Finding Courage in Crisis

The courage to step forward in a time of crisis often means responding to pain and frustration as a positive personal act.  This can be especially challenging if it feels like the world around us is unraveling.

To persevere in the present turmoil, we are in need of a vision of the future that embodies our hopes and a purpose we believe in.  Our values and sense of personal integrity are vitally important.  But, ideas are useless without action.

What is to be done?

Our responses to a crisis will be guided by our values and sense of belonging.  We must never forget that there can be no freedom without personal responsibility.  This is the backbone of a free society.

This is our country and our world, and the problems we face belong to us as well.  In my view, a commitment to the integrity of civil order is a commitment to ones’ own personal integrity.

We would do well to think about who we are and what integrity means to us.  This will lead to greater self-sufficiency and a stronger sense of purpose and belonging.

Self-sufficiency and purpose give us self-confidence; both are important.  Self-sufficiency concerns practical matters and will-power.  But purpose has to do with ideas, and ideas can be problematic.

So, let’s think about this.

Sense of purpose is a personal matter, yet it would be useless in a vacuum.  It builds on creative thinking and adapts to change.  If we are not engaged, thinking and responding, we are not paying attention.

However, purpose also implies a future.  How can we think about the future when all we know is the past?

It would be easy to attach ourselves unwittingly to ideas or expectations that are based solely on past circumstances.  There is both strength and danger here.

Most of us develop a firm commitment to certain ideas.  This has value, so long as we keep our minds open.  We need the capacity to stick to our beliefs and to follow through with plans.  Otherwise nothing would get done.

But, at a time of extraordinary disruption and change, when the future is hard to imagine, purpose and expectations can sometimes take unexpected turns – or disappear into a fog.

We know what kind of world we wish to live in, at least in general terms, but the details of the future will be veiled from view.

Why?  Because the emerging reality of the future will remain in constant motion during a long crisis.  And, in the coming years we can expect to be bombarded by sequential crises

This is why shared moral values and agreement on basic principles are important in genuine community.  A vision for the future needs to be built upon mutual respect and understanding, rather than on the assumptions of a crumbling past.

Even in the midst of chaos, “constructive action” can be understood as the means by which we unite and progress toward intended goals, not away from them.

So, let’s keep two priorities in mind:  First, to hold firmly to values capable of guiding us through turmoil.  Second, to stay alert, allowing flexibility of judgment and adjusting our thinking as conditions change.

If we believe in freedom we cannot allow presuppositions to set the future in concrete. That is not what freedom is about.

Let’s be clear.  Assumptions that we carry with us from the past are dinosaurs that threaten our ability to create the future.  Our values and principles must be permitted to guide our way, based on the realities at hand.

We may dislike the conditions in which we find ourselves at any particular moment.  We may determine to alter them.  But, to be rigid and inflexible would court disaster.  Our independence as free people depends on our capacity to engage effectively with ever-changing circumstances.

We are challenged to keep our balance at the vortex of historic change, resisting absolutism and bigotry in the spirit of liberty.  Our values will support personal integrity and trustworthiness; our vision will help us keep our bearings as we traverse a stormy sea.

To survive and serve we must summon the courage to spread our wings and soar on the wind.

Tom

Please look for the next blog post on or about February 23.

A note to new readers:  Blog entries are posted on alternating Fridays on both this and a Facebook page.  A project description, an introduction to the forthcoming book, and several chapter drafts are posted on this page.

From Darkness to Light

Without neighbors we can depend on, how will we find safety for our families and the strength to build the future?  Tell me, please, in what place other than our local communities do we have the opportunity amid deepening turbulence to forge dependable relationships, heal wounds, and influence our destiny?

I have never said it will be easy.  Responsibility never is.  We face an extraordinary turning point, an oncoming sequence of crises that will challenge each of us to rise to a new level.

Do we imagine that a shining superhero will rescue us from chaos?  Or will we, as I asked in the last post, pick ourselves up, reach out to our neighbors, and do what needs to be done?

This is an uncompromising question.  Not to answer it, or to defer commitment, is in fact to answer it.  Failure to rise to necessity is to accept defeat.

Whatever ones’ personality, political philosophy or religious belief, we have an unavoidable choice to make.  Either we retreat into ourselves, accepting what is given as beyond our control, or we step forward to engage hardship and purpose with constructive intent.

This is a very personal choice, but at a time of existential crisis for America it takes on great significance – for ourselves, for the nation and for the world.

The United States has served as a model for governance and an engine of creative vitality that is unparalleled in human history.  The American idea has been a beacon of hope for people everywhere.  There has never been anything else like it.

And, the world is watching.

To hesitate would be to act as victims rather than as Americans.  It would be to choose loss over promise, helplessness over responsibility.

We may be temporarily intimidated by difficult circumstances.  But we must never give in, and never lose sight of the dawn of a new day that even now lights the horizon.

Living with purpose gives us courage and inspiration.  Without the courage to begin anew, we will join the slide into turmoil.

Strengthening our communities will not isolate us from uncertainty.  It will provide only limited protection as an island of safety.  What it can do, however, and will do if we are determined, is to open the door to genuine possibilities — dependable neighbors, mutual assistance, food security, and economic renewal on a human scale.

