Money: derived from the Latin "moneta" which originally meant "warning" (as Juno Moneta was the goddess of warning). "When coinage was devised by the Romans, they set their mint in her temple and the goddess became the guardian of finances."
In October of 2002, I wrote a guest column for a local weekly entitled "A Greater Depression". In January of 2003, I printed and passed around a one-shot newsletter called "The Regressive" which closed with these words... "These economic problems will in all likelihood reach a point of critical mass unless the most extreme changes take place in the Hearts and minds of people everywhere. The collapse or the change may not take place in 2003, but the new year is likely to bring war and depression." In 2004 I wrote an online article entitled "The Imminent Market Crash and the Depressing Economic Collapse." These are a few of my articles which, I feel, establish my credentials to write confidently about the severe economic crisis we now find ourselves in.
Admittedly, some of my predictions were slightly premature and things haven't fallen apart precisely as I foretold (I never got around to printing "The Regressive" #2 regarding the housing bubble mentioned in issue #1). However... the war did happen, of course, and my economic points about the cost of petroleum were all too accurate. Anyone who short sold the Big 3 automakers based on my analysis of the automotive and petroleum industries would have turned quite the pretty penny. Unemployment rates have skyrocketed (as predicted) and would appear even higher if it weren't for underemployment masking those numbers. The bottom line is, we are now very much in an economic crisis and I feel as qualified as any economics professor to comment on the situation. And so I will...
The stock market has lost nearly a third of it's value since it's peak (14093). In the past week the DJIA has had it two worst daily downswings ever. Since Oct.1st, the market has dropped 1383 points (and counting as of 10/07/08) from 10831 to 9447. While the overall crash from the peak has happened more slowly than in 1929, the loss of value has been of a greater percentage than what took place in the initial days of that historic collapse. And, while certain computer automation techniques have been introduced to prevent more sudden single-day crashes, like the one in 1987, the markets are still plummeting and the results are the same.
Just as in 1929, the common citizen had been encouraged to invest more regularly in the stock market, right before it's peak, and now the rug has been pulled out from beneath them. Touted as the soundest, surest, most profitable investment... many average citizens tied their hopes and their retirement funds to the stock market. As before, many have already lost their life savings.
The bailout farce deserves more attention than I want to give it but, suffice it to say, at best, it's too little and too late. They could, basically, print more money and technically save these failed businesses. But to the extent that they don't overwork their printing presses (digital or conventional) or, out of thin air, issue some other form of promissory notes (drawn towards the national debt), domestic spending of all sorts will be cut -- and these various programs (whether they be for schools, agriculture, or jet fighters) would have spent that money and fueled the economy as well. Without the funding, these various institutions will have to make cutbacks. They won't be able to buy as much (hurting the GDP) or pay their employees as much (whose collective spending also fuels the economy).
So, however this $850Billion bailout is actually conjured up (through taxation, simple printing, or borrowing back from various investors), the economy (even as it's commonly considered) is going to suffer great hardship. Somewhere along the line, either A) People will have less money to spend and invest in other projects, or B) The value of the dollar will be greatly diminished because they've printed and distributed so much cash. When the latter happens, people realize the worst arbitrary quality of money (and would thus prefer to hold on to actual items with inherent worth while moving away from monetary exchange). When the former happens, the masses don't have enough money to buy the typically massive amounts of certain products like food, clothing, electronics, etc. (so those products won't require a workforce to produce them and the subsequently laid off workforce won't then be able to buy still other products -- creating a deflationary spiral). In either case, people will lose confidence in the dollar because it is either worthless or because it's too hard to get a hold of. No one wants it or no one has enough of it to get what they need. However the government goes about financing this bailout, the general public will lose faith in the state.
"Only when the last tree has died and the last river been poisoned and the last fish been caught will we realise we cannot eat money."
Old Cree saying
The problem is that we are not actually living in a post-scarcity world. Americans have lived temporarily in a society where an abundance of their material desires could be met, but the idea of post-scarcity was an illusory fiction. The earth is still round and finite. The planet cannot forever maintain this incredibly large number of people who desire a consumeristic American lifestyle.
Specifically, our global agricultural system depends most heavily on petro-chemical fertilizers and pesticides. As petroleum is a finite (non-renewable) resource we will not be able to maintain production of those petro-chemicals which the agricultural system and billions of people depend upon. And wishful thinking about a ready substitute will not make one magically appear.
Petroleum has been, without a doubt, the primary fuel of industrial civilization -- and it's been 1/2 depleted. It's as simple as that. The underground lakes of oil have been half sucked dry and literally burnt up. And the dependance on petroleum has increased so dramatically with each passing decade that the remaining oil will be extracted at a much quicker rate. Each passing decade of extraction far outpaces the previous decade (as international demand skyrockets). But the geological forces which create petroleum oil take millions of years to produce more. Scarcity is an obvious and immediate factor.
