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The Paradise Perspective: Commentary from a Free and Compassionate Alternate Reality 2008 Update, Part 2 by Glen Allport Exclusive to STR July 8, 2008 Last
week
we looked at trends for the economy
and for government action, and
found the situation less than optimal, in much the same way that an
outbreak of Ebola
in your neighborhood would be less than optimal. This
week we consider the situation for commodities (and in particular oil and
metals), food supplies, and the environment. 3)
Oil, metals, and other natural resources The
dramatic
trend for higher commodity prices which began several years ago is not
an artificially inflated bubble about to pop, but instead a very real
expression of powerful, fundamental change in the world (which I'll
describe shortly). Downticks are inevitable in any bull market, but the
commodity uptrend itself isn't going away anytime soon. Unlike in a bubble
(e.g., the recent bubble in housing) buyers are snapping up the available
supply for current use as it
comes to market, not buying and holding actual inventory for expected
future gain. To
see how broad and strong this uptrend has been already, click here
for a page with charts for many commodities over various periods of time;
the example below is for heating oil over the last ten years. Most other
natural resource-based commodities, including gasoline and metals, show a
similar pattern.
Heating Oil
(HO, NYMEX) http://futures.tradingcharts.com/chart/HO/M Returning
to the topic at hand (and to a tone more appropriate to the situation): The
first and (for now) most
important reason that commodity prices will continue rising: We live in a dying, world-wide empire of fiat currency. This empire
is owned by private banks with monopoly charters that are granted by, and
operated in league with, coercive governments. The empire itself is
sociopathic to the core; it is gimlet-eyed, cunning, and controls most of
the major outlets for news and entertainment; it also controls respected universities
and influential think tanks and the most powerful organizations among the
power elite. For
a century and more, this empire has controlled the money supply of nations
and has financed wars and other destructive government make-work projects,
growing fat on the profits while millions suffered and died. The empire is
highly skilled at promoting such disasters, which are said to be
"compassionate" or "necessary" (often to Save Us From
an Enemy or some other danger). Regarding war in particular,
highly-decorated General
Smedley Butler (two Congressional Medals of Honor) put it plainly in
the title of his 1935 book: War
Is A Racket. Banks and their friends in other industries
(including government, the one industry that imposes itself on customers
at gunpoint) make the profits; soldiers, their families and friends, and
ordinary civilians everywhere pay the price, both financially and in terms
of death, maiming, and other horror. Despite
its power, the fiat-currency empire is based on a self-serving lie, and
thus the truth has been
undermining the empire's foundations since inception. That truth is now
poised to bring the whole, rotting, corrupt edifice down in a collapse of
epic proportions that will devastate entire societies and echo through
time, eventually becoming myth and legend. The
character of the future that emerges from this event will depend on how we
respond to the disaster now in progress. In particular, our responses will
determine whether our children and their descendents live in a civil
society of love and freedom, or in a technologically-enabled police
state powerful enough to resist any attempt at overthrow or reform. Love
and freedom,
then – or cruelty and tyranny.
Make no mistake: that is the choice we face, and not only for ourselves
but for many, many millions yet unborn. -
- - - - The
lie at the heart of the fiat currency empire is that a central bank can and should be the sole provider of a nation's money
supply, and that said supply should consist of worthless pieces of paper (and now, electronic entries in computers)
that can be almost-instantly created in any quantity by the central bank
at essentially zero cost. These currency units are tied to, and redeemable
in, nothing whatsoever. In
other words, the fiat currency empire is based entirely on what might be
called counterfeiting, and on
coercively enforcing monopoly
privileges for the counterfeiters. Not only do the central banks have
a monopoly on the "right" to counterfeit, but competitors
offering honest money (gold or silver, which cannot be inflated into
nothingness) are attacked
as criminals (video, 1 min 10 sec; mostly scrolling text describing
the victim's point of view; see also this Washington
Post story on the event). Actually,
central banks are doing something worse
than counterfeiting. A true counterfeiter creates a phony copy of
something real (for instance, when a twenty-dollar bill was redeemable by
law for roughly an ounce of gold, the counterfeiter who created a fake $20
bill was essentially making a phony copy of one
ounce of gold), but the Federal Reserve and other central banks have,
in collusion with the governments that charter them, eliminated
the "real thing" entirely: even "real" dollars now
have no intrinsic value at all. This is a scam of far grander dimensions
than the mere counterfeiting of genuine currency. This
corrupt and parasitic
system has infected nearly every nation around the world (the U.S.
