The Money Valve IV

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Published on the Doomstead Diner on June 15, 2014


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In the final article of examining the nature of the Money Valve of Central Banking, we will look at the end stages of the Waste Based Economy, along with a few of the parameters not included on what are quite simplified diagrams to make the total flow of downhill energy consumption apparent.  It is quite possible to dissect many of these areas further, which I may do at a future date, but the global implications are obvious just from this level of analysis.

In Part I, we just looked at gross energy flow mediated by the Money Valve with this diagram:


The basic flowchart turning resources into waste through the Money Valve of Central Banks is straightforward and easy to understand.  However, it does not look at all the various Feedback Loops that are engineered into the system in order to keep it operating.  Most notably what is not included in the diagram is how Goobermint and the Military are involved, or how taxation and interest serve to capture wealth out of the system for the Elite class of society.

This diagram is basic, but it doesn’t show how the various parts of the Machine of Industrial Capitalism work in synergy.  To elucidate that, I set up a Web Connections diagram to look at the most important connections and relationships in this sort of economy.  This diagram itself is simplified, there are many further levels you could go to dissecting up the whole economy, but IMHO at a certain point this becomes a waste of time, because the conclusions are obvious just from this set of parameters.  Here is the basic Web we are working with here:


Now we can take a look at the last waypoints in the system before the Energy which once was underground for a few million years ends up as Landfill where it will rot for the next few million years, until the Sun goes Red Giant.

12- Factories

I put Factories separate from Industry because they are not precisely synonymous, Industry is everything that surround the production and sales of goods and services, whereas Factories are just the physical infrastructure used  to produce the goods.  Factories are only a part of an Industry.

Factories are important separately though because they are what require the maintenance, and they are what produce the most pollutants in the waste from production, and of course their placement around the world determines who gets a Job in some 3rd World country now and who does not.  Few people here in Amerika work in Factories anymore, our Industry is Credit production, and generally speaking we continue to survive by living off debt issued to ever more countries around the world, which of course is irredeemable debt they will never be able to pay off, but who cares?  We’ll just keep rolling it over and issuing out MOAR debt.  As mentioned before, this keeps working until it doesn’t.

13- Products

The End of the Line on the “productive” end of this sort of economy, which brings to your doorstep via order on via Fed-Ex truck everything from Iphones to Netflix Movies. Condoms to Viagra and beyond.  Every last one of these products though ends up as Waste in some Landfill somewhere.  Gotta love that Newzspeak.  call it what it is, a DUMP!  Nothing is really “built to last” because if it was, the company making the thing couldn’t stay in biz and sell more of them!  Everything has a Planned Obsolesence built in, from Carz to Iphones.  Some things have slightly longer lifespans then others, for instance the original Verrazano Narrows Bridge lasted about 60 years, but now that one is destined for the Dump as so much Scrap Metal and Concrete.  All the McMansions you live in are Ticky Tacky stuff that won’t last more than a year or two once the lights go out.  All the Skyscrapers are useless Phallic Symbols once the Elevators no longer function and you can’t pump water up more than 6 stories to flush the toilets.  There isn’t a single thing produced by Industrial Culture besides perhaps some Lodge Logic Cast Iron Cookware that might have a lifespan of more than a Century here in it before it is also Waste.  Once it is in the Dump and the energy is not there to replace it, it is gone for good.

14- Waste

I could have shoved a Waste Bubble along every connection in the Network, there is Waste every step of the way here in the downhill flow of energy.  This is the case with every machine that operates, it is basic thermodynamics.  However, this would have made an already pretty cluttered network diagram even more cluttered, and is unnecessary.  So I just sprinkled 3 Waste Bubbles around the periphery to demonstrate that in the end, this is where everything ends up.  People are sold here that we have a perpetual Motion Machine, a Virtuous Cycle, yadda yadda, but this is complete bullshit.  Energy gradient runs down below the ability of the whole machine to overcome the Friction involved, it seizes up.  Period.  There is no Free Lunch.

 Missing Stuff?

Once again, you can go on endlessly making these sort of things more complex, trying to chart everything going on in the economy.  Even trying to KISS it here, I end up with a freaking 6000 word dissertation.  A few Notables here to mention though not in the Diagram.


Nowhere do I really show all the Jobs that accrue in the economy, and this is the way the Debt gets sprinkled out for people to buy the products, besides the Social Welfare System and Credit Cards.  There are some types of Jobz available for almost every Bubble in the Network.  Even the Waste Bubbles have a lot of Jobz, Sanitation (Garbage) men, Homeless Bottle Collectors for Recycling, you name it.  Generally a low paid profession of course.

