Rob’s comments below are in italics.Derek’s comments below are in normal font.
Today is the 20th of March — the spring equinox, halfway between the shortest day and the longest day. I like to mark these things. Lots are going on in the world, and we thought we’d do a bit of an update.
Yes. In the last couple of days, I came across a couple of quotes that, in different ways, were very pertinent to the current moment. One was J.P. Morgan — the original J.P. Morgan, founder of the banking dynasty. He’s credited with the remark that “The only real money is gold and everything else is credit.”
We’ll see how that relates to the current situation, if it’s not blindingly obvious. The other was from Hannah Arendt, who said “Revolutions always seem impossible before they happen and inevitable afterwards.”
Ain’t that the truth.
Because I don’t know what shift is going to happen, but it’s plain that the current way of dealing with affairs at a global level is becoming more and more obviously untenable as the days go by. In this context, I thought I’d have a quick review of the book I wrote four years ago.
It’s almost exactly four years this month since I published it — The Letter from 2100 — which is obviously a work of imagination. The first bit I’d like to share is from page 25, the beginning of the second chapter, which I called ‘Unravelling’. What I wrote then was:
As the era of domination drew to a close, it became increasingly obvious to growing numbers of people that the entire global system was about to unravel. The only question was what form this unravelling would take. Would it be possible to preserve the positive accomplishments of human progress, or would it all be lost?
Would the generation currently passing from childhood to adulthood live to a comfortable old age, still able to enjoy the comforts and amenities of industrial civilisation? Or would they — the small proportion who survived at all — see a return to the harsh feudal lifetime of back-breaking toil to scratch a bare meagre living from the soil?
If the knowledge of our technology were to be lost, would it be possible to regain and reconstruct it, even in a dozen generations, or ever? As the multiple crises escalated, people reacted in various ways. Most commonly, it was denial. Many simply refused to acknowledge that the life they’d been born into really could vanish utterly, and immersed themselves in the daily struggle to get by. Many sought certainty in the dogmatic embrace of simplistic belief systems.
It’s almost like you’re looking over my shoulder, Derek!
Well, there we go. Then, towards the end of the book, on page 68, after running through various pillars of activity in the world as it stands — plainly not going to be sustained for very long — I asked:
If none of these are possible, what are the options for human society?
Other than something along the lines of the optimistic scenario I laid out, the previous seven chapters or so sketch a world that would truly serve humanity and which is, I assert, physically attainable by the end of the century. So, if that didn’t work out, what are the alternatives?
One would be a complete collapse of the industrial technological system and the loss of the knowledge and know-how to create our machines and global communication systems. This would entail an order-of-magnitude drop in world population and a return to a more primitive and onerous lifestyle.
Perhaps this would take the form of feudal agrarian communities governed by local warlords, rather like European society in medieval times. If some isolated communities of scholars managed to preserve enough of our scientific and technological knowledge, perhaps an eventual rebuilding of systems providing abundance, comfort and convenience would be possible — maybe in the course of a thousand years or so.
If the collapse were more drastic, the fall in population more extreme and the loss of literacy total, the reversion might be to the level of Neolithic village life 12,000 years ago. Because we’ve now exhausted the easy pickings of minerals and energy, a reconstruction of technological civilisation would be far more challenging than it has been this time, even over the course of several millennia.
A still more depressing possibility is the actual extinction of the human race. Finally, there’s the fantasy of a new world order envisaged by the World Economic Forum, where a global elite of a few thousand billionaires preside over the rest of the population, reduced to penury.
Does that seem like an exhaustive list of possibilities — unless we can manage to navigate a return to sanity in pretty short order?
Unless we take the reins fairly promptly. I wonder as well if this loss of knowledge hasn’t happened before. If you look at sites like Göbekli Tepe in Turkey, or ask how Stonehenge was built? We can only speculate.
Yes, even Stonehenge or the pyramids. Or Great Zimbabwe, or Angkor Wat. Angkor Wat was built during this era. But the various pyramidal structures are plainly difficult to explain on conventional timelines.
Yeah, it feels like the timelines are wrong, or the history is wrong. Something’s not right. So I wouldn’t rule out that this is something that has happened before — and could happen again, but on a bigger scale.
That’s a whole other topic. We need to prepare for a proper discussion on that. Human beings appear to have been anatomically and cerebrally pretty much as they are now for two or three hundred thousand years. That’s possibly time for several cycles, considering it’s only taken 12,000 years to get from the Neolithic Stone Age to present technology.
The fact that we’ve managed to exhaust the geological capital so thoroughly is a real challenge when considering whether possible high-tech societies have arisen and declined. Because if they’d done it the same way we have, there wouldn’t be any oil, coal, or readily accessible copper and other minerals. We’ve taken all the easy pickings.
That’s another whole story. The relevance of the J.P. Morgan quote about gold is underscored by the fact that central banks have bought around 1,000 tons of gold in each of the last three years. That’s what is available on the public record — there are probably far larger figures below the counter.
