I was kind of relieved to be leaving the country again this week with Thursday's Feast of Football looming, followed by the "consumer" buffoonery of Black Friday. Distance affords reflection and this is a good week to ask ourselves what, exactly, lies on the other side of this massive wall of suspense we have constructed around the fate of our money system?
What a scary season! This is what it feels like to hit the wall of limits to everything the earth provides us. Our oil problems are for real and urgent, despite the arrant nonsense ("There Will Be Fuel") published last week in The New York Times - a news organization that runs a direct hose-line of smoke up its own ass from the oil industry's chief PR shop, IHS-CERA, The Times's sole source on the energy beat. Meanwhile, Europe is back to imploding financially again (with Ireland as the rotting head of the dead fish in the current rotation). The US housing sector has flat-lined, the banks are so lost in the "mortgage-gate" morass of lost and robo-forged documents that the ghost of Roy Cohen couldn't get them out of it alive - though Lloyd Blankfein and Jamie Dimon must pray to tiny gilded statuettes of old Roy in their late night sweats. Ben Bernanke is set to shovel huge transaction fees to the "primary dealers" (i.e. Lloyd's and Jamie's banks, et al) in his scheme to buy treasuries through them monthly at a whopping premium instead of directly from the source - with the side effect of making it an act of futility for ordinary Americans to save money the old-fashioned way, at interest. The fetid remains of decomposing CDOs line the vaults and stain the books of financial institutions everywhere. Accounting fraud is still the order-of-the-day in everything from Fannie and Freddie to your neighborhood HMO. Government at all levels is dead broke. Did I leave out endless war at endless cost (of money we don't have)?
There's a lot to feel uncomfortable about. But the question remains: what will be there when we break on through to the other side (as The Doors used to say... remember them? Probably not).
You can bet there will be a "workout" of all the imbalances, distortions, perversities, rackets, obligations and other financial dead weight paralyzing this country. America will be dragged kicking and screaming through it - like a 14-year-old video gamer through the Okefenokee Swamp - and it all amounts to one thing eventually: a society with much less money, and perhaps with a lot of things in disarray. After being crybabies for a while - and if we don't blow up the planet - we'll face the task of reconstructing a society that has some kind of future. It probably won't look like the way we live now. Are you ready to imagine what that might mean? Readers are incessantly twanging on me to lay out some kind of agenda, some "positive vision" - or, resorting to the phrase I so disdain for its sad-sack sanctimony, to "offer some solutions." Since it is Thanksgiving week, a time of gratitude and humility, I'll try to oblige. I have stated a lot of this before, but readers seem to forget.
Basically, we're looking at a re-set to a lower-scale type of economy and smaller, more local, autonomous units of governance. We have to move from unmanageable levels and layers of complexity to more direct, local modes of activity. We would necessarily have to let go of a lot of things that have provided comfort, convenience, and incessant diversion from reality. I'm not altogether confident, for instance, that we can even keep local telephone systems operating - let alone cellular networks that can download porn movies, if that gives you any idea of how things might shake out. And forget about getting "back on track" with the so-called consumer economy. The struggle to hang onto all this crap may steal all our attention from the really necessary tasks.
Will there be money? And what will it be? A lot of idealists promote what they call "local currency." Presumably this is some kind of paper medium-of-exchange representing claims for future work or goods. Their models are Berkshire Bucks and the scrip issued in Ithaca, New York. I do not believe this for a moment, anymore than I believe we'll be driving psychedelic Volkswagon buses to rock festivals twenty years from now. I believe money will be silver and / or gold. If any paper is involved it would be something like a promissory note from a person with a lot of silver and gold, perhaps even one affecting to act like a bank, as the Medici did. There may be other miscellaneous kinds of tradable paper - bills of lading, letters of credit - but nothing like the abstract nonsense we're swapping around today. I doubt that corporations as we know them will survive the end of the age of fossil fuel driven hyper-complexity, and by then their paper will be in utter disrepute anyway. There's no reason that barter would not be a common feature of daily life, even if gold and / or silver are circulating. This is certainly how I imagined the future in the Witch of Hebron and World Made By Hand.
The human race (North American division) had better reinvent small-scale farming or there will be no Homo sapiens around these parts. Plenty of knowledge and skill is still out there, though not widely distributed. There are people who still know how to breed working animals, train mules, oxen, and dogs. We can grow edible plants without dumping oil-and-gas byproducts all over the ground. Our soils are pretty played out, but we know how to improve them. A much greater percentage of people will have to take up this line of work. I see agriculture coming back to the center of economic life. It doesn't have to be like the 13th century, but I rather think the social relations around farming could be starkly different than the model we know today, if only to keep the wandering riff-raff at bay. I don't know if the countryside will be orderly enough, otherwise.
We have no idea how we're going to make useful products when the conveyer belt from China to WalMart grinds to a halt, as it surely will. I would not bet on nanotechnology or carbon ladders-to-the-stars or related techno-grandiose horseshit so popular these days at the corporate-sponsored conferences, where venture capitalists dressed in black like the old Viet-Cong spin their fantasies between plates of basil-infused duck with quinoa farfalle, sets by Vampire Weekend, and other blandishments of the dead-end techno-wankery life. My guess is we'll be making a lot less stuff, and there will be little plastic involved (except what can be scrounged up), and it will be more like cottage industry than Henry Ford's River Rouge assembly plant. Surely water power will have something to do with it, perhaps hydro-electric, if we're lucky.
It may be too late to improve the railroad system. There's quite a bit left, though too many places have been cut off from it, especially small towns - which will regain importance as farm trading towns with or without the railroads. But our continued investments in new freeways and airport expansions have been about the dumbest choices we've made in recent years. And now that we're heading into a vortex of capital scarcity - that is, lack of money for any kind of project - we may be out of luck on fixing the railroads. Especially as political mischief mounts and Sarah Palin huddles with Glenn Beck to put the final polish on her inaugural address. Need I mention that our fantasies about running the Happy Motoring matrix on alt.fuels is one of the most corrosive delusions plaguing our culture now, especially among people who ought to know better.
There's no guarantee that the USA will hold together as a continent-sized federal republic, and if history is any guide the fact is that political boundaries constantly shift over time. Manifest destiny is looking less manifest these days. If anything, the federal government can only become more broke, more ineffective, and finally irrelevant. If there is any Big Brother, he will show up in your county courthouse in a cheap suit. Or perhaps we're in for more interesting costumes. Personally I could go for something other than Land's End casuals. But please, check the "no" box on ruffed collars and Star Trek outfits. I stray from my theme....
Anyway, I'm convinced that a sore beset public, broke, hungry, idle, and hopeless, will beg somebody to push them around, or at least tell them what to do. Our new "leaders" will range in style and disposition just like the honchos of yore, from Otto the Illustrious, to Charlemagne to Ethelred the Unready. Who knows what residue of Anglo-American law will persist. My guess is that some of these characters will act more in dispatch than in the interests of what used to be known as justice.
I do think the next ten days or so might be pivotal ones in the global banking system. Europe is not doing a very good job of sweeping its sovereign bankruptcy problems under a rug the size of Belgium. Faith is withering away in currencies and tradable paper of all kinds. Any sort of gross instability from any player in the global money game can blow up the equity, bond, commodity, and currency markets. And things are getting gross all over....
Posted from the departure lounge, Sydney airport, en route to Perth....