The global ruling class knows this all to well. It's the fundamental reason why the U.S. invaded Iraq and why the sabers are now being rattled in the direction of Iran. It's a fact not to be overlooked or forgotten. Even if the wars there take decades, and require brutal escalation, in the end the U.S. is positioning itself to be atop the last and largest remaining oil fields. The U.S. intends to have the last source of petroleum to maintain it's dominant military machine. This is arguably why they are not immediately concerned with increasing petroleum extraction in Iraq, and why, cynically, they are not overly-concerned with the current health of their diminished industrial economy.
A temporary reduction in industrial output will slow the immediate demand for oil -- and that's oil they'll have to use later in the game for their military machines. If common civilians around the globe can't afford oil now... that's just oil that will remain and be used to suppress them later. We are talking about literal, political, and military power. The ruling elites are the ones who are truly looking at the long-term -- with the intention of retaining and maintaining their status. They understand what's coming and this is why, for example, President George Bush recently purchased 100,000 acres in Paraguay on top of the Guarani Aquifer, one of the largest underground freshwater reserves.
As resources are drained, the water is polluted, and the overall environment is laid to waste (all while the population continues to boom)... the ruling class is literally and figuratively positioning themselves to ride out the coming storm.
WORSE THAN A DEPRESSION
People like to say that history repeats itself (because similar events do take place throughout history), but we are living in unprecedented historical times. We have an historically unprecented number of people using, and depending upon, more BTUs that ever before. Simultaneously, the environmental conditions are in a worse state than ever before in human existence (dead zones in the ocean, polluted freshwater, deforestation of an epic scale, rapid desertification, and the mass extinction of untold species because of human activity). These are very serious issues not to dismissed, overlooked, or forgotten. We also have more governments around the world armed with historically unparalleled weaponry.
But before we look at the obvious consequences of those facts just mentioned, let's look at the more immediate consequences of the dire economic straits which Americans (and citizens of other industrialized nations) now find themselves in.
The stock market collapse has already wiped out the life savings and retirement funds of many Americans. Home foreclosures are at an unprecedented rate. Unemployment and underemployment rates are incredibly high. Disposable income is down as food and fuel costs have skyrocketed. Crime rates in the USA, "land of the free," are only kept in check by the massive prison-industrial complex which jails more people in total numbers (and per-capita) than any other nation. Corporate raiders, stealing hundreds of billions of dollars, are given a walk. The banking system is in collapse and runs on the banks are getting louder and more frequent.
When they piece it together, and look at it as a whole, anyone can see that this does not bode well for the immediate future (never mind the long term for a moment). Violent crime in the U.S. is about to skyrocket. We are going to see Americans fight tooth and nail as they attempt a futile defense of their consumeristic lifestyles -- and that's even before food and fuel costs really catch up with them. Any ideal you may have of capitalism is going to crumble because it fundamentally depends on parties X & Y trusting each other enough and being able to prevent violent renegotiations of any and every deal. It's not going to be... "Oh well, despite the fact that I worked hard and saved, I'll just starve and live a life of dilapidated poverty." Some will accept that, but enough will not -- thus make things more than interesting (in the worst sense of the word).
The sad fact is that there are very many small-minded and corrupt people who will use this current scenario to promote the worst political agendas. Race-baiting will become more frequent. Anti-immigrant movements will grow. Socially authoritarian idealogues will blame the situation on individual vice and a lack of fundamentalist religion. The police state will expand as the authorities struggle to maintain their control. Any idealogical threats to the elite's status will be crushed as quickly as any actual physical threats. A new push towards totalitarian fascism will make the last ten years look like a stroll through Freedomtown.
And that's before, above & beyond, any widespread international conflicts created by the governmental leaders (which are specifically designed to distract and/or horde more in their own best interests). Again, what the do you think the war in Iraq is really about, Iraqi liberation? Securing America from al Queda? Yeah, right.
I have the belief that Homo sapien sapiens flourished by means of their aggressive (de)evolution and that they wiped out other more passive and intelligent Homo genus relatives (like Homo sapiens idaltu [roughly translated as "elder wise human"] and Homo neanderthalensis). And that trend will continue now as the more peaceful (& more intelligent) humans are quickly and easily disposed of. The cooperative peaceniks amongst us (by definition) won't put up much of a fight -- and that will leave more hostile warmongers to comprise the bulk of humanity.
And while essential resources become more scarce, the militaries of the world are armed with the most devastating weapons ever created. They can scorch and irradiate the entire face of the Earth. Based on their track record, why would one doubt that they might? I mean, let's assume President Truman was relatively mild... there are far more ruthless leaders now and more of them are in possession of even deadlier weapons. Your hopes that there will never be another (more limited) nuclear strike will not change the tendencies of evil and irrational leaders who are more empowered than ever.
We are in serious trouble. If we do not adequately recognize the real threats to humanity (and the biosphere as a whole) we will not be able to adequately come up with a life-affirming response. Sadly, we may not be able to anyway. Culturally we have been conditioned to expect a happy ending... but this isn't a bedtime story or a Hollywood movie. The good guys don't always win and the planet may not be saved in the final scene.