It positions us to best keep our balance, mentally and spiritually.  And, it keeps the potential for an American future alive.

Working with people is probably the most challenging part of life.  Choosing to work together will require perseverance and forbearance – a readiness to exercise tolerance, patience, self-control.  Communicating effectively will become a necessity.

There will always be difficult people to test us.

Our job is not to be heroes or caretakers or managers, although these roles may call on us at times.  Our job is to win over hearts and minds to the cause of reason, safety, mutual respect.

Only then will it be possible for fear to give way to sincere listening, anxiety to understanding.

No one is asking that we change our views.  Our lessons, (and those we need to teach), are those of democracy: Patience, problem-solving, teamwork and collaboration.

Progress will come one step at a time and will often seem painfully slow.

Making a commitment to stay positive requires considerable resolve.  But, focusing on productive purpose and building dependable relationships can make a very big difference.

The negativity that imposes itself on us may appear powerful, but it can only exist in the absence of constructive action, and only has the energy we allow it.

When we set out on a practical path and offer encouragement to others with a friendly spirit, we become as a light that pushes back the darkness.

If we meet with overwhelming negativity, it may be wise to take our energy elsewhere.  But, we must never allow our vision to dim or our compassion to be compromised.

Darkness can always be countered with light.  Darkness is the absence of light and has no substance of its own.

The light of a small candle defies even the darkest night.

Tom

Please look for the next post on or about February 9:  Finding courage in crisis.

A note to new readers:  Blog entries adapted from the forthcoming book are posted on alternating Fridays on both this, the main blog site and a Facebook page.  To receive alerts by email you may click “Follow” on the right side of your screen.

Turning Point for America

Whether our ancestors came to this continent by choice or in slavery, or were forcibly separated from their indigenous American roots, all of us are estranged from the lands and lives of our forbears.

For some the escape from oppression or deprivation has taken great determination and willpower.  With a strength rooted in the individualism of the survivor, Americans have reconstructed human society on the basis of association, reciprocity, and principle: freedom of thought, economic independence, and a new sense of belonging that transcended social and religious differences.

Despite the hardships, European settlers formed communities and built a vibrant civil society that flourished through the first half of the 19th century.

However, our inquisitive nature and the inclination to range far and wide across the North American continent soon took us away from physical roots and led to the society we know today – mobile, disconnected, alienated, and suspicious of differences.

Cut off from the cultural foundations that provided previous generations with the basis for social stability, personal identity, and moral integrity, our values have become less confident, our standards less clear.

First railways, and then a proliferation of highways, major industrial enterprises and shopping malls facilitated unrestrained pursuit of economic productivity and material gain. Cheap energy made many things possible.  Big always seemed better and was certainly more profitable.

Somehow we lost any sense of proportion, purpose, or belonging.  A society once anchored by small businesses and community cohesion soon fell apart, morphing into urban sprawl, broken families, and lost dreams.

What have we been thinking?  Did we ever really have a vision?

We have lost interest in community, except in isolated rural areas that have found themselves increasingly on the defensive, both socially and economically.

For new immigrants the trials have always been greatest.  And for people of color, especially blacks, numerous setbacks keep resurfacing.

Paradoxically, the resulting loss of social cohesiveness has led to diminishing independence and self-sufficiency for virtually everyone.

Many of us have a haunting awareness of the deterioration and decay of American society. Some have responded with inarticulate anger, with little understanding of the historical context or economic forces that are contributing to their unease.

Do we understand the forces of disruption that are confronting us?

Sensing the loss of vitality in an economic order that once provided us with the dignity of self-sufficiency, and watching the deterioration of the civil order we have depended on, we look for something or someone to blame.

In the past year this blog has reflected on a national character that has, historically, embodied conflicting values: generosity and self-indulgence, a welcoming inclusiveness and an unfriendly prejudice.  We now find ourselves at a turning point at which hard choices are becoming clear.

The positive ideals that have given us a feeling of dignity are partly veiled from memory, and the need to clarify our identity as a nation has become clear.

Never fully realized, the visionary foundations laid down in 1787 remain ideals.  The genius of our Constitution has allowed the nation to grow and mature.  Yet, we find ourselves in confusion today, without a vision, and without a sense of community we can trust or depend on.

As we find ourselves confronted with growing instability and uncertainty, I believe this is the only place that offers us effective control over our destiny – our own local communities.  It is here that the future will be determined.

Yet, we know very little about how to make community work.

We are presented with a formidable task.  Without trustworthy neighbors and coherent communities, how are we to engage constructively with America as a whole – a people uprooted and disorganized in the wasteland of a broken society?

How will we build dependable relationships, a stable civil order, and a safe future for our children and grandchildren?

I do not voice this question as an intellectual exercise, but rather as a personal challenge to my readers as thinking, caring, self-respecting individuals.

This is our turning point.  Do we have the will to rise above our differences to engage with our neighbors to meet local needs and resolve shared problems?

Do we have a choice?

I don’t think so.

Tom

Please look for the next post on or about January 26.

In the Crucible of Crisis

The extraordinary challenges confronting the American people mark a turning point and an unambiguous test of America’s place in history.