succumbed in 1913, with creation of the Federal Reserve), and now, after
decades of hidden wealth transfer from
the masses to central banks, governments, and the power elite (including
corporations feeding at the government trough), the resulting economic
damage is nearing a tipping point (see last week's column).
Artificially-created boom/bust episodes are coming more frequently and
(because the fundamentals grow ever-weaker) are becoming more severe.
Central banks thwart the necessary corrections with the only tool they
have: more inflation. Creation of ever-more fiat money (much of it in the
form of debt) is the only thing keeping the game going, and the result is
an entire planet headed toward economic collapse; see Zimbabwe
for a preview. Money supply growth, worldwide, is heading into the
vertical part of the parabolic curve. The egg, as it were, is about to hit
the floor:
From
"Global Inflation: The next major obstacle" http://www.321gold.com/editorials/aden/aden070308.html Another
look at the data, using the Consumer Price Index for
From
http://mwhodges.home.att.net/inflation.htm The
system and its apologists are desperate to keep this obvious truth hidden
from the public, or at least to keep the public confused about it. For
example, last week, U.S. Treasury Secretary Henry Paulson said that "a
weaker dollar cannot be blamed for soaring oil prices." This is
on par with saying that "heavy rain cannot be blamed for flooding in
the Proof
– and this is where that pesky "reality" thing really gets in the way of a good lie – is that gasoline prices have hardly changed in terms of real money. A gallon
of gasoline today costs about $4.10
in American fiat money, but can still be had for less than a quarter-ounce of silver (silver is $18.12 per ounce as I
write; check the Kitco graphic at the top of 321gold.com
for the current price). A silver
quarter from 1964 or earlier contains nearly a quarter-ounce of
silver, and, despite fluctuations in the price of the two commodities,
will usually buy roughly a gallon of gas. This
situation has changed little in decades. In Texas during the late
1960s (yes, even a few years after the removal of silver from new
coinage), a gallon of gasoline sold for between 20.9 cents and 24.9 cents
– I know because I was there, filling the tank of my rattle-trap 1960
Ford Falcon for about $2.00 total. For a short video pointing out that 23
cents would buy a gallon of gas in 1947, click here.
The video ignores that a silver quarter is only 90% silver and also
pooh-poohs the increasing supply/demand mismatch (i.e., peak oil versus
higher global demand, which is
starting to impact prices), but it nonetheless makes an easily-understood
case for the basic reality that erosion
of dollar value is by far
the biggest reason for higher gas prices today. At
some point, after the system has largely collapsed and much of the
pseudo-money has vanished (in bankruptcies, stock market crashes and other
asset deflation, and in a hundred other ways) you will STILL be paying
more for consumables and for most other goods – if not as measured in
currency units, then as measured in hours worked or as a percentage of
your monthly income. (Here's
an argument for deflation coming sooner rather than later, for those
interested). Why? Reason Number Two
for higher prices is supply
versus demand, that most basic of economic realities. Supply of most
commodities is either diminishing or growing more slowly than demand, and
the cost of bringing that supply to market is increasing dramatically;
the high-quality and easy-to-harvest deposits of oil and metals and coal,
for example, have for the most part already
been harvested. Yet world population continues growing and billions
of people who now live in abject poverty are clawing their way into the
middle class, or at least in that direction. The result is ever-more
people wanting (and buying) air-conditioners and automobiles and every
other material good you can name, bidding up prices on the diminishing
supply of commodities
required to make and transport those material goods. In
short, Peak Oil and Peak Metal will increasingly drive oil and metal
prices higher, independent of and in addition to monetary inflation. As
an example, here is a look at the
http://www.energyfiles.com/eurfsu/uk.html Once
again, this same basic problem is being experienced in the mining
industry. Current data suggest that the supply of several metals
(including indium, needed in LCD panels) will be exhausted in only a few
decades – for indium, perhaps in 13 years. Naturally, this has an effect
in the market: "In January 2003 [indium] sold for around $60 per
kilogram, by August 2006, the price had shot up to over $1,000 per
kilogram" says Brian Durrant in Commodity
Predictions: The Future Is Uncertain. Durrant includes a chart with
"Years to exhaustion" for over a dozen metals. If
all that sounds like a recipe for lower prices to you, then