Against this backdrop, the Fed has been quietly creating $40 billion per month out of nowhere to buy short-term Treasury bonds that are either expiring or being dumped onto the market. That’s per month. These go down in the books under the heading ‘reserve management purchases’ — whatever that means.
The point is that, in this year alone, the United States needs to roll over $9.2 trillion in expiring Treasury notes into new loans. That’s almost a quarter of the total of around $40 trillion. Every time we talk about the total US government debt, it seems another trillion has been added. Of course, they won’t be able to replace these at the same interest rates as those that expired.
That will put further pressure on. The Federal Reserve has actually lost $245 billion in the last three years. They have various accounting and reporting policies which obscure this fact, but any other organisation with deficits on that scale would obviously be out of business.
If you or I arrived with those numbers, we’d be in trouble!
Yes, with a lot smaller numbers. Against this background, one can’t help thinking about the way the Iran war is unravelling. Quite apart from anything else, at some point the United States may simply not be able to afford to carry on. It’s a rather frightening prospect — what they might do in desperation, given the stockpiles of various weaponry they hold.
Can we just elaborate slightly on how it does appear to be going at the moment, regarding the US potentially not being able to afford to participate in the long term?
Well, they’ve got to pay all those servicemen for a start. The arms manufacturers are obviously delighted to be running at full capacity, although that capacity doesn’t seem to be as great as some of their adversaries, as far as we can tell. To do that, they need to be paid.
At some point, printing money at an ever-faster rate will reduce its value in real time. We’ll be in a total hyperinflation scenario. So even if they are paying their servicemen and suppliers, they’ll be paying them with increasingly worthless currency.
Those wages obviously don’t mean anything in real terms.
Across the world, other countries which have been happy to hold US dollars are increasingly unwilling to continue doing so. They’re either dumping their treasuries for whatever they can get now, or simply refusing to repurchase when they mature.
That is yet another aspect of the unworkability of the present situation. Plus, of course, there’s the credibility of the US government itself. The rest of the world, aside from its allies — or vassals, whichever you prefer — has obviously been highly sceptical of the US for a long time.
As we close the third week of this conflict with Iran, apart from the economic damage inflicted — which we’ll look at in more detail in a moment — this cannot fail to be anything other than a total erosion of the illusion of United States supremacy. To have taken on a smaller third-world country and failed to achieve a quick, strategic, decisive victory is itself a complete failure.
The negative consequences are increasingly felt throughout the world. We’ve hardly really started, but another month or so of this and it’s difficult to see how we can avoid enormous price hikes on fuel. We’re already beginning to see that. We’ll also be back to petrol stations running out of fuel, with queues up the street for the limited amount available.
The blowback from this is enormous, and it’s not clear what end could be in sight. They’re sending 2,500 Marines from Singapore, which would take at least another week and a half to get there — and who knows what the state of the conflict will be by then.
There’s been a very rapid escalation in the last few days, with the attack on the South Pars gas facility in Iran, which caused an immediate response — a strike on Qatar and Saudi Arabia. There’s now been another strike on the largest oil refinery in Kuwait.
I don’t know how long it will take to repair the damage to all these sites. Even if the Strait of Hormuz reopened tomorrow, it would probably take months, if not a year or two, for production capacity to return to normal. This is all against the backdrop of many people judging that we’ve passed the peak of global oil production — and that the downward slope will be far steeper than the upward one has been.
We’ve just squandered unbelievable amounts. Have you picked up on pictures of all these installations with vast flames shooting up into the sky?
I’ve seen images, yeah. It’s mad.
The lunatics really are in charge of the asylum at the moment.
But at least they’re out in the open. At least we all know they’re lunatics — and we can all see it. Slowly, it’s dawning on the wider population too. Something Caitlin Johnstone was saying was that people are going to feel this soon in terms of inflation and the cost of everything. Perhaps that’s the thing that will change the situation.
Yes. Trump does have absolute record-low approval ratings for any American president at any time, with the population at large. This can only get worse as the consequences arrive. There are also hugely embarrassing revelations in the Epstein files, which more and more people are digging into. Even though he’s managed to shrug it off so far, there’s a limit to that.
So that was really the relevance of the Hannah Arendt quotation I gave earlier — about revolution seeming impossible. It’s not just America.
The fall of the Berlin Wall seemed impossible until it happened.
Exactly. The collapse of the Soviet Union seemed impossible until it happened. There are governments in Britain and right across Europe that are completely out of touch with the wishes of their populations and don’t seem to care. Something has to give somewhere.
I mentioned the sale of US Treasuries by foreign holders. The petrodollar arrangement seems to be eroding by the week. More and more oil is being traded in other currencies, which is what they’ve been desperate to avoid. When you consider how flagrantly unjust an arrangement it was, it’s incredible they managed to hold it together for 50 years. But the wheels seem to be well and truly coming off now.
That’s one of those shifting baseline things, isn’t it? When you’ve grown up with something, it becomes so normal that you don’t question it — why wouldn’t oil be traded in dollars?
Anyway, there we go.
So as usual, it’s a watch this space — but things are changing.
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