For more than two hundred years the United States has stood before the world as a beacon of hope, a source of creative imagination and ingenuity, and as a singular model of political freedom, social diversity, and economic vitality.

In the cauldron of crisis it is easy to forget the unparalleled historic meaning of the United States, and the role it has played and will continue to play in the progress of an ever-advancing civilization.

Yet, our confidence in the future is shaken by abandoned responsibility and collapsing institutions.  Our economic well-being and social coherence as a nation have been weakened, and the generosity of spirit for which Americans have long been known has faded.

As we begin a new year, I am stepping away from recent topics to revisit the central theme of this blog and forthcoming book.

Most of my posts are adapted from a working manuscript.  They usually appear on alternating Fridays here at http://www.freedomstruth.net – and at facebook.com/freedomstruth.  You will find a project description on this page, an introduction to the book, and drafts of several chapters.

My question is this:  Is there a diverse and loyal core of American citizens who possess the will and the vision to refine our shared identity as a nation at this great turning point?

The turning point I speak of is not political.  It is social and economic, defined by crises and brought on by lack of foresight and the abandonment of moral responsibility over many years.

I believe this is a critical moment; a time to consider our identity as a people.

Are we prepared to stand firm amidst chaotic disruptions and rise above our differences to seek a common understanding and vision – an “American idea”?

My message is brief.  It will be short on analytical detail and will avoid blame.  There is more than enough blame to go around and we all know about it.

Rather, it will focus on the essentials of mind and attitude, of moral character, and of our relationships with one another that will be required to go forward – to turn despair into courage and failure into honor and self-respect.

The book will acknowledge certain past mistakes and failures of responsibility. We will briefly consider the manner in which we have gradually abandoned control over our lives, making ourselves vulnerable to the present circumstances.

However, it will do so not to fix blame, but for the purpose of understanding the steps required to build a stable future we can all accept and believe in.

We all yearn for a less partisan and more civil national discourse. Let us accept that diverse views are needed, however divergent they may be, if we are to identify effective solutions.  Practical problem-solving best occurs with input from varied perspectives.

In the present dangerously fragile context, priority must go to ensuring the safety and well-being of our families and communities.  This will depend on trustworthiness and teamwork despite our differences.

There can be no freedom without trust.  And, we cannot begin to build trust or address the larger issues in our future without first securing stable local forums in which to dialog, strategize and collaborate.

Is this really possible?  Yes, but only with great patience, a commitment to justice, and an effort to envision the end in the beginning.

The United States has gained its vitality from our diversity and the creative engagement found in the clash of differing opinions.

I will not ask you to alter your views, but to listen, understand, and debate.  Our differences must not be permitted to subvert the unity of purpose that defines us as a nation.

At a time of extraordinary existential threat we are confronted with a stark choice.

Will we seek the ideal made possible by the United States Constitution?  Will we defend and protect two hundred years of commitment, hard work, and sacrifice by generations of Americans who have given their lives to this unprecedented vision?

Or, will we give way to the emotions of uncompromising partisanship – and allow a great trust to pass away?

Tom

Dear readers, you can support this project by suggesting that your friends and associates take a look.  Constructive feedback is much appreciated.  Please expect the next post on or about January 12.

The Forward Edge of History

The vision of America that came to life with the birth of the Nation was unprecedented in history.  It is subverted today by a bitter divisiveness that disallows dialog and obstructs decision-making.

To regain the integrity of that vision – and to build a future we can all believe in, Americans must navigate carefully through currents of alienation, hostility, and misinformation.

Violence begets violence in a downward spiral, verbal or otherwise. Words can ignite fierce, uncontrollable fires.  And, irresponsible, dishonest or self-serving actions can do the same.

Destructiveness can take many forms.

When the banks nearly collapsed in 2008, the United States hovered on the edge of catastrophe.  Americans discovered that failures of responsibility, foresight, and common sense involved the very people and institutions we depend on.

We were stunned by the foolishness that came to light in places where we are most vulnerable.  It was a startling discovery: A cavalier disregard for the interests of both citizens and nation – by institutions we had previously regarded as models of dependability.

In retrospect, however, we can see that this crisis has long been coming, and that it reveals far more than foolishness.

For many years we have watched a broad social deterioration in America that comes with a self-centered lack of principles and the absence of genuine values.

Respected national leaders have stained themselves.  We have even seen immoral and deeply hurtful actions committed by religious leaders and clergy, the supposed exemplars of integrity.

Where will it stop?  In addition to the material damage done to our lives, the rampant failure of responsibility appearing at the core of our society is demoralizing.

There is nothing more destructive.  Indeed, it strikes at the foundations of civilization.

It is easy to get caught up in emotional feelings at a time like this.  We have healing work to do.  If we wish to reaffirm the ultimate purpose of this great nation, it will be necessary to modulate our speech and better manage our emotions.

Times of peril require that we communicate carefully and avoid contributing to inflamed passions, however offended we may be.  Hurled accusations and insults make it impossible for others to hear reason.

The trouble with blame is, first, that it tends to be indiscriminate. It blinds us to the complexity of circumstances, and to the plural identities of those who disagree with us, or who may have just made some bad mistakes.