congratulations! You may have what it takes to become U.S. Secretary of
the Treasury. You
might think things couldn't get any worse for energy and other commodity
prices, but in fact several
other, short-term problems (including a possible attack on Iran and
predictions for above-average hurricane activity this year in the
oil-producing Gulf of Mexico region; see also here)
could spike the price of oil and natural gas dramatically, all on their
own, which would naturally raise the market price of metals and anything
else that must be transported to market. Some believe an attack on A
note on conservation and other voluntary reductions of usage: yes, higher
prices – even for crude oil and gasoline – tend to reduce demand, as
consumers change their habits in response. It may happen that the economic
downturn now in progress will reduce demand enough to lower prices
temporarily. But take a good look at the down-slope of the graph above
before telling yourself that voluntarily lower usage will lead to an ongoing
match with available supply anytime soon. Once again, other nations, and
almost certainly the world as a whole, have or will have very similar
down-slopes for crude oil supply. Unlike the OPEC oil embargo of the
1970s, the escalating oil shock of today and tomorrow will increasingly be
based on actual, systemic, unfixable (at least in the near term) shortages
– as well as on Reasons Number One and Three. Speaking
of Reason Number Three: commodity
prices will also reliably increase in the years ahead because government
is keen to help solve the problem. That is another way of saying that
the free market will not be
allowed to solve the problem, or at least will be severely hamstrung in
its efforts. See the ethanol
debacle now unfolding, or our efforts in the War
on Drugs, or the disaster of government
"help" in healthcare, or the destructive
effect of our aid to Africa, or the U.S. government
response to the 9/11 attacks, or, well, almost any other example of
government help: government is indeed The
Worst Way to Do Anything. Government solutions not only fail reliably;
they get in the way of genuine solutions. It
is worth noting that one "government solution" is for a
government to either nationalize
a resource or to increase the government's percentage of the profits. This
is happening around the world – and is being suggested by some in the In
sum, none of these three reasons for expecting higher commodity prices has
moderated since the first of the year; all three continue to worsen –
more inflation in America and around the world, more evidence that we are
near (or even slightly past)
the Peak Oil point and the Peak extraction point for several metals as
well, and more government intrusion. 4)
Food Take
everything we just talked about above, and add "extensive
drought and flooding." That's the food picture: a long-term uptrend
for prices (due to monetary inflation, looming oil and other energy
shortages, population growth, farmland erosion, water shortages, and the
government-enforced "let's use a bunch of our corn for fuel
instead of food!" idea, among other things) combined with near-term
additional pressure on price and supply from poor harvests this year –
actually, from poor harvests and higher demand the last several years, which have already
reduced food stocks to their lowest levels in decades. The
mega-famines of the 1970s and 1980s predicted by Paul
Ehrlich and others were averted by the Green
Revolution, which improved farming productivity around the world via
the application of technology. The question today is: Will technology, or
anything else, prevent mega-famine in the future as world
population soars to a projected 9 billion in the next 34 years? That
would be today's 6.7 billion plus 2.3
billion more – the current population of In
any case, we don't have to wait decades for a budding food crisis: one is
already here. In The
World Food Crisis (The Nation, May
12, 2008), John Nichols points out that this crisis (as with so many
others) has its roots in government "help" and in corporatism: "The
current global food system, which was designed by US-based agribusiness
conglomerates like Cargill, Monsanto and ADM and forced into place by the
US government and its allies at the World Bank, the International Monetary
Fund and the World Trade Organization, has planted the seeds of disaster
by pressuring farmers here and abroad to produce cash crops for export and
alternative fuels rather than grow healthy food for local consumption and
regional stability." The
word "crisis"
keeps popping up in stories on the global food situation, and for millions
of people in poor nations, food shortages and higher prices are indeed
becoming a life-and-death problem. Even in wealthy nations, the poor and
increasingly the middle class are feeling the pinch as well, and there is
little to suggest things will improve in the near- or even medium-term.
