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by James Howard Kunstler
Like entropy, the diminishing returns of technology never sleep. The hubristic techno-narcissism of the day, as seen in mankind’s efforts to fake-out the universe, will eventually get our one-way ticket to Palookaville punched. Perhaps there’s such a thing as being too cool after all.
The trick so far has been to create massive inflation, export the effects of it to other trading partners, and end up with a lot more money here in the USA, or the illusion of more money. Well, loans, for houses, cars, and college tuitions. In a word: debt. Let’s call it “Rainman Economics,” because it begins to resemble the behavior of a severely autistic human being who performs a small range of obsessive actions over and over and over, often centered on numbers. Rainman Economics is the policy of the Federal Reserve and, indirectly, the government under Mr. Obama.
The suave and genial Mr. Obama just doesn’t know what’s going on — despite being surrounded by minions with briefing folders, sages and vizeers, quantitative augurers neck-deep in mathematical goat entrails, and (always) the lone, silent soldier toting the dire nuclear “football.” Mr. Obama doesn’t know that the universe has launched us on a journey to a place beyond techno-industrialism — and it’s not Ray Kurzweil’s infinity of orgasms. It’s a place where no ring-tones are heard and not so much as a stretch-mark of the Kardashians remains to be found.
This is the eeriest summer. The coordinated effort to devalue gold — so as to maintain the sagging reputation of the world’s re$erve currency — has had the effect mainly of funneling it out of weak hands in the west to strong hands in the east, to countries that at one time or another we regarded as adversaries. China and Russia have been backing up their respective trucks at the gold warehouse loading dock, and before too long they will have yuan and rubles with more credibility than the US dollar.
In these games of currency war, there are too many moving parts for comfort. Paradoxically, the American position is all about maintaining undeserved comfort, that is a standard of living that is no longer earned but borrowed from the darkest pool of magic capital: the future of declining expectations. Enjoy the flat screen TVs, water-parks, RVs, and Happy Meals while you can. There is sand in the gears of the moving parts that have made all that possible. It’s quite a trick to debase your currency for strategic advantage and at the same time maintain the world’s credibility in it. The strategic advantage is that debasement allows you to dissipate existing debt by stealth. But that trick is not working too well at the moment in the USA because too many other players are trying the same thing, and doing it badly, so people in foreign lands are dumping their currencies to take refuge in the dollar. The chief product of all this motion is not “prosperity” but instability. That is the last thing that economies need, even if the gamesters in the financial markets can arbitrage it to their advantage.
Instability translates into uncertainty, especially about the relative value of currencies. For the moment, holders of weakening currencies are seeking refuge in seemingly “stronger” dollars in bubbling equity markets. Many more dollars have been stashed on the balance sheets of the Federal Reserve in the form of bonds purchased in galumphing bales since 2009 — only the catch is that many of these bonds are worthless, especially the mortgage-backed securities. The collateral exists in the form of mold-infused sheetrock, swimming pools with algae blooms, and strip malls left with a single tenant: the wig shop. The Fed will never be able to unload this hoard of garbage, even if it “tapers” its buying of new garbage. The dollars that the Fed creates out of nothing are trapped in this fetid backwater of rotting capital, destined to go nowhere — surely not into activity that produces real wealth, or the means to continue being civilized.
Something’s in the air this hot, soggy summer and it smells like the loss of faith. In another month, as the nights grow cool we’ll approach the sober season of fall, when the air seems to possess powers of magnification and suddenly things can be seen clearly. The high frequency robo trading bots are good at detecting microscopic differences in digital quant pools, but they don’t have the finer sensory antennae of human brains for forces outside the rather narrow math narrative.
For instance, I communed with my fellow citizens this Fourth of July weekend for a few hours at a little beach in a Vermont state park. It was a family kind of place. The mommies and daddies were putting on a competitive tattoo display (along with competitive eating). So many skulls, Devil heads, snakes, screaming eagles, flags, and thunderbolts. I suppose they acquire these totem images to ward off some apprehended greater harm, the metaphysically inchoate forces marshalling at the margins of what little normal life remains in this nation of rackets, swindles, and tears. All was nonetheless tranquility, there by the little lakeside, with the weenies grilling and the pop-tops popping. A three-year-old came by where I was working on my tan on a towel in the grass, supine. He asked me if I was dead. Not yet, I told him. Behind him a skull smoking a doobie loomed in blue and red ink on his daddy’s thigh. My people. My country.
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