We often fail to see that we share many similar values and commitments with those who anger us.

Secondly, blaming will blind us to looming perils that are the fault of no one.  A fierce storm has come upon us.  We need each other if we are to take responsibility for the needs of our local communities.

Make no mistake: A storm of this magnitude will alter everyone’s perspective.  It is essential that we transcend personal fear, resisting its attendant passions, and learn to work with those around us.  We will build from there.

Some of you have expressed serious doubts that this is possible.

I never said it would be easy; I said we have no choice.  If we are unable to confront crises shoulder-to-shoulder as loyal Americans, freedom will be lost in the chaos of the deepening storm.

This will require patience, cooperation, and learned skills.  We must try to see the end in the beginning – the vision of a civil society where respectfulness, fairness, and moral responsibility prevail and freedom of expression is nurtured and defended.

This vision and purpose might just be worth our learning to get along, even for the most doubtful among us.  Local communities are the one place where we can be assured of having the freedom and capacity to make this happen.

Steadfast determination and the legendary American generosity of spirit are among the virtues that will be called upon again and again in the coming days.

We will not escape this great turning point in human history.  It will inflict tests upon us whether or not we respond with dignity and compassion – whether or not we take our rightful place at the forward edge of history.

Tom

A note to readers:  The blog will take a break until after Christmas.  Please watch for the next post on or about December 29.

If you wish to know more about the project you can find a description, along with an introduction to the forthcoming book and several chapter drafts elsewhere on this page.

From Crisis to Crisis

The twentieth-century brought an immense number of marvelous advances to the world – scientific, intellectual, cultural.  Yet it was a century of appalling violence, the most destructive in human history.  An estimated 167 million to 188 million people died at the hands of their brothers.

The century that produced communism, fascism, and nationalism also saw the invention of highly efficient weaponry and a willingness to direct it against civilian populations on a massive scale.

Do we understand that terrible things could happen on American soil – tragedies far worse than anything we have experienced since the Civil War?  At this historic turning point we can least afford a repetition of the world’s destructive past.  And how easily that could happen!

Only a strong America, just and wise and levelheaded, can lead a disrupted world back to stability and peace.

In his 2006 book, “The War of the World: Twentieth-Century Conflict and the Descent of the West”, the historian Niall Ferguson, who I have introduced to you previously, wrote that “the hundred years after 1900 were without question the bloodiest century in modern history, far more violent in relative as well as absolute terms than any previous era…. There was not a single year before, between or after the world wars that did not see large-scale violence in one part of the world or another.”

I consider Niall Ferguson’s analysis to be of value because he departs from the typical explanations that blame weaponry and fascist governments, as significant as these were, and instead identifies ethnic conflict, economic volatility, and declining empires as the true causes.

In short, he reminds us of our human vulnerability to fear, emotional insecurity, and tribalism.

The convergence of multiple crises I am writing about here involves elements of all these things, but also a range of newly emerging concerns that most of us have not seen coming.

These include a fragile and globally interdependent banking system, depleted natural resources, environmental degradation, and runaway technologies that are rapidly outpacing the maturity of human moral competence.

In every case, regardless of the particular nature of approaching crises, the challenges we face as individuals and families come into focus in the form of immediate local threats.

And, as Dr. Ferguson points out, it is the overreaction of people under pressure that leads to the most terrible violence.

Long-time readers know my views.  In the extremes of social and economic crises, it is my belief that local communities are the only place where we have the capability and reasonable hope of organizing our lives in a civilized manner.

The difference between a violent past and a civilized future will depend entirely on the manner in which we address problems with our neighbors and manage our local affairs.  To be plainspoken, the distinction between past and future will be determined by personal attitudes and dependable relationships.

Local communities are the only context in which we have the capacity to respond constructively to the social and economic degradation taking place around us.

Community provides us with the means to build trust with friends and neighbors, and to take responsibility for meeting needs.

Here it is that the real needs of real lives can be identified and addressed.

And, it is in the process of problem-solving and working shoulder-to-shoulder that we can begin to know, understand, and influence one another.  The lessons of civility and cooperation to be learned here will be critical to our future as a nation.

We must be realistic.  Many people are still dominated by their own crippling prejudices.  This is unlikely to change until we are forced to address the essential needs we all face together under crisis conditions. 

Patience and determination will make many things possible, and necessity will sharpen the mind.

Distrust and alienation are diminished as we identify common concerns and work together in service to a common purpose.

And what is that common purpose?

Ultimately, in my view, it is the survival of a constitutional republic and the Constitution of the United States, which together have allowed gradual progress toward unity and inclusive fairness for more than 200 years

Tom 

Watch for the next post on or about December 1.

A note to new readers:  A project description, an introduction to my forthcoming book, and several working drafts of early chapters are posted on this page (see above).  Please see especially, “American Crucible”.

 

Food and Water: The Bottom Line

It is easy in a crisis to feel overwhelmed or angry.  Seeking assistance from neighbors might feel difficult or impossible.  Yet, it may be necessary to cooperate, to organize mutual assistance simply to meet essential needs.

The safety of our families, the security of our local communities, and even the future of the nation could depend on it.