Worse yet, a major financial collapse, as many believe imminent (see last
week's column), has the potential to disrupt food distribution in a
rapid and dramatic fashion and to reduce farmers' ability to grow the next
season's crops as well. I believe such a collapse is inevitable at some
point and quite possible in 2008, although timing
and velocity of such events can never be predicted with certainty. In
addition to drought and flood and other factors, remember, the dollar
itself is worth less every year, putting price pressure on real goods. I
can't think of a more vivid example of how badly the Federal Reserve has
wrecked the American dollar than the fact that before the Fed was created,
bread was typically five cents a
loaf. (See U.S. Supreme Court, SCHMIDINGER
v. CITY OF CHICAGO, 226 U.S. 578, 1913).
Bought
a loaf of bread for a nickel lately?
Probably not, and the price
of bread in the U.S. is now rising dramatically, up 16.3% in the last year, per the Department of Labor. The linked
article details the price increases bakers face for nearly everything:
labor, flour, eggs, fuel for delivery vans, you name it. Flooding and
drought may end this year or not, but monetary inflation by the Federal
Reserve rolls on. Bottom
line: the food situation looks even worse than it did at the start of the
year. 5)
Environment The
oceans remain my biggest concern with the environment; they are becoming more
acidic, are heavily
polluted with chemicals and trash
(some areas have more than six
times as much plastic as plankton by weight [video, 7 min 9 sec] –
and that was in 2001), and have been over-fished to an extent that "Peak
Fish" is now, already, joining Peak Oil and other peak phenomena
as a human problem. This is yet another reason for concern about the food
situation: seafood is heading towards extinction. There seems far too
little awareness of this looming disaster. None
of this is new, and I haven't seen any dramatic new environmental problem
that wasn't already on the radar screen six months ago. My sense is that
the trend continues in the wrong direction, but contradictory
stories are commonplace, and unlike with food or oil prices which we
all experience first-hand, evaluating the truth behind environmental news
reports and commentary is difficult. One
possible bright spot is that an economic downturn combined with less
fossil fuel being available might, just possibly, ease some of the
pressure we are putting on our home planet. It also might do the opposite,
as desperate people respond in desperate ways that end up creating even
more damage. So
perhaps I own Bohr an apology; sometimes, "prediction is very difficult, especially about the future." Conclusion You
could be forgiven for thinking I am a pessimist, because this two-part
column is a litany of dire problems. But if the problems are real – and
they are – then writing honestly about them is realism, not pessimism. People
are accustomed to believing things that comfort them, but the benefit of
seeing things as they are is
that acknowledging a problem is the first step in solving it. Right now,
the tendency is to see the converging downtrends discussed in this column
as temporary, as part of the "normal" business cycle, as
something that will soon reverse and return us to the more stable and
prosperous world we knew. But
that is not the case – not this time, or so I believe. Certainly, a
tipping point will be reached at some
point that will prevent a quick or easy return to prosperous
"normality." Too many fundamentals are being eroded at
the same time, and this erosion has continued for many decades. I
believe the tipping point is now behind
us, but if not, it is coming soon. I am hardly alone in this view; see Destruction
by Paradigm from March 2007 for a long collection of data and comments
by others on the gathering financial storm. Don't
let occasional short reversals of the downtrend confuse you. The downtrend
now underway will outlast and eventually overshadow the Great Depression
of the 1930s. Why? Because compared to the situation in late 1929, today's
situation is dramatically worse. Today, we have: Vastly
more debt,
at every level (federal, state, local, business, personal):
An
auto industry on the verge of bankruptcy
and with ever-smaller market share; in 1929 our auto industry was the
world leader Other
industries also near bankruptcy
(banking, homebuilding, airlines, etc). An
ever-worsening trade deficit;
Americans buy more and more goods from the rest of the world while
creating less and less to sell. (Yes, this makes the nation poorer). In
