paid, with high social standing, many are extremely intelligent, highly educated academic economists; others are bankers and investment managers …

        – I never finished high school, I’ve spent most of my life hanging doors and sheetrock … it’s not hard to figure this finance stuff out … building real things is hard, finance is simple … Compared to Schiff, Bernanke & Co. I haven’t made a fucking penny at this finance critique business … Meanwhile, the continuation of business as usual is leading to the complete bankruptcy of all economic participants w/ dire consequences for everyone. Were is the famous human self-preservation instinct?

        It is as if the city walls are surrounded by a gigantic army of barbarians. The city’s inhabitants have all rushed to the temples to offer sacrifices to useless ‘Gods’ rather than taking up arms to defend themselves. Standing alone on the wall, looking down on all those barbarians … then looking @ the temples … is pretty annoying right now.

        QE really has nothing to do with anything real. Finance = a bunch of grifters, but that’s what we’ve built our lives around … sorry.

      2. Ellen Anderson

        No one talks much about Marx’s definition of ‘man’ as Homo Faber rather than Homo Sapiens. He points out that humans are fundamentally toolmakers/users. We realize our human potential by performing work with tools in the real world and by incorporating the real world into ourselves. Marx thought that division of labor should not be allowed. In other words, everybody has to bang some nails and grow some food. Nobody gets to sit around being a priest or a banker. (Personally, I say everyone has to do some growing of food, cooking of food and washing of dishes!)
        Capitalism alienates humans from their essential being because the bosses take real things away from the people who made them, then makes them use wages to buy them back.
        I guess that the elites are alienated and thus not truly human. It has always seemed so to me. Capitalism is an evil system and it is destroying life on earth.
        PS. My father always warned me not to talk that way. He said someone would come and arrest me. He lived through times when that sort of thing did happen. Now everyone is so confused that my words don’t scare a soul!

      3. Ken Barrows

        “Building real things is hard, finance is simple.” Well said.

        QE really has nothing to do with anything real in that it doesn’t create wealth. However, I think that it sure redistributes claims on wealth. Would you disagree?

      4. steve from virginia Post author

        Claims are created but they would be created if the central banks were doing nothing.

        Bankers create claims because they don’t want a ‘greater depression’ any more than anyone else. Creating claims is the only thing they can do.

        Finance claims are discountable with time eventually they are worthless as they become redundant … this discount is the ‘illusion’ of inflation. At the same time, the central bank says none of this is so; they pretend the claims are something special by paying par for them. However, a lie is still a lie even if it’s spoken by the Pope, contradictory policy creates confusion.

  18. Ellen Anderson

    Good interview. That initial drum roll of foundations sponsoring Bill Moyers…… so glad they support such lectures but those “family foundations” represent the 1%’s attempt to shield its own kiddos from poverty, you know. How can I complain? The Cleveland Art Museum still offers free admission thanks to Mr. Hanna. Still, I do complain…..
    Marxists would argue that the intellectual and moral superstructure of a culture arises out of its economic substructure. As the quantity of the latter changes there should be alterations in the former. I hope. Maybe we are starting to see some of that and maybe what comes out will be good. It doesn’t feel that way to me but maybe what we do can influence the outcome.
    One of the problems about organizing at the very local level is that it is so incredibly infuriating. These small town officials are not rich nor are they totally uneducated. What gets into them??? Here is a link for you.
    http://thecompletepatient.com/article/2013/november/20/after-nearly-300-years-can-lawton%E2%80%99s-farm-survive-local-regulators-out-crush

  19. Pingback: futures, real and imagined- part 5 | Brain Noise

    1. steve from virginia Post author

      Very, very hip and cool.

      It isn’t the same without the slum-people, however. Stewart Brand would approve.

      1. Jb

        Maybe they could hire actors in costume; like Main Street USA at Disney? At the very least they need a mascot.