Our disagreements pale in the face of an unprecedented convergence of multiple crises.  If we believe in the unique value of the United States of America as a model for the future of the humanity, we need to think about our priorities.

Some disagreements may need to be deferred to honor central and overriding agreement.

Americans are capable of recognizing shared goals and collaborating to meet shared needs – if this is recognized as a necessity.  Nothing needs to shake our determination to prevail.

The world is changing dramatically every day.  Tensions rise when the economy deteriorates or resources are scarce.  We live in a digitally interconnected world in which financial stress is never isolated and can suddenly spread and metastasize into instability.

But, we do not need to wait for a sudden crisis to know that something is happening.  It is no secret to anyone who watches supermarket prices.  The global population is growing exponentially.  We are gaining approximately 214,000 new mouths to feed every day.

Do we understand that the price of food is determined primarily by global commodity markets?

Natural resources are becoming extremely expensive to produce, whether through agriculture or to extract from the earth.  As falling water tables, changing weather patterns, and the loss of top soil bring pressure to bear on agriculture, the cost of food will continue to rise unevenly.

The natural aquifers that provide water for some of the most productive farming regions in the world, including the United States, are collapsing at an accelerating rate – as they are over-pumped and water is diverted to cities.

Available farmland is shrinking rapidly in the breadbasket areas of the United States, India, and China, which feed hundreds of millions of people.

Some scientists suggest that advancing technologies will increase crop yields.  But, there is evidence that biological “glass ceilings” may exist, above which photosynthesis will not allow increased productivity.

Given the rapid loss of farmland, we have little time to wait for research.

It has become apparent that a worldwide food crisis can only be avoided by producing record harvests every year – year after year.  We all know this is impossible. The weather has never allowed for that.

For Americans, the availability of food at any price could also be of concern.  A banking crisis or other major disruption of North American supply chains would empty the stores. American supermarkets only maintain three-day warehouse inventories.

Logic and wisdom should draw our attention to food security.  This is a necessity that requires self-sufficiency, and it would benefit immensely from cooperation with our neighbors.

We cannot wait to reach a state of desperation before we prepare.  We can all learn how to grow and preserve food. This requires that we arrange for access to appropriate land and find knowledgeable neighbors to work with.

Growing food can be a rewarding endeavor.  It can generate economic activity, and can lend itself readily to community cooperation. But, early planning and preparation are essential.

Safe drinking water is another matter.  The majority of municipal water systems in the United States are ancient and tottering.  Furthermore, polluted ground water can render local wells toxic.  This also demands knowledge, planning and preparation.

Having community-members with electrical, plumbing, farming, and other skills is important for all kinds of reasons.  This is why I continue to remind readers of the importance of finding a diversity of knowledge, experience, and skills for our local communities.

There are also skills we each need to learn – how to build trust, manage conflict, and engage in effective small group decision-making.

We are Americans.  We can do this.

When the going gets tough, differences in religion, politics, or skin color are not going to go away, but they need to take a back seat.

Tom

A note to regular readers: The drafts of several chapters posted on this page (see above) are currently being re-written and expanded.  I depend on your feedback.

Please watch for the next post on or about November 17.

Why the Bankers Are Trapped

Few seem to grasp that we have arrived at an historic turning point: a nation and a world confronted with profound structural change.  The hope to recover the past will not be helpful. We must pick ourselves up, hit the reset button, and respond to a rapidly changing reality.

I cannot accept assumptions about political policies or intentions without asking practical questions. I want to understand a complex transition that is having an immense impact on us all.

There are many aspects to the changes we are experiencing, some with immediate implications, others longer-term.  To seek solutions we must recognize structural change.

I have given attention to the continuing financial crisis in recent posts because I believe that is where the closest danger lies.

So, I begin here with a financial question with structural implications: Why is the Federal Reserve unable to return the economy to some semblance of fairness and order? Or, to put it another way: Why have our financial liabilities not been corrected since the crisis in 2008?

The short answer is that they want to believe they are dealing with a cyclical crisis rather than a structural crisis.  Again, why?

Because the truth represents an unbearable existential threat.

Here we find a powerful example of the problems presented by structural change.

The economy has shifted into a long-term deflationary trend, which presents banks and governments with an impossible situation.

I refer you again to James Rickards’ best-selling book, “The Death of Money: The Coming Collapse of the International Monetary System”.  A monetary economist and former banker, Rickards has been advising the Pentagon and CIA concerning financial warfare and terrorism.

Using simple math, Rickards’ explains how, “in effect, the impact of declining prices [deflation] more than offsets declining nominal growth [GDP] and therefore produces real growth.”

Most of us would think this is a good thing.

He writes: “Despite possible real growth, the U.S. Treasury and the Federal Reserve fear deflation more than any other economic outcome. Deflation means a persistent decline in price levels for goods and services. Lower prices allow for a higher living standard even when wages are constant, because consumer goods cost less. This would seem to be a desirable outcome, based on advances in technology and productivity that result in certain products dropping in price over time….”

Why is the Federal Reserve so fearful of deflation that it resorts to extreme measures to oppose it? Rickards gives us four reasons.

