America Can’t Afford to Rebuild
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Adolphe Yvon Genius of America c1870 A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing
[See the full post at: America Can’t Afford to Rebuild]Seems so, but the USA is the reserve currency; money is infinite 😉 FYI, it’s four Texas representatives,not senators. Can debt grow faster than income in perpetuity?
Fixed that Ken, but at the same time that’s just details, and not what I’m after.
America can’t pay back its debts already, and the storms will make it impossible to keep hiding that simple fact. By adding more debt as the only way out.
Six itchy men are shipwrecked on a small, mosquito-infested island. Their names are Wark, Bink, Det, Guv, Prece and Robby. Wark spends all his time working: cutting bamboo, building huts, tending a garden, hunting, fishing, cooking for the group and singing everybody to sleep at night.
Bink searches the island for seashells, and loans them to Det in exchange for any new seashells he might run across. Guv shouts orders at everybody and beats them with a broken strand of rigging when they don’t listen. Robby steals food, seashells, bamboo and anything else the others haven’t hidden from him. Prece writes about it all, but fibs and distorts a lot. With the exception of Wark, everybody spends the bulk of their days horsing around in the itty-bitty jungle and lying on the beach telling bad jokes.
Bink is prosperous, as he says he has more seashells than the rest combined.
Det is prosperous, having borrowed large quantities of shells from Bink.
Guv is prosperous, as he screams at the others to surrender a “fair portion” of their shells.
Prece is prosperous, as he’s bribed by Guv and Bink.
Robby is prosperous, too, as he’s expert at stealing the others’ shells.
Wark is stressed out, nearly broke, and in pain from blisters and abrasions.Then one day a seventh man floats to shore on a piece of driftwood. His name is Doct, and he offers to numb Wark’s blisters with wads of algae and sea snake oil. Before long, Doct is also prosperous, but Wark is now penniless. Sorry, shell-less.
Bink, Det, Guv, Robby, Prece and Doct are all out celebrating their prosperity one day when Wark strolls up and tells them about the distant hurricane he sees coming. There is a traffic jam as they all try to escape on Doct’s little chunk of driftwood. During which time Robby is busy stealing from the huts. Guv shouts at Bink to loan him more shells. Bink just gave himself a bonus and finds himself momentarily out of seashells, but promises more later if Guv promises to save him. Det needs just one more loan.
Wark quietly passes away that night. And with one less mouth to feed, the rest dance in celebration. Life has never been better.
Two days later, everybody’s starving, and shocked to discover that seashells are hard to chew. Two more days pass and Guv is the lone survivor, a cannibal. Next day, the hurricane wipes the island clean. Then a week passes and another shipwreck brings six more itchy men to the island.
Five of whom immediately express their strong contempt for all the bloodsucking mosquitoes.
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“America can’t afford to rebuild.”
Why am I not surprised?
As archaeologist Joseph Tainter asserts in his book The Collapse of Complex Societies, when a society no longer has the reserves to help offset what might otherwise be considered a recoverable disaster, collapse is not far off…
Ken Barrows
Seems so, but the USA is the reserve currency…That, effectively, is coming to the end; BRICS+, Russia, China, Iran, and Venezuela (to name a few) are all moving away from the dollar.
Gold is once again gaining currency (no pun intended) for energy purchasing (oil, gas, LPG) with China, Russia, and Venezuela .
The U.S. destroyed two countries and killed their leaders for the same thing.
The greatest fear of the U.S. is a stable, multi-polar world; coming soon regardless…
Or, anihilation in WWIII…Not to fear: we were never going to pay our debts back. Ever. Not since 1979. So we’re the same as before.
Okay, but that does not mean we can go on rebuilding houses, badly, that add nothing and never should have been built in the first place. We have the resources to fix all this. We have men, skills, ore, trees, pipes, power, and believe it or not, still a lot of oil. The problem is, like Kunstler or Diogenes says, we’re just completely mis-applying them.
