Our Next Move Will Be Our Last

The economic meltdown towards the end of the first decade of the New Millennium, apparently due to sub-prime mortgages in the USA and the economic costs  of the ‘war on terror’, raises an issue the ‘chattering classes’ should have seen coming.

Something like 75% of the money in circulation is ‘debt money’, i.e., money created by banks because reserve ratio legislations allowing leveraging deposits into loans at a nominal rate of 5 to 1. (The actual multiplier is higher, since a large proportion of this debt money immediately reappears as new deposits.)

In this context, government-issued currency is used mostly in small retail transactions and, of course, by bank robbers, drug dealers and pimps.

This is a perilous circumstance for most human beings, since economic stability and growth now depend upon debt-leveraged manufacturing and consuming.

In a world struggling with pollution and resource depletion  issues, debt-based economies mean that the wealthy enjoy an unprecedented new power. Their growing wealth (in 2006, 2 % owned more than 50% of the world’s assets) comes from fiscal stratagems transferring equity from lower and middle class populations.  Profit-generating activities are an important part of this picture, but debt servicing costs – a perpetual mortgage upon the non-wealthy -  are even more so.  This is why banks make enormous profits, come hell or high water.

Consumer and commercial loans are advertised as a means of increasing consumer demand.  The truth is, they have exactly the opposite consequence.   Money spent servicing debt interest charges is money that cannot be spent purchasing goods and services.

This dependence upon debt-money has another implication. Debt-laden economies are under constant threat because debt-money can be extinguished in a heartbeat.

This is important to think about now that environmental and resource-depletion issues threaten global well-being.

Non-wealthy populations should not doubt for a moment that the wealthy are beginning to understand something Robert Malthus pointed out in 1798. A growing population, especially a growing population with growing expectations, is unsustainable.

During the 20th century, ' endless growth' fantasizers imagined that the  'Malthus Equation' could be evaded with clever stratagems.  Such talk is rarely heard these days.

Anyone not in denial realizes  that even a few more decades of business as usual will mean the end of life as we know it.

Fortunately,  the ten per cent who now own virtually everything are well positioned to diminish the volume of money in circulation.   All that is required is a ‘necessary adjustment’ to reserve ratios and credit-based economies will shrink into recession and depression. Once this process starts, lending institutions will spontaneously tighten eligibility requirements, further accelerating ‘difficulties’. At the same time, interest rates will drop, ostensibly to “stimulate or sustain economic activities”. This will transfer more of the burden of government expenditures from investment to earned income, i.e., from the wealthy to you and I.

In short, the rich will continue to prosper, although they may not become richer.  (In any event, once you own everything, having more money becomes redundant!) The advantage they will enjoy is that the rest of us will slide down the economic ladder more quickly than we would have otherwise.  All we need to understand is that globalisation of poverty = smaller environmental footprint.

And let's be honest.  This is the only ‘Save the Planet’ plan that has a chance of working.  This is the only plan that does not rely upon you and I acting thoughtfully.

The only ‘operational asset’ not yet fully in place is for the wealthy to do globally what they have been doing domestically – organizing populations to advance their own agendas.

We know that they are good at such work.

This is, after all, how we came to live in cities, to educate ourselves in ways that make us hapless and dependent, to work and consume ourselves into a stupor.

Of course then, we can be herded through the next door and into the darkness beyond. A new Commons is even now being prepared for us, one where our thoughts and aesthetic sensibilities will find a congenial home. There are garbage dumps on the dark side of every city in the world. Millions have already made the journey from villages and farms to these new stomping grounds.

They await our arrival with bated breath, flying toilets at the ready.