Debt Rattle January 23 2017

[Raúl Ilargi Meijer]

DPC Looking south on Fifth Avenue at East 56th Street, NYC 1905 • We’ve Been in Decline for 40 Years – Trump is a Chance to Rethink – Eno (G.) • The C
[See the full post at: Debt Rattle January 23 2017]

[John Day]

Apologies for posting this to yesterday’s thread first:
@ Joe and Chris
Karl Marx is relevant again. Henry Ford got it. When labor is not adequately paid, the market for products and services collapses, because laborers are also the market. An increased carve-out of the pie for capital will eventually destroy markets. Globalization and massive borrowing gave capital a large carve-out of profits, but ultimately destroyed the biggest market ever, that provided by working class Americans, Henry Ford’s workers, buying Ford cars. We are now poised for global financial reset, the second-leg-down of 2008. This happens periodically, the generation that knows nothing of collapse, manages to collapse. It happens every 4 generations. Strauss and Howe describe it. This time it’s different, because the easy oil is in terminal decline, and that is what funded the party and fed us all.
Charles Hugh Smith looks most clearly at how the left deserted labor, especially in the US, and how the betrayal led ultimately to the gutting of markets after capital scored a decisive victory.
https://www.oftwominds.com/blogjan17/collapse-Left1-17.html
Brandon Smith gives clues as to knowing the minds of our shadowy puppet masters, behind the curtains. He has a fairly good recent prediction record. He sees the touting of populist threats in the media last year, and the passing of Brexit, and election of Trump, in that context. Populism will be at the wheel of the Titanic as it hits the iceberg and sinks. Globalism will take the stage once and for all.
https://www.alt-market.com/articles/3112-how-to-predict-the-behavior-of-globalists
I don’d disagree with his analysis of reading elite intentions, shared in code with the in-crowd, but I disagree that the free-energy will exist to rebuild globalism. In “complex systems” each level of complexity imposes further costs, which have to be supported at the base level of production. As long as there is more easy-oil to pump, and more forest to fell, and more fish in the ocean, increasing complexity will facilitate more rapid consumption of the resource base, and will be supported. That was the 20th century story. The resource base is now in decline, at least the easy-oil is in decline.
Complexity in systems collapses rapidly, “Seneca’s Cliff”. When complex systems collapse, the collapse down to the level of complexity which is inherently supportable, under prevailing conditions of production. The world is in overshoot, but it is “granular”. What regions will collapse to what levels? Can any region survive without healthy local agriculture? Will we be able to plow, irrigate and fertilize enough? How long can this be done in each place? Can some places and groups actually make a transition to “sustainable civilization”? What might that eventually look like? We are the animals we have evolved to be over eons. We should consider what we are and what we can do in modest sized working groups of around 100, with some good shovels, knives, and things like that.

[zerosum]

@ John day

Destination vacation Beaches are not crowded

The beach bums have retired
The beach vendors are suffering
The baby boomers are buying diapers
The beach jig-a -lows have disappeared

Locals are being targeted for time share

The old well-to-do middle class are not going to vacation destination and those that do are no longer buying more tricklets.

The yung’n have other concern/priorities than to go to vacation destinations

[Chris M]

John Day,

Thanks for your comments.

Henry Ford understood that a functional, solvent economy had to be balanced. The income of producers had to be balanced with the income of laborers, or wage earners, who constitute the largest share of consumer purchasing. If one sector of the economy gets more than its fair share, that imbalance undermines the whole economy.

I remember one time bringing up what Henry Ford said about this to a gentleman from the Mises Institute who was a guest on a call-in radio show. Unfortunately, the expert from Mises disputed what I had to say about Henry Ford, by going on to explain that Ford paid his workers more because he was forced to be “more efficient” due to competition.

It is really sad to witness how many people, who should know better, miss the relative simplicity and elegance of how a complex economy, as we have in places like the United States with much division of labor, really is to function, to be prosperous, without resorting to these silly debt-induced booms and busts.

Furthermore, I want to comment on something I didn’t include in my posting yesterday. I am fully aware how our economy will change in the future as our non-renewable forms of concentrated energy will become more scarce and net-energy negative. When I was running my certified organic vegetable farm in the Midwest, I had the blessed opportunity to rub shoulders with people who were thinking about, and trying to build a more local-based economy, especially in terms of agricultural production and distribution. That kind of contemplation was certainly spurred by $4.00 per gallon gasoline.

But even if we have to depend more on carbohydrates, instead of hydrocarbons, the need for a fair trade and balanced economy will remain.

I’ll repeat what I said yesterday. If my production at the base of the economy is undervalued, I can’t properly value the production and labor of those I engage with in trade. Those producers and laborers, consequently, cannot properly value their suppliers and laborers…and on and on it goes, cascading throughout. That is the basis of how depressions start and manifest themselves. The natural resources (in what forms they still exist) are there. The people to apply labor to them are still there. But trade, or money velocity starts to grind down slower and slower, showing itself as a deflationary spiral. It can be observed in the measurement of declining earned national income, but, unfortunately, that is often masked by borrowing taking the place of those earnings.

The message is simple. We need to earn our way, instead of borrowing our way. A system of compounding debt forces wealth into fewer and fewer hands.

And the participants at Davis are scratching their heads wondering why “prosperity is spread too unfairly”. That’s really rich. Pun not intended.

[Chris M]

Oops. That should have said Davos, instead of Davis.

Automatic spelling correction–a blessing and a curse. 😉

[John Day]

Hi Chris,
I think we agree.
I’m beginning my fourth year of this kitchen garden, in what was an over-shaded back yard. https://www.johndayblog.com/2016/07/liberty-garden-central-texas-climate.html
John

[Glennda]

Thanks, Chris M. I’ve ordered the book by Carl Wilken. These ideas make sense of so much. How frustrating that New Deal regulations were dropped.

Still the way the Plutocracy works makes me suspicious of such a simple solution. The top tip of the pyramid will want to have their increasing share, so where is it to come from, but from the great unwashed base of the pyramid? Perhaps a financial collapse can loosen some of the elite state and corporate strangle hold on the world. Localizing what’s left may make it harder to monopolize.

And Thanks again, Ilargi for providing a place where we can get intelligent discourse.

[Chris M]

Glennda,

Be careful about calling what Wilken was able to get Congress to pass, New Deal regulations. It’s my understanding that this was not part of Roosevelt’s New Deal, but separate from it.

The agricultural parity pricing laws that Congress passed is NOT price fixing, as some people like to think. The prices float with the costs of production. It is an index. The idea is to maintain the RELATIONSHIP between the price of any given commodity and the cost to bring it to the market. It is not to try to fix the price of anything.

In fact–and I’m sure you won’t find this hard to believe–there are guys in some obscure office of the USDA who still calculate and publish parity prices for a whole slew of agricultural products, on a monthly basis. They are required by law to do so. You can go onto the USDA website, for example, and find out what the parity price for corn should be today. Pretty fascinating.

Here’s the punchline: parity pricing laws are still on the books, but not being enforced by USDA and the Secretary of Agriculture.

The federal government not enforcing its laws??! Sound familiar?

[Author]

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