First, deflation has a severe impact on government debt: “U.S. debt is at a point where no feasible combination of real growth and taxes will finance repayment…. But if the Fed can cause inflation…, the debt will be manageable because it will be repaid in less valuable nominal dollars. In deflation, the opposite occurs, and the real value of the debt increases….”

Second, deflation impacts the debt-to-GDP ratio, causing foreign creditors to lose confidence in the dollar and demand higher interest rates. This is an urgent problem because the debt is continually increasing. Budget deficits require new financing, and interest payments are already being financed with new debt.

Third, deflation is a major problem for banks. As Rickards’ puts it, “deflation increases money’s real value and therefore increases the real value of lenders’ claims on debtors…. But as deflation progresses, the real weight of the debt becomes too great, and debtor defaults surge.”

The fourth problem with deflation is about taxes. When a worker receives a raise, the additional income is subject to taxes. But, if the cost of living drops by the same amount, the worker in effect receives the same raise and the government cannot tax it.

“In summary,” writes Rickards, “the Federal Reserve prefers inflation because it erases government debt, reduces the debt-to-GDP ratio, props up banks, and can be taxed.”

“Deflation may help consumers and workers,” he says, “but it hurts the Treasury and the banks…. The consequence of these deflationary dynamics is that the government must have inflation, and the Fed must cause it. The dynamics amount to a historic collision between the natural forces of deflation and the government’s need for inflation.”

Such are the challenges of structural change.

Tom

Note to readers: You can support this blog and the book project by suggesting that your friends and associates take a look.  And, watch for the next post on or about November 3.

Unexpected and Unsuspecting

The future confronts us with an impenetrable complexity.  And the future is now.  Hidden within this new reality is an unexpected menace that we can only barely imagine.

In the densely interconnected world of digital networks, instant communication, and global markets we find ourselves arriving in what appears to be a seductively attractive frontier, but which in fact masks entirely new dimensions of danger.

It is a new and unpredictable world, and it hides hazards of unimaginable magnitude.

Exponential population growth and digital connectivity, along with warfare, fragile commercial distribution systems, and the global transmission of deadly diseases, are all contributing to rapidly intensifying complexity.

However, it is the immensity and density of digital networks that is most difficult to comprehend.  And it is here where we are learning that complexity itself can behave in very strange and disturbing ways.

Complex systems are capable of spiraling out of control suddenly and inexplicably.

Living as we do in the instability of today’s world, I think it important that we understand this.

In his book, “Ubiquity”, science writer Mark Buchanan writes that a natural structure of instability is in fact woven into the fabric of the world.

He writes that complex structures and processes – in geology, in rush hour traffic, in financial markets, and in the many intricate networks of human society – have a natural tendency to organize themselves into what’s called a “critical state,” in which they are poised on what he describes as the “knife-edge of instability.”

A critical state occurs when a system is poised for sudden change.

Some mathematicians and scientists now believe that a pervasive instability is a fundamental feature in nature – and in the structures of human societies.

Any event, even a small one, can have an effect that seems far out of proportion to its cause. A single grain of sand, for example, will cause a sand pile to avalanche. But it is impossible for us to know which grain of sand, which individual maneuver in heavy traffic, or which specific circumstance in the financial markets will trigger inevitable catastrophe.

What is the difference between something that is complicated and something that is complex?

James Rickards, who I introduced to you in the previous post, answers this question in his book, “The Death of Money: The Coming Collapse of the International Monetary System”.

Rickards explains: “Many analysts use the words ‘complex’ and ‘complicated’ interchangeably, but that is inexact. A complicated mechanism, like the clockworks on St. Mark’s Square in Venice, may have many moving parts, but it can be assembled and disassembled in straightforward ways.

“The parts do not adapt to one another, and the clock cannot suddenly turn into a sparrow and fly away. In contrast, complex systems sometimes do morph and fly away, or slide down mountains, or ruin nations….

“Complex systems include moving parts, called autonomous agents, but they do more than move. The agents are diverse, connected, interactive, and adaptive. Their diversity and connectivity can be modeled to a limited extent, but interaction and adaptation quickly branch into a seeming infinity of outcomes that can be modeled in theory but not in practice.

“To put it another way, one can know that bad things might happen yet never know exactly why.”

James Rickards goes on to expound on the instability of today’s financial markets and global economy.  He writes: “Bankers’ parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse.

“Wealth is no longer created; it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives, and the elite societal stratum.”

Today the financial markets and monetary system are again poised “on the knife’s edge of criticality.”

My message here is the importance of preparing for severe unforeseen shocks.  It is essential that we not panic when confronted with the unexpected.  We must remain steady on our feet when others are ready to stampede.

Only with a commitment to justice – and the self-discipline for ethical behavior and moral responsibility – will we hold our communities together and begin to rebuild.

Yes, the road to freedom requires courage, but getting there depends on responsibility.

Tom

Please look for the next post on or about October 20: Why the Bankers Are Trapped.

New readers can find a project description, a draft introduction to the forthcoming book, and several chapter drafts on this page.

When Money Dies

Americans experienced a major financial crisis in 2007-8.  Some would argue that it began far earlier, and clearly it is ongoing today.  We may be more aware of this crisis than others because it confronts us daily.  In preparing for what is to come, we would do well to listen to those who saw it coming and who continue to warn of its’ inevitable consequences.