1929, and
actually until the 1970s,
A
fiat currency rapidly dropping in value
and tied to nothing, as opposed to a dollar tied to gold by law; this has
become obvious and is changing
behavior in relation to the dollar world-wide. Those still willing to take
dollars want more of them, and expect to need even more tomorrow just to keep
pace with the dollar's loss of value. Price pressure on nearly everything
is compounding throughout the market; higher oil prices, for instance, add
price pressure to nearly everything that is manufactured, grown, or
transported. In
addition, we have depleted much of
our oil and other resources ( The
infrastructure for harvesting
and refining these resources was relatively new and in good repair in
1929; that
is no longer the case – many trillions
of dollars are needed to repair and upgrade not only oil field and related
equipment (pipelines, for instance) but also electric, gasoline, natural
gas, water, and sewer infrastructure in the U.S. – in addition to
repairing our neglected roads, bridges, railways, and nearly everything
else needed for a functioning economy. This is in addition
to trillions of dollars needed for new technologies and infrastructures
(solar and wind farms, for example) required by the oncoming shortfall of
oil and natural gas. But we are already deeper in debt than any other
nation in history has ever been,
and our productive capacity has been deeply eroded, so where will
the money come from? The
environment has degraded
to such an extent that even the oceans are dying. Add other environmental
problems, which are legion, and the situation is not only impacting the
world economy and food supply – the environment may be perilously close
to a collapse like none ever seen in human history. We really don't know
what to expect; we have never killed the oceans before, for instance. What
effects (direct and indirect) will that
have? Whatever the effects are, I don't expect them to be positive. The
cancer-like growth of government
in the
-
- - - - Is
there a simple set of instructions you could follow to protect yourself
and your family from what is coming? Not
if you are planning to remain on planet Earth, there isn't (although I'll
discuss some possibly-helpful actions in a moment). Certainly, the He
may be right in the near term; Get
clear on this: your children's
lives will not be like your own. A new era is beginning, and it will
take your complete attention and a great deal of effort to survive
comfortably – or perhaps at all – much less to prosper in the years
ahead. At
the individual and family level: Food:
Do you have any stored or are you currently growing a significant amount
of food (in a large garden, perhaps)? If food distribution were severely
disrupted for a weeks or months, what would you do? Your local grocery
chain is about three days away
from empty shelves, at least for perishables. If food becomes scarce or
more expensive than you could afford, would you have any alternatives
other than showing up (with thousands of others) at your local food bank? Water:
Several areas in the Jobs,
money, and investments:
A financial collapse is coming;
this is no longer in doubt, and in fact early stages of the collapse have
already begun (see Part 1 of this column for more detail). Is your job one
that will remain in demand when most other people have lost theirs? Are
your pension and other investments likely to survive bank failures,
hyperinflation, the bankruptcy of your corporate employer, and other
problems? If you were to find yourself without income for a week (or
month, or a year or longer), do you have anything set aside to take care
of necessities? Security:
The turmoil ahead will almost certainly include an increase in crime as
large numbers of people grow desperate. Family
and friends:
In the Great Depression of the 1930s, millions of Americans got by with
the help of family and close friends. Today, families are smaller,
physically scattered, and family ties are typically weaker; we move more
often and thus have more shallow ties in the community. Fewer of us go to
churches today, which were another safety net and source of strength in
the 1930s. Building relationships today could well pay off tomorrow. Transportation:
If gasoline were to double or triple in price from current levels, how
would you cope? Better to answer the question now than to find out later
the hard way. Careful
consideration of the questions raised above will lead you to answers –
to your own answers, because