      2. steve from virginia Post author

        All that is needed is a trash- and water-filled ditch running around the ‘camp’ with toilet paper set up next to a spot on the ditch. The ditch would provide the drinking- and washing water for the facility. Add a highway next door with endless streams of smoke-belching diesel trucks and horn-blaring cars 24/7, repair ‘shops’ w/ hammering, cursing and oily waste 24/7, some animal slaughtering and rendering here and there, plastic burning, street begging and drug dealing and you have the major components of the real thing.

        Every now and then the ‘cops’ can come in — plain clothes of course — and burn the entire place to the ground while beating those trying to retrieve their property with clubs, pipes and pieces of electrical wire. Then a luxury hotel would be built on the spot.

      3. Jb

        Don’t forget the prostitutes, packs of wild dogs, and gangs of barefoot homeless children. Happy Thanksgiving.

  20. christiangustafson

    China’s suburbia harboring a crisis

    “Unlike the U.S. postwar sprawl, which mixed houses with schools, supermarkets and diners, the new Chinese commuters have to drive for basic services, boosting energy consumption and emissions that have made the nation’s cities some of the most polluted in the world.”

    “I have to drive 20 minutes just to buy vegetables.”

    http://seattletimes.com/html/businesstechnology/2022262127_chinasuburbiaxml.html

    LOLOLOLOLOL

  21. Ellen Anderson

    In case anyone was interested: here is a post from today’s Foxborough.Patch.com in Massachusetts where the local board of health would like to regulate a 300-year-old dairy farm out of existence. (More than 200 folks showed up on a windy freezing cold night and not a shot was fired! Who says small town democracy doesn’t work? The trick is getting the right people to show up.)

    “With a capacity crowd inside the meeting room at the Public Safety Building and more unable to get in, tonight’s Board of Health public hearing, or lack there of, may have been a small victory for the Lawtons.

    It was expected that the board was going to hold a public hearing to discuss the rules and regulations relative to the sale of distribution of unpasteurized raw milk but overcrowding at the Foxboro Public Safety building prevented the hearing from starting.”

  22. The Dork of Cork

    Hanging around Waterford town these past few weeks and I am shocked ( despite all my years in this conduit country) at the scale of the depression in the center of the old medieval town which does not make monetary or economic sense in a country which has seen a 33%~ drop in oil consumption since peak unless you realize the place is but a jurisdiction.
    Just outside the town on the Waterford to Cork road a series of absurd car dealerships & home improvement supermarkets remain (at least with the lights still on).
    The center & especially the quay remains very very quiet.

    The Quaker history of the Waterford Tramore rail line as narrated by a former worker on the line. ( starts at 2.00 minutes)
    A form of private & local quasi social credit was issued to insure the sustainability of the line.(4.30)
    http://www.youtube.com/watch?v=t3q1EBpThZI

  23. The Dork of Cork

    This Utube clip of Waterford is from 2012 but not much has changed except for nice Christmas lights in the center of town.
    http://www.youtube.com/watch?v=oX1OktbFkXw
    The lack of critical mass is seen in many Irish or Spanish towns with German low cost supermarkets such as Lidl and Aldi gaining the remaining market share via the purchase of external products and cheap imported & local labour – a form of commerce which seems to thrive in the hard petro monetary system of today.

  24. Jb

    “The recent jump in homeless people signals that people have run out of alternatives, said Randy Albelda… Many families were able to stay off the streets by living off savings, doubling up with family members, or sleeping on friends’ couches, Albelda said. But eventually their money or relatives’ good will “just runs out.”

    http://www.bostonglobe.com/business/2013/12/02/record-homelessness-overwhelming-shelters/OtrsdYgUdGDFxwJbms3qzH/story.html H/T Stacy Herbert

    The Creative Accounting Dept. runs out of ideas in April 2015 says Glennjeff:

    http://www.theautomaticearth.com/forums/topic/nicole-foss-where-the-rubber-meets-the-road-in-america/#post-9491

    (yay! I’m logged in)

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