Beyond all the foolishness and greed running rampant in the financial world, one great threat hangs over our future more than any other: The greatest expansion of debt the world has ever seen.  This is in large part due to non-stop deficit spending by governments.  Corporate borrowing has recently exploded similarly.

However, we need to understand that this has been made possible by a credit-based monetary system.  Easy access to credit, which is money created out of thin air, has led to the belief that credit is wealth.  This fantasy has infected society from top to bottom.

When a credit-based monetary system functions the way central bankers wish, the money supply should expand only slightly faster than economic growth.  Enough additional money must be created to cover the growing cost of servicing the expanding debt.

But, since 2008 the central bank (which we call the Federal Reserve) has expanded the monetary base almost four-fold while the economy has grown very little.

They call this “money”, but it is mostly debt.

The arrangement is extremely profitable for banks and the wealthy elite.  It allows for all kinds of mischievousness.  And, it depends on inflation, which is a long-term problem for the rest of us.  If it sounds to you like a Ponzi scheme, you are not alone.

In managing the money supply to avoid the growing threat of another banking crisis, the Federal Reserve has facilitated repetitive cycles of booms and busts, each more severe than the last.  This has perpetuated major social and economic distortions and dislocations.  It has stifled any possibility of restoring normalcy to the lives of ordinary Americans.

The economy has not been permitted to return to a normal and balanced condition.  Nothing has been fixed.  Extremely low interest rates have encouraged rapid growth of corporate and government debt, so the situation has been steadily worsening.

At such extreme levels, there are only two paths forward: default or devaluation.

Debt must default and be liquidated before economic productivity can recover.  But, the immediate pain of bankruptcy is too great for the bankers and policy-makers to bear. Consequently, they are struggling to gradually devalue the currency in relation to the cost of goods and services.

The government hopes desperately to meet the nominal cost of Social Security, Medicare, and other long-term budgetary obligations without defaulting.  This means the value of the dollar must fall significantly.

By altering the method of measuring price inflation, rising prices have been masked and social security payments held to a minimum.  Only those who live in the real world know the truth.

The devaluation of currencies is taking place around the world as budget deficits grow. Central banks attempt to minimize the interest costs of huge debt loads, while at the same time trying to avoid the failure of banking institutions that depend on interest rates.

Monetary economist and former banker, James Rickards, has written that “financial crises have supplanted kinetic warfare at the center of complex system dynamics. Financial crises in 1998 and 2008… are warnings – tremors ahead of a misfortune beyond imagining.” (“The Road to Ruin”, 2016, p.204)

The consequences of all this are profound and unpredictable.  We face a deepening crisis that will exaggerate all others, severely limiting the capacity of businesses to grow and create jobs, undermining our standard of living, and making it impossible to address pressing needs without worsening monetary instability.

The dependability of a productive, self-sustaining economy has been sacrificed to the tyranny of selfish interests.

Strangely, however, the wealthy elite have behaved like parasites that destroy their host.  They have wrecked the healthy economy upon which their profits depend.  And they have exposed themselves, as well as the rest of us, to the evaporating value of credit-based money.

Tom

Please look for the next post on or about October 6.  We will take a look at the problem of complexity, and the realities of financial markets and other systems that have vastly exceeded the human capacity to fully understand or control.

A Confluence of Crises

Americans find themselves at an historic turning point. We face a formidable array of current and emerging crises.  The challenges ahead will be diverse, profound, and mutually reinforcing.  Some will appear suddenly, others gradually, but all will ultimately converge as they impact our lives in the coming years.

Most of us are focused on the highly politicized concerns and dangers that currently attract media coverage. Attention is easily diverted from the most important problems, including deteriorating economic conditions and growing civil disorder.

The real causes behind these circumstances are ignored or avoided – the pervading loss of responsibility and trustworthiness, the failure of economic foresight, and the many conceptual disconnects stemming from the growth of complexity.

Yet, it is just such underlying conditions that most threaten our future security and well-being.

I will not debate the relative importance of various issues.  However, in the coming posts I will draw your attention to several that I consider most significant.

I offered a short list of emerging dangers and dilemmas in the last blog post, (see August 25 “In This Time of Danger”).  These threaten a wide range of consequences: social and economic, moral and material.

One revealing example of the material threats is the vulnerability of the national grid in the United States to cyber-attack.

Such an attack could cut off or severely limit telecommunications, broadcast media, the internet, air-traffic control, banking, emergency services and hospital functions – without warning.  It could disrupt distribution systems, leaving supermarket shelves bare.

The grid is very old; damage could require a long time to repair.

Whatever the details of a confluence of crises, the fabric of civil and economic order could be shaken.  Systems and structures could come unraveled in a self-perpetuating chain reaction.

Never before have we been dependent on the interactive complexity of digital systems.  We are stumbling into a multi-dimensional crisis of the whole, capable of leading to a cascading collapse.

We must be prepared to respond rationally, without panic and with our principles intact.

The integrity of the whole is a dynamic reality, both physical and spiritual.  And here is the crux of the matter.  Behind the material problems there is a silent, central, and transcendent crisis that is of ultimate significance.

