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.

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.

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”

Finding Our Balance in the Storm

We live in a world of unprecedented complexity.  Add to this a sense of moral responsibility, and life can be imposing!  The conditions we will face in a serious social and economic crisis will create unexpected challenges.  It will be easy to stumble and fall

So, let’s think about how we can respond to extreme conditions with courage and fortitude.  How can we meet adversity in a way that can actually serve as a springboard for constructive action and community-building?

All of us sometimes feel inadequate.  Courage fails us.  It can be difficult to find our footing and focus our energy productively, especially when we are confused or surprised.  And, it can sometimes feel impossible to be supportive of others, many of whom we seem to have little in common with.

Preparing ourselves will be important as we navigate through one of history’s great turning points.  Our ability to function responsibly under difficult circumstances will be challenged again and again.

I believe we have entered a period of upheaval that will be unparalleled in character and global in its dimensions.  I will explain in my forthcoming book why we can expect to experience “a confluence of crises” in the coming years, an extraordinary convergence of inevitable and seemingly unrelated crises.

It is imperative that we meet our tests with dignity, and above all not to give in to fear.  Democracy is by nature unpredictable, and it will be severely tested in the coming years.  Our future will depend on steadfast patience and forbearance if we are to preserve the open discourse and cooperation that liberty requires.

The American Republic is and always was founded on core human values and a positive, constructive attitude.  We cannot stand by and watch our future descend into chaos.

Those who are alive today have been chosen by history to bring America through this critical passage in time.  Preserving the essential qualities of the American Idea will be our great responsibility as we transit the upheavals of a great storm.

We must keep our balance, keep our hearts and minds focused on our ultimate purpose and not allow ourselves to be dragged down by rancor and bitterness.

We will prevail if the means we employ are harmonious with the ends that we seek.

I offer you symbolic imagery below for our place in history – a metaphor for freedom’s truth.  What follows are the final lines of a eulogy I delivered for my father at his memorial service, and a testimony to what I learned from him.  Please think about it:

“He gave me one truly great thing above all else…. And, this he did by teaching me the ways of sailing boats.  He taught me to fly on the wind.  He taught me to sail, to ride high on the blustery gale!

“Without fear we ventured out on the running tide, suspended between liquid and ether, to know the snap of the rigging, the sting of salt spray, and the unyielding rush of a steady keel straining against the wild.  Together we embraced the untamed and raced across the sky.  He was my Dad.”

Throughout life we are subject to the vagaries of a capricious human world, just as we can be subject to the vicissitudes of the wind and sea.  Yet, core principles and steadfast standards remain firmly in place in both worlds if we have the eyes to see.

Understanding the requirements of this truth, we can then spread our wings and learn to fly.

As with a sailing vessel at sea, our identity as human beings can only be realized in action.  It is through action alone that we free ourselves to discover the world we are given, learning as the sailor learns – to engage a fluid and often unpredictable reality with wisdom and flexibility.

Failing this, we will beat ourselves against an implacable and merciless resistance.  An unwillingness to learn will expose us to the storms of life in a rudderless ship and with our rigging in disarray.

Tom

Please look for the next post on or about August 25.

A note to new readers:  Blog entries adapted from the forthcoming book are posted on most Fridays here and on the Facebook page.  A project description, an introduction to the book (in draft), and several chapter drafts are available on this page.  Reader engagement on the FB page is substantial.  To receive alerts by email you may click “Follow”.