not every person or situation is the same, and because chaos (a good
description of what we are heading into) is inherently murky; we can see
the tornado coming but cannot predict where that lawn chair will end up
after the tornado passes. I
wish I could be more precise, and more positive for that matter, but I am
interested in reality, not fantasy. You can find plenty of that
on the web, if you desire. At
the national and global level: You
will have noticed that the problems facing us are of two distinctly
different types: 1)
Natural-world problems created by the rapid and breathtaking
increase in human population and human wealth; environmental issues,
depletion of finite resources, and difficulty of continually ramping up
the food supply to keep up with population growth are examples. These
problems were created by the solving of earlier
problems by technology and the market, including the problem of how to
feed billions more people as the population grew. Now that these new problems are on the radar screen of almost everyone and are
known to be serious, technology and market forces will eventually solve them
(and quicker than most would expect) – if they are allowed
to do so – i.e., without government interference. 2)
Problems caused directly or indirectly by government action.
Coercive power and central planning simply do not work well, and if we
continue to expect such methods to solve today's problems, we are doomed.
As noted philosopher Ringo
Starr has said, "Everything government touches turns to
crap." Henry David Thoreau made the point more eloquently in Civil
Disobedience: "Government
is at best but an expedient; but most governments are usually, and all
governments are sometimes, inexpedient. The objections which have been
brought against a standing army, and they are many and weighty, and
deserve to prevail, may also at last be brought against a standing
government." Thoreau
was putting it mildly. To say it plainly, the
human race can no longer survive the inefficiency, destruction, and
carnage caused by governments. If we are to surmount the problems now
facing us, the irrational belief in coercive government as necessary, as positive,
as even long-term survivable
must, absolutely must, be
widely examined, seen for the delusion that it is, and discarded. Any
system that creates war and genocide and which simply murders people by
the thousands and even by the millions deserves to join the system of
human sacrifice in the dustbin of history. Few people are aware of the
horrific level of violence and murder that governments inflict; see Dr. R.
J. Rummel's Death
by Government for a look at the reality. Rummel's current (revised)
figures for 20th Century government murder come to 262,000,000 – more
than two and a half million murders
per year, on average, for an entire century. That is in addition to
war, in addition to torture, in addition
to maiming and other injury, in addition
to millions who were displaced from their homes or otherwise harmed by
governments. Why on Earth do we put up with this? Government
action has directly and indirectly caused much of the disaster now coming
and has exacerbated the rest. We either put an end
to the coercive, ham-fisted, destructive meddling of our politicians and
their central-bank masters and corporatist parasites, or that entire
system will put an end to us. Solving
both our natural-world problems and our systemic problems of tyranny and
economic corruption can only happen to the extent we free ourselves from
the web of systematic coercion that now ensnares us. Free human beings
solve problems with shocking speed and can change focus and direction
quickly as needed; government action creates entrenched and
coercively-funded special interests that make necessary change difficult
or impossible. The
other element needed is more love (or less neurosis, if you prefer) in the
world, especially for the young. Freedom without compassion is no less a
disaster than compassion without freedom. Systematic
coercion and widespread neurosis are the Two
Great Evils of this world and I am ever-more certain that nothing less
than bold moves towards more love and freedom will save us. Love
and freedom,
then, or cruelty and tyranny; it shouldn't be a difficult choice. Glen
Allport
co-authored The User's Guide to OS/2
and is the author of The
Paradise Paradigm: On Creating a World of Compassion, Freedom, and
Prosperity. He maintains paradise-paradigm.net.
This is one in a series of columns on the human condition.
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