This is a crisis of a different kind, and it will influence the ultimate outcome.

I speak here of the loss of moral compass, the need for which is critical in the management of complex crises.

The absence of ethical and spiritual grounding precludes personal responsibility and accountability.

Such an abdication of reason threatens the foundations of civil order.  Contrary to the popular imagination, reason cannot exist in a moral vacuum.

This is the most profound crisis, and the most dangerous, because it will limit our ability to respond effectively to every other crisis.  And, because it will lead to the loss of the integral order of human civilization.

Whatever our particular religious tradition or philosophical grounding, the difficult years ahead will demand a steadfast commitment to the highest ethical standards, to consistent moral responsibility and a patient readiness to cooperate with others.

Our ability to engage constructively with our neighbors will be essential.  While there is much we will not agree on, we must learn to work together, to listen respectfully, and to translate our inevitable differences into language that can be understood and respected.

Problem-solving will require local cooperation if our communities are to be safe and dependable.

A special kind of leadership will be needed to navigate this turning point safely.

We will need leaders who help us believe in ourselves and empower us to make things happen for ourselves. Such leaders will be ordinary folk like ourselves, working to meet local needs and resolve local problems.

In a fearful passage through a chaotic transition, some will turn to inflexible ideology or violent rhetoric.

The wreckage of sedition, whether it comes from above or below, could threaten everything we believe in. Leadership that is true to its American roots will stand firmly against such mental weakening.

Such a leadership will be quiet, compassionate, steadfast.  It will carry us through the storm and out the other side.

Tom

Please look for the next post on or about September 22.

In This Time of Danger

I have addressed my concerns to Americans for two primary reasons.  I believe we have entered a period of severe, successive and interacting crises that promises to be deep, grinding, and long-lasting.  And, I am concerned that the bitter divisiveness and disunity current among us will limit our ability to respond effectively to the danger we face.

Many of you know that the present disorder has been gradually escalating for decades. We now find ourselves with a pervasive loss of respect for civility and moral responsibility, (both public and private), a frightening loss of social coherence and stability, and a broad deterioration of economic well-being for ordinary Americans.

We now stand at an extraordinary turning point.  Do we want the United States to be preserved as a constitutional republic?  Are we personally prepared to rise above our differences to make this possible?

There are pragmatic solutions to these questions, but they will be extremely difficult.  I have never said it would be easy.  I have said I do not think we have a choice.

With closed minds and hardened attitudes our circumstances are becoming increasingly extreme.

We face a formidable array of complex crises.  The challenges are diverse, profound, and mutually reinforcing.  Some will impose themselves suddenly, others gradually, but all will ultimately converge as they impact upon our lives.

What is most extraordinary is the number and variety of crises that are emerging into view at the same time: social and economic, moral and material.

An abbreviated review is offered here to demonstrate this diversity.

1) Increasing social instability characterized by a dramatic loss of civility and unrestrained anti-social behaviors that include accelerating incidences of brutality and mass murder.

2) A banking and monetary system that favors the financial elite rather than the American people, and which has become dominated by self-serving individuals who appear incapable of recognizing that their risk-taking behavior threatens the well-being of everyone, including themselves.

3) Massive government, corporate, and private indebtedness, which constricts the economy and threatens to precipitate a significant devaluation of the US dollar.

4) Old and deteriorating infrastructure, which we depend on every day: bridges, municipal water and sewage systems, and the electrical grid.  These cannot be upgraded or replaced by national, state, and municipal governments that are hobbled by indebtedness and shrinking revenues.

5) An exponentially increasing global population.  With this comes rapidly increasing risk of war and global epidemics, as well as food shortages caused by falling water tables and the ongoing loss of arable farmland.

6) The rapid development of advanced technologies without a commensurate advancement of ethical maturity or a commitment to moral responsibility.

7) Degradation of the natural environmental systems that provide us with clean air and water, the consequence of population pressures and the long-term aggregate build-up of toxic substances derived from motor vehicles, household products, and industrial pollution.

8) Last, but not least, the loss of ethical integrity and moral responsibility on a massive societal scale.  This deterioration is overwhelming the values and norms upon which social stability depends.  It is a crisis weakens our ability to respond to all other crises.

During the past 100 years we have seen the emergence of integrated global systems that include transport, communication, and surveillance technologies, and an interactive global monetary system.  No crisis can take place anywhere without disrupting the whole interrelated system.

However dark the immediate future, we will always be presented with opportunities.  The most important opportunity for us lies in a disruption so broad and profound that it alters our perspective and challenges our assumptions.

We will find ourselves thinking differently to survive: How well do we actually know our neighbors? What are our priorities?  How important to our future is the idea and vision of America?

Local problem-solving will once again become paramount.  Safety and food security will depend on a diversity of local knowledge, skills and experience – regardless of our politics or religion or the color of our skin.

Discovering safety and strength in diversity will change us.

If we can build dependable communities we can also begin to talk – to identify shared needs and shared values, and to re-imagine a shared vision of the future that we can respect and believe in.

Tom

Please look for the next post on or about 8 September:  “A Confluence of Crises”