Friday, March 18, 2011

Nothing Left to Steal

Michael Betancourt is an intellectual: he uses words like semiosis and actually knows exactly what they mean. Speaking on The Keiser Report, he made some interesting points about the pile of digital ephemera that the global financial system, and much of the economy with it, has devolved into. From 20:52 on, Michael has this to say on the current action in the financial markets around the world:
I wouldn't necessarily say "steal" ... I just don't feel that "stealing" is necessarily the right verb for this. It's something else. Stealing [implies] that there is some kind of physical commodity that's being stolen... that the currency is being debased implies that if we didn't do this the currency would be solvent, and the whole problem here is that the currency itself is disconnected from any kind of physical value. It exists as a debt against future production rather than a store of value. And all of this comes down to the immaterial basis that we are now living in. So, yes, in a sense you could say that they are stealing, [but] in another sense you could say that they are not stealing because there is nothing to be stolen... The reality is that this is an unsustainable system, and that the inevitability of its collapse has been there almost from the beginning, because the entire system is based on a currency that is not based on anything—it exists only in relation to other currencies...
On the protesters in Wisconsin and elsewhere:
What makes this even more perverse is that what they are fighting for is the continuation of their entrapment... The powers that are currently acting and that are causing these riots, protests, rebellions... are fighting for their own survival, and the shift that's happening is perverse because we are driving towards a collapse, and it is almost inevitable that we are going to have this collapse again at some point. To a certain extent I think it may have already started with the credit freeze in 2009. The attempt to print our way out of it isn't going to result in hyperinflation necessarily (although there are people who are saying that it will) so much as it will result in a complete revaluation of the system, in which we arrive at some other, new equilibrium. Part of the problem with getting there is that there are forces fighting over who has the largest number of these essentially immaterial objects, this immaterial currency. What will happen is that at some point they will have most of it (and we are moving towards that already, if you look at any of the various numbers on who has the wealth and who doesn't). What will happen when it gets concentrated enough is that the entire system will freeze up like it did in 2009. This is because the equilibrium and the maintenance and the survival of this system depends upon the circulation of these immaterial commodities. As soon as they start getting hoarded, or as soon as people who have them start cashing out and into some sort of physical commodity, both of these can trigger an imminent collapse, not necessarily in the sense of a bank run or a panic, but in the sense that the system can no longer feasibly maintain its own equilibrium... it drives towards ever greater disequilibrium, because that's the ground state for this sort of a situation, where you have vast immaterial production versus limited physical production.
I would tend to agree. The value of financial assets rests on the promise of future industrial production, which will fail to materialize due to shortages of multiple key resources. In the updated edition of Reinventing Collapse (which is scheduled to go to press next week), I try to get at much the same thing as Michael, trying hard to avoid big words like “disequilibrium”:
The extent to which we value money depends on our degree of confidence in the economy. At first, as the economy starts to collapse, we start to hoard money, to make sure that we don’t run out. Then, as the economy continues to wither away, supply disruptions and price spikes cause some of us to suddenly realize that we might not be able to gain access to the things we need for much longer, never mind the cost, and that running out of money is not fatal whereas running out of food, fuel and other supplies certainly can be. And then we start cashing in our paper assets in exchange for physical commodities we think might be more useful. Shortly thereafter everyone realizes that the chips they are holding are not all that valuable any more. It is this realization, more than anything else, that renders the chips instantly worthless. [RC 2.0 p. 54-55]
In recent months I have had many occasions to walk through Boston's financial district and look at all the suit-and-tie-wearing lab rats whose job is to push buttons to try to stimulate the pleasure center of some wealthy person's brain. The vast majority of what they trade is derived from debt secured by future production that will not exist. At what point will their patron's pleasure cross the pain threshold? Will we see the über-wealthy immolating themselves on pyres of their now worthless money, just to escape the anguish of being disencumbered of their phantom possessions? I hope for everyone to survive with their precarious sanity intact, but I can't help but look forward to a Bonfire of the Vanities to put this lengthy episode of breathless financial self-digiting behind us.


Patrick said...