I think Tainter, while correct, is also mistaken: yes the infrastructure outruns the resources, but why? Societies have business cycles they must safely contract in, and larger, 70-200 year cycles as well. We sometimes even catch them reforming themselves for round 2 or 3, or not. So why do some large societies reform themselves and heal, which is clearly possible, and some ossify and collapse? That’s the real question, and I think he wrote the book so that we might ask. The U.S. – and most places on earth, in fact — can still reform and recover. Congo has everything and is poor. Japan has nothing and is rich. Why? The largest long-term study discovered that property rights, equal justice, stability/visibility, and a few other things were the real signals of wealth; things that have been forcefully and systematically undermined in the U.S. since the 40’s — a long discussion, but reported by several converted spies and our otherwise inexplicable actions over the years. So we can go back to what worked, or we can go off the rails, your choice. But one thing’s for sure, thanks to the 50-year party I and everyone outside the 20 ordained cities fought against and didn’t enjoy, there are no promises now but “blood, toil, tears, and sweat.” So are we going to build more party houses, or are we going to get to work now?
Don’t ask.
Another realistic assessment of a situation that will become more frequent in the future, not just in the US but for all nations. In the context of the US, Tim Morgan’s recent post (No. 104) entitled “Why Mr Trump Can’t Raise American Prosperity” on his Surplus Energy Economics website explores and quantifies the the financial issues undermining the US economy, opening with:-
With SEEDS – the Surplus Energy Economics Data System – nearing public release, this article has two purposes. It assesses the outlook for the American economy, and uses this investigation to demonstrate how SEEDS is applied to economic interpretation.
It concludes that American prosperity is in decline, and has been falling ever since it ‘peaked’ way back in 1999. This doesn’t make America unique – prosperity has long been falling across much of the developed West. But it does mean that the central economic task of President Trump, which is to make the average American more prosperous, simply is not possible.
Two main factors are driving the deterioration in prosperity. First, the underlying economy has been deteriorating, a trend disguised by the spending of borrowed money.
As has already been identified by both Raul and Nicole on TAE, the deeper largely unrecognised issue is declining net energy, or surplus energy, coupled with its steadily decline in affordability that responsible for the slow motion evaporation of genuine wealth, which leads to more and more people becoming impoverished. Global political, economic and banking elites have failed to recognised this reality, and wrongly believe creating money can compensate for this decline in net or surplus energy. This blind spot in their thinking effectively equates to providing more bucks and getting less bangs, which will inevitably end with another financial crisis. Tim Morgans latest post (no.105) entitled “Anticipating the next Crash” explores the consequences of this misguided policy, arguing the next crash may possibly be caused with a loss of confidence in money rather than banks, and opens with:-
Because the global financial crisis (GFC) was caused by a collapse of trust in banks, it can be all too easy to assume that the next crash, if there is one, must take the same form.
In fact, it’s more likely to be different. Whilst the idiocy-of choice before 2008 had been irresponsible lending, by far the most dangerous recklessness today is monetary adventurism.
So it’s faith in money, rather than in banks, that could trigger the next crisis.
I remember reading that the USSR failed because so much was spent on military spending trying to keep up with the USA that it went bankrupt. I feel that the US is now in the same position but all the money is being spent to fight mythical enemies!
Russia, China, Iran and North Korea are being portrayed as mighty monsters champing at the bit and ready to destroy the world! They’re not. They are countries who just want to trade with the rest of the world without the threat of interference from the US.
The US is close to spending as much on the military as the rest of the world combined. The banks have had trillions of free money to try and cover their gambling debts. But the vast majority of Americans are living paycheck to paycheck, the infrastructure is crumbling, most pensions are in jeopardy, the police are becoming increasingly militarised and unconstrained by laws, and despite spending fantastic amounts on healthcare it is still behind any other developed country.
The only thing keeping the US solvent is that the world is willing to invest trillions in supporting US debt. This could change quickly sending the US over the edge.
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