Thing is, as the economy begins to grind to a halt, the jobz disappear, initiating a positive feedback loop through the whole system.  Less Taxes get collected, less products are bought, etc.  Issuing gobs more debt slows the process some, but it does not stop it.  Eventually at some node you will get Critical Mass here, and this locks up the whole machine.  Suffice it to say that Jobz are an outcome of the whole economy, and they only exist as long as the energy is there to run such a large economy.  Globally speaking, it is not there, which is why there is so much unemployment through places like Spain and Greece already.  Coming Soon to a Theatre Near You also.

B- Assets

All along the way as this economy developed, certain things were deemed as “assets”, like say your McMansion or a Skyscraper in NYC.  Your Car also viewed as an “Asset”. During the Heady Daze when the economy was functioning, such assets could be traded back and forth regularly, House Flippers made money as Real Estate values inflated and Car Buyers could trade in the old model for a new one easily.

As we progress along here in collapse of the Industrial Economy, these all become what I call “Asset Class Sinkholes”. You can’t sell them because there are no buyers for them.  A nice example of this on the grand scale are our friends Sears & Roebuck, now basically a Zombie REIT.  Most of whatever is left of the Net Worth of that company is in terms of all the Real Estate it owns for all the stores in all the Malls sprinkled around the country.  On the Balance Sheet, all those stores and their marked to make believe value are listed as Assets.  This is ridiculous, they are all Liabilities requiring tons of maintenance, in many respects it is cheaper to keep them running as Zombie Retailers just because it is cheaper than Decommissioning them.  Can they sell these stores to anybody? Nope.  WTF is gonna buy them at the price they list on the balance sheet?  Nobody.  If they could get 10 cents on the dollar they would be lucky.  The Banks don’t want to realize the loss though, so debt gets rolled over and you the last Sears Customer gets to park in an empty parking lot and shop in a store devoid of customers.  For a while more here anyhow, but not in perpetuity.

C- Markets

Sometimes referred to as Bourses, aka the NYSE, COMEX,  Nikkei, DAX yadda yadda.

If I had included this, I then would have had to include also Pension Funds, Insurance Companies, Hedge Funds, etc etc etc.  The diagram wasn’t complicated enough?  The text wasn’t long enough?  What?  LOL.

Seriously, the so called “Free Market” is just a Casino run by the TBTF Banks and a subsidiary Bubble encapsulated in the #4 Money Valve Bubble.  If you bust it out as separate, then you have to dissect the whole FIRE economy, which maybe I will do at a future date but this article was way too overloaded with information for the typical reader already.  Long as you grasp it is a complete sham and totally manipulated, that is sufficient.

In fact over on Global Economic Intersection, I was taken to task by Per Kurowski, a former Executive Director at the World Bank for not detailing enough all the various ways in which the flow of money is sprinkled out into the economy through various asset classes.  From Per:

Per Kurowski

You talk and you illustrate your “money valve” as a traditional single flow valve. It is not.

By means of the risk-weighted capital requirements for banks, the regulators have construed an irrigation system in which there are ample channels for bank credit to flow to whatever is perceived as “absolutely safe” like housing, the infallible sovereign and the AAAristocracy and very narrow channels for bank credit to flow to “the risky” like medium and small businesses, entrepreneurs and start-ups.

If you do not redraw and rethink taking in consideration these hidden capital controls you will not get a real understanding of what is happening.

Thing here is, while there are in fact many channels for the money (and the energy it proxies for) to flow through, there is only one end result to the channels, which is Waste, and only one source of Capital, Resources, most critically the Energy Resource in this design.  My response to Per was as follows:

Yes, of course the system is more complex than I drew it out, but adding the complexity isn’t really necessary to understand the nature of the problem.  Like tributaries of a major river, all those various channels controlled by the Global Banking system all lead to the same place, liquidity traps and asset class sinkholes, as I have referred to them in past articles.

Housing isn’t an “absolutely safe” investment, not when it was designed and built on a completely unsustainable suburban sprawl model,  This is all malinvestment and in fact more waste, worthless flotsam of the industrial economy.  “Infallible Sovereigns” are anything but that, countries built up on the industrial model are all themselves loaded with debt and destined for failure, and the infrastructure they built holds no more value than the McMansions the Consumers live in.

The folks who ran this system and built this machine either never really had a good grasp of the nature of capital and thermodynamic flows, or they were criminally insane.  You can’t prop it up by issuing more debt on it, because per capita the resources aren’t there to extract at cheap enough price.  The system either shrinks or it collapses, there is no way to “grow” it anymore, and anyone selling the idea of growth is using fictitious math to do it.