Right, and we poor slobs with modest 401k's who want to turn them into something more useful than digits on a screen, or tiny bits of ink on a statement (before it's too late), must pay hefty taxes AND a significant penalty on the money.

cmaukonen said...

Why does this remind me of Schrodinger's cat ?

Lance M. Foster said...

Excerpts from Hojoki: An Account of My Hut by Kamo no Chomei (1153-1216)

"Though the river's current never fails, the water passing, moment by moment, is never the same. Where the current pools, bubbles form on the surface, bursting and disappearing as others rise to replace them, none lasting long. In this world, people and their dwelling places are like that, always changing.

...Nor is it clear to me, as people are born and die, where they are coming from and where they are going. Nor why, being so ephemeral in this world, they take such pains to make their houses pleasing to the eye. The master and the dwelling are competing in their transience. Both will perish from this world like the morning glory that blooms in the morning dew. In some cases, the dew may evaporate first, while the flower remains--but only to be withered by the morning sun. In others the flower may wither even before the dew is gone, but no one expects the dew to last until evening.

...People want power and authority, for if their family has none, others look down on them. But people who have property have many worries, too, just as the poor people who envy them do. Whenever you must rely upon others, so are not self-sufficient, then those others come to possess you. Even helping a stranger, if you are drawn to that person, infringes on your independence of spirit. On the one hand, it is difficult to maintain independence in following the standard social conventions, but, if you do not, you will seem absurd, will look like a lunatic. And wherever you live, whatever you do, in the short period of time of this life, you should seek peace of mind--but this seems impossible for human beings.

... In general, the past, present, and future history of human beings is a product of the mind. If there is no peace of mind in possessing the elephant or horse, or the seven wonders or treasures of the world, it is meaningless to have palaces and buildings of many stories. Now I dwell in my tranquil residence. It is only a ten-foot hut, but I love it. When I want to go to the capital for something, I may feel ashamed to go in the appearance of a beggar, but I return feeling sorry for the people I see there, who are so caught up in and preoccupied with wealth and honor, so busy doing things. If you are doubtful about what I am saying, look at the situation of the fish and the birds. Fish are always in the water, yet they don't become bored with the water. If you are not a fish you probably can't understand that feeling. Birds hope to live in the forest. If you are not a bird, you probably can't understand that motive. My feeling about my tranquil residence is of the same kind. Who can understand this if they haven't tried it?"


Anonymous said...

When would the 2.0 version hit the kindle store?

James H said...

Aw man, what happened to the 101? That was really interesting. The explanation of the hydrogen explosions especially.

escapefromwisconsin said...

Yes - it's true, since money is nothing more than an imaginary social contruct, it can increase exponentially, but the real world of apples and oil barrels can only gorw arithmetically. Thus when you attempt to convert those digital bits into real things, a problem occurs. When that happens, since the productive world can not grow as fast as the money world, the price of things is bid up, pricing the lowest people, those who have access to less "bits" than the others, out of the market completely. That's why housing prices increased so dramatically and tickets to the Super Bowl can sell for a thousand dollars apiece. There's a limited supply, so it's bid up beyond the reach of ordinary people.

Much of what is being stolen is therefore created by the act of stealing. Those pensions are nothing more than future obligations based on previous notions of exponenetial growth, thus what they're stealing doesn't even exist. And through the miracle of leverage, much of what they're stealing is actually brought into existence by the very act of stealing it!

Hey Dmitry, ahve you seen this?

tickmeister said...

I think I have been saying the same thing.

I am fond of telling folks that it doesn't matter how many turnip vouchers the government or anybody else prints, you won't get turnip soup unless sombody raises some damn turnips.

Will be planting turnips in about 3 weeks.

Alejandro said...

I believe that some sort of divine intervention led me to this web. It just removed from my soul that apocalyptic feeling I've been carrying the recent months and made my eyes point beyond the frightening facts we are facing today. Yes, collapse will ocurr, but now more than ever I've been urged to make fundamental changes in my way of living, acting, wishing and making decisions.
A human revolution is needed and each one of us must start with a personal spiritual revolution