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The Predatory State

(image: lorenjavier, flickr)

(image: lorenjavier, flickr)

Austerity, and asset stripping are now the modus operandi of the moneyed classes, the 1%. Their pursuit of returns from their ever-increasing piles of money, are driving the need for both austerity and investment in non-asset based financial instruments.

To further this end, their purchase of the leaders of “Democratic States” is more visible than ever.

Why is this happening now?

The Resource Limit

The wold has limited resources. Limited oil, limited coal, limited natural gas, limited rare earths; in other words, anything that is mined, including potable water, is a limited resource. All mines become exhausted, as do all oil wells and gas wells.

Water wells tend to be replenished naturally, but only if less water is used than flows into the aquifers. Excessive usage can permanently damage the aquifer as a water resource; an example of this is the aquifer that supplies Houston. Water, in theory, is infinitely recyclable. However, we are now seeing evidence of changing precipitation patterns, leading to rainwater being delivered by the ecosystem in amounts which cause drought or flooding, but not balanced delivery, as was formerly the case. Moreover, the human population is growing. A continually-growing population puts an increasing strain on a finite resource.

There is no Growth in Maturity

Every system follows a life-cycle curve – commonly called an “S” shaped curve. The curve is characterized by initial slow growth, followed by rapid growth, and finally, the growth flattens off at maturity. Individual people follow the same pattern. Children grow slowly to start with, then grow “like weeds” during their school years, and eventually stop growing. The S-curve is common to the growth of every living organism, and society. When a child’s growth stops, we mark it as an indication of maturity and attainment of a certain level of progress. This is fine in families, and in small communities, but unfortunately, Western society has lived with an assumption that overall growth can go on forever. This flawed model is beginning to have serious consequences in our world, right now! Let’s look at the “public” numbers:

Projections

Roughly a billion people in the West consume 25% to 40% of the World’s current production of Goods; but 3 billion Asians are observing the West’s apparent prosperity and standard of living – and they want a similar lifestyle. Unfortunately, there are not enough resources for everyone to be able to enjoy that level of excess. It would take more than one Earth to deliver that. The point is, that it simply is not possible for growth to continue to approximate an exponential increase.

Let’s look at some more numbers: The world’s economy doubles every 24 years at 3% compound growth, or 18 years at 4% compound growth. Energy consumption is correlated with growth, as is the consumption of all minerals. The world’s economy can possibly double once, but cannot double twice.

The Monied seem to believe this. Why?

Keynesian economics is based on the belief that Government spending, and the consequent deficits, will bridge the demand gap in an economy in recession and depressions, and lessen the effect of the random fluctuation in the chaotic system that is our economy. Government leading the demand will also improve the business cycle in the subsequent upswing of demand and production. However, there is a hidden assumption in the Keynesian model.

The assumption is that sovereign deficits, and the associated debt service (interest payments), will be easily managed by the growth in the economy, which follows the “end of the down turn”. Historically this was true. The possibility of the sovereign debts being repaid or retired may be possible, although history shows sovereign debt retirement to be a myth. Growth provides cash flow to service sovereign debt.

What happens if there is no growth? The Bush era was one of the greatest historical experiments in using Keynesian Economics to boost the economy, after the “dot com” bust. It failed, for two reasons: First the spending was “expense” on foreign wars, not “investment” in infrastructure at home. Mere expense is the worst possible form of Government spending, because there is no “return on expense” only “return on investment.” The second reason that Bush’s Keynesian experiment failed is the maturation of our economy, along with maturity in our civilization. As a result, the Bush-propelled Keynesian stimulus provoked a real estate bubble and an asset bubble, but no robust growth (except in Mercantile China).

So what’s a money person to conclude? Is the assumption used in Keynesian Spending is no longer valid? Is this due to limits on growth, the maturity of our ecosystem, and our economical system, caused by exhaustion of resources, with Oil being an early indicator? The answer is that we have reached the flat top of the S-curve. Exponential growth in the West is OVER; there may still be some growth, but it will be residual, not exponential. The financial models that we used to use are no longer valuable, because they were based on an assumption of exponential growth. For governments and the elite, this is a BIG problem. That’s why no one is talking about it.

If that became the Monied’s belief, what’s the Monied, as a group, to do?

1.  Go public with the projections? (“Things are mature now, there will be no more growth, and we all share the rewards and the expenses.”)

2. Collect as much as possible right now, and leave the dregs to others? (I’m all right Jack)

    It would seem that (2) is their chosen response to the new limitations on growth.

    This would explain the seemingly crazy rush to “invest” in financial derivatives (non-asset based investing, or gambling) that is such a feature of our economic system. What’s a financial manager to do if there is is continual demand for returns on money, and there’s not enough resources, or manufacturing in which to invest? Aha! Invent a new investment! Worthless derivatives!!!

    This would also explain Austerity. If the pie is frozen in size, keep the projections close to oneself, and grab as much of the pie as possible, NOW. Any other action reduces the size of one’s slice of the pie (aka: losing).

    If the lack-of-growth projections became public knowledge, the myth of “more pie for all” later (aka: The American Dream) would result in the peasants demanding some of the pie, NOW, and not be put off by vague promises of more pie later.

    The state becomes the Predatory State. Bought by the money, paid for by rents and taxes on the people.

    What’s a person to do?

    Support the people who can help, and support each other. The time has come to defend yourself, your family, and your society from coming depredation by government and the elite. The best response is the one modeled by the Occupy movement – peaceful but firm resistance. The Occupy movement have focused on the on the most obvious attempt at grabbing your money. Support them, and keep one hand on your wallet! There are “pickpockets” everywhere!

    The 1% are grabbing all they can, leaving have-it-alls and have-nots.

    In a era of limited growth, or growth at the expense of others (e.g. Chinese Workers vs US workers), only Occupy, supported by the ACLU and the progressive left are the voices representing ordinary people, the have-nots, the 99%. The ACLU is key to ensure their right to assemble and protest. Don’t waste your time trying to get your representative to support American values, because while one could petition one’s bought-and-paid for representatives, this author believes that will be as effective a throwing a piece of buttered bread at the 1%, ineffective and messy. Your representative will say he supports American values, and then will do what he is paid to do, hoping you don’t notice.

    As Thomas Paine wrote, “These are the times that try men’s souls.” Stand up for yourself, your family, and your society. Send $20 to support Occupy. Send another $20 to the ACLU, to protect Occupy’s right-to-assemble and protest.  Join a Union if you can, you’ll need it, and a local neighborhood group. We are in this together, and united we stand and divided we fall. It’s as simple, and as complicated, as that.

    Beware of false prophets, people with smooth tongues and hidden agendas. They run for office and will disappoint at every opportunity.

    And remember, the other side will resort to violence, as they did with Occupy, because the have-it-alls have only two choices: either become violent-by-proxy or pay up. Paying up is the last thing they will do.  As a response, choose peace, because peace is stronger, but be ready for the agitators and ‘agents provocateurs,’ who will do their best to lie and to create circumstances which enable self-defense to be painted in a bad light. Stand firm, and stand together. Support Occupy and the ACLU.

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