The shrinkage is absolutely apparent now just about everywhere, the only question is how rapidly this moves from the periphery to the core, and then what occurs when it hits the core.  It could be modeled now quite well, there is enough data to do it, but nobody is doing this because it would generate a result nobody wants to hear, which is that the Industrial Civilization cannot continue onward.


Are there any solutions to the problems we face here now, even just on the economic level, forgetting for a moment about the climate issues and Nuke Puke issues?  Well, 40 years ago there were quite a few solutions which might have worked, but overall the Will to Power prevented such things from happening.  Nowadays, the choices are much more restricted.  At this point, once the general economy fails, probably the only thing that functions for a while will be a Command Economy along with Enforced Rationing, but that will be hard to maintain for all sorts of logistical reasons.  After that, it may be possible to get some local economies up and running on a vastly reduced scale, depending on local resources and so forth.  You still always need a surplus of energy relative to populaton size for a monetary system to work.  The better solution here once it shrinks enough is probably return to a Potlatch or Gift economy and dispense with Money.  I don’t see any way for a Monetary system to function in a contracting economy.


End of Carz

Off the Microphone of RE

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Aired on the Doomstead Diner on June 12, 2014


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People who talk about Sustainability and Renewable Energy and who revere the older ways of living we once had just about uniformly revile the automobile.  There is no doubt that the automobile is an unsustainable technology, or that its use over the last century has developed an equally unsustainable infrastructure and style of living.

My friend Steve on Economic Undertow writes about this all the time, and presents the choice being made here, to Feed the carz at the expense of Feeding the People. You can’t keep the carz running and at the same time run an economy that keeps the people fed. The Carz simply waste too much energy, for no real remunerative reason in the end.

The problem of course is that you can’t simply dispense with automobiles, when you have built an entire infrastructure and society precisely around that device.

Steve writes in a recent blog:

“Take away the autos and there is a vanishingly small need for petroleum”-SfV

My response, fairly predictable for anyone who has followed the diner over the last couple of years;

Take away and replace with…what?

For the rest, LISTEN TO THE RANT!!!



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Peak Credit: Podcast

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Aired on the Doomstead Diner on May 11, 2014

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. many years since around 2000 or so, there has been quite a bit of discussion about the idea of Peak Oil, which many people interpreted as the idea we would RUN OUT of oil to fuel the industrial machine that our society is currently based on. Not just Oil, but the other fossil fuels like Coal and Natural Gas we extract to keep the machine running. The machine is vast and complex, it includes everything from the electrical generating plants that supply electricity to the pumps that pull water up from aquifers to deliver to suburban homes and farms to the sewage systems that remove the waste to the trucks that deliver the goods to the Carz that ship everyone around willy nilly every day from home to school, to work and to the local Fast Food restaurant.

We’re not running out of this stuff in absolute terms, there is a ton of it still left in the ground. What we are running out of is the easily accesible stuff which for a good while here came a bubblin’ up out of the ground practically for free, like on Jed Clampett’s old farm before he headed for Beverly Hills, upon Cashing Out on the farm to the Rockefellers and Standard Oil…

For the rest, LISTEN TO THE RANT!


Revelations of World Bank Whistleblower Karen Hudes

Off the keyboard of Michael Snyder

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Published on Economic Collapse on September 30, 2013


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World Bank Whistleblower Karen Hudes Reveals How The Global Elite Rule The World

Karen Hudes is a graduate of Yale Law School and she worked in the legal department of the World Bank for more than 20 years.  In fact, when she was fired for blowing the whistle on corruption inside the World Bank, she held the position of Senior Counsel.  She was in a unique position to see exactly how the global elite rule the world, and the information that she is now revealing to the public is absolutely stunning.  According to Hudes, the elite use a very tight core of financial institutions and mega-corporations to dominate the planet.  The goal is control.  They want all of us enslaved to debt, they want all of our governments enslaved to debt, and they want all of our politicians addicted to the huge financial contributions that they funnel into their campaigns.  Since the elite also own all of the big media companies, the mainstream media never lets us in on the secret that there is something fundamentally wrong with the way that our system works.

Remember, this is not some “conspiracy theorist” that is saying these things.  This is a Yale-educated attorney that worked inside the World Bank for more than two decades.  The following summary of her credentials comes directly from her website

Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.

Today, Hudes is trying very hard to expose the corrupt financial system that the global elite are using to control the wealth of the world.  During an interview with the New American, she discussed how we are willingly allowing this group of elitists to totally dominate the resources of the planet…

A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.

Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”

Previously, I have written about the Swiss study that Hudes mentioned.  It was conducted by a team of researchers at the Swiss Federal Institute of Technology in Zurich, Switzerland.  They studied the relationships between 37 million companies and investors worldwide, and what they discovered is that there is a “super-entity” of just 147 very tightly knit mega-corporations that controls 40 percent of the entire global economy

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

But the global elite don’t just control these mega-corporations.  According to Hudes, they also dominate the unelected, unaccountable organizations that control the finances of virtually every nation on the face of the planet.  The World Bank, the IMF and central banks such as the Federal Reserve literally control the creation and the flow of money worldwide.

At the apex of this system is the Bank for International Settlements.  It is the central bank of central banks, and posted below is a video where you can watch Hudes tell Greg Hunter of the following…

“We don’t have to wait for anybody to fire the Fed or Bank for International Settlements . . . some states have already started to recognize silver and gold, the precious metals, as currency”

Most people have never even heard of the Bank for International Settlements, but it is an extremely important organization.  In a previous article, I described how this “central bank of the world” is literally immune to the laws of all national governments…

An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe.  It is called the Bank for International Settlements, and it is the central bank of central banks.  It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City.  It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws.  Even Wikipedia admits that “it is not accountable to any single national government.”  The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system.  Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does.  Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”.  During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on.  The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.

This system did not come into being by accident.  In fact, the global elite have been developing this system for a very long time.  In a previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“, I included a quote from Georgetown University history professor Carroll Quigley from a book that he authored all the way back in 1966 in which he discussed the big plans that the elite had for the Bank for International Settlements…

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.

And that is exactly what we have today.

We have a system of “neo-feudalism” in which all of us and our national governments are enslaved to debt.  This system is governed by the central banks and by the Bank for International Settlements, and it systematically transfers the wealth of the world out of our hands and into the hands of the global elite.

But most people have no idea that any of this is happening because the global elite also control what we see, hear and think about.  Today, there are just six giant media corporations that control more than 90 percent of the news and entertainment that you watch on your television in the United States.

This is the insidious system that Karen Hudes is seeking to expose.  For much more, you can listen to Joyce Riley of the Power Hour interview her for an entire hour right here.

So what do you think about what Hudes is saying?  Please feel free to share your thoughts by posting a comment below…

Collapsing in Paradise

Off the keyboard of Eddie

Published inside the Diner on September 3, 2013

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I spent the past week in St. John, USVI, camping on the beach in the National Park and snorkeling. I first visited that general area of the world about twenty years ago, and for the last 10 or 12 years I’ve been returning there every year or two. They have some of the world’s most beautiful beaches and bays.

The cottages at Cinnamon Bay campground

Cinnamon Bay and Cinnamon Cay

But St. John is a place with a dark history of human suffering, ecological disaster and economic collapse.

The native Caribs never had any permanent settlements on St. John. It was largely ignored by the Spanish and English who were the main European settlers of the region, because there were lots of better island alternatives for agriculture, which in the late 17th and early 18th centuries meant sugar farming and making rum. St. John was only 20 square miles and all mountains and forests. It was finally claimed by the Danes in 1718. Both the English and the Spanish ordered them to leave, but  never cared enough to back up their rhetoric with cannons and muskets.

The Danes brought slave labor to clear the land and plant sugar. They were either unlucky in their choice of Africans or the harsh life hacking down the jungle and planting and harvesting sugar cane was more than the slaves could bear. (It is said that among the original slave contingent were some proud tribal leaders who never fully took on the yoke.) By 1733 there was a bloody slave revolt. Several of the slaves were caught and subsequently brutally tortured, and the rest took their own lives to escape recapture.

Rams Head, where legend has it the slaves of the 1733 Slave Revolt took their own lives.

By 1800 the sugar boom days were over, but it would take another 120 years for the Danes to give up and go home for good, leaving behind the descendants of their slaves, freed in 1848, but given no property nor any means of making a living. The land continued to pass to the descendants of the planters, finally ending up mostly in the hands of about 12 families.

A semi-feudal peasant culture eventually evolved that allowed informal land use by the ex-slaves, who supported themselves by fishing, farming, and small animal husbandry. More on this later.

The slash and burn agriculture techniques of the white settlers resulted in a 50% deforestation of the island. This caused a fairly immediate, precipitous, permanent drop in the water table. Natural fresh water springs and streams dried up forever.  Today the  former creek beds are called “guts” and only run when it rains heavily on the island. Virtually all the water used on St. John today is from catchment, with the exception of a couple of big resorts that have their own desalination plants.

The beaches of St. John are gorgeous, but the jungle (now mostly park land) is filled with ruins of plantation houses and sugar mills, and the hillsides are dotted with crypts containing the remains of the people who came to build them, many of whom succumbed rapidly to various tropical diseases. The bones of the slaves lie in unmarked graves. Much of the jungle is comprised of invasive species, second growth forest that contains non-native mangoes and tamarinds, and a host of less welcome plants. The old growth Lignum vitae trees were all cut down, with only a few left on the always wild and ragged East End.

Jungle ruins, Reef Bay (I think)

The most interesting part of this story is what happened to the island after the collapse of the sugar industry. Although the last sugar mill closed in 1917 or so, most of the plantations fell into disuse around 1850, and almost all of the white settlers left for greener pastures.

The population stabilized at around a thousand people and hovered around that number for the next hundred years. The black inhabitants managed to buy little scraps of land, enough to build houses (there was also eventually a small homestead provision passed into law), and the land was held in common by families, for the most part. A local gift economy emerged, with men forming “clubs” to assist in large endeavors, like home building, which is a never ending job in a place visited regularly by hurricanes and the occasional earthquake. The old sugar plantations were used by new absentee owners to run cattle, and the “natives” took care of them.

Fishing and subsistence agriculture proved adequate. Nobody got rich, and nobody starved. Christian churches, started by Moravian missionaries, were attended by the ex-slaves and their descendants, Life revolved around family and church and work. For a time there was a balance.

Enter the white men, version 2.0.

Always known for its raw beauty, St. John began to attract vacation visitors of the off-the-beaten-path variety. A couple of hardy souls even started extremely small time resorts, by the 1930’s and ’40’s. By the ’50’s, Caneel Bay was a popular destination for certain American and European 1%’ers.

Lawrence Rockefeller, who was an avid sailor, acting surreptitiously, bought about half the island from the descendants of the original settlers and various newer land owners. What happened next is still debated in some circles. The official version is that Larry R. generously donated almost all his land to form a National Park, which was then approved by Congress and signed into law by President Eisenhower. Stories have always persisted among long time VI residents, that tell a slightly different story, one in which Rockefeller owed a lot of taxes to the Treasury that were inconvenient for him to pay when demanded, and that the Park was part of a work-out deal. I don’t really know, but I didn’t start the rumor.

In any case, he managed to hang on to Caneel Bay, which he by then had purchased, and which became (and still is) a playground for the rich and famous. Oppenheimer Beach, a mile or so west of where we camped, is a lasting reminder that the man who supervised the Manhattan Project had a beach house where he spent a lot of time in his declining years.

Robert Oppenheimer as an old man, at home on the beach that now bears his name

Most white islanders and American tourists think of the Park as a win/win. So did the black inhabitants…at least at first. But then they found out that their long time informal claims to the “commons” land ended the day the Park Service took over, and that they couldn’t farm or run a few cattle and goats there anymore. The fragile economic stability of their local economy was broken. Eventually, some of them would find work building the infrastructure of the new St. John. Others, not so lucky, would emigrate to the States (which bought out the Danish government’s stake in 1917, for 25 million dollars).

Today, most of the reef fish can’t be eaten for food, without risking Ciguatera poisoning, a bacterial toxin disease somewhat similar to Botulism. (this is blamed by some on climate change, but I suspect sewage contamination of the bays is a factor too). Native St. Johnians still do fish and garden, but it isn’t enough to live on. They either work for the government, the Park, or live on welfare and food stamps, like all the other poverty victims in the FS of A. Many of the more menial jobs now go to even poorer “down island” blacks who come there for the work. The population is maybe 4500 people (or more by now, my sources are not current). The old work clubs still do function on a lesser level, since no one can afford a mortgage, and most native houses are still self-built.

But the balance has been lost.

I spent my week carefully looking…trying to see…is the ocean level rising? Is the coral dying, or is it hanging in there? Are there more fish, or less than I remember from years past?

Apparently coral is affected by bleaching “events” during which water temperatures rise, perhaps quite subtly, but to a point where “bleaching” occurs very rapidly, within days or weeks. A couple of these events were documented in some of the St. John bays in 2005 and 2006.

Me? I had to admit that I couldn’t tell. To be honest, I don’t think the coral has been doing that fabulous for the last twenty years or so, which is the duration of my informal observation. It certainly has always been less spectacular than the Caribbean reefs I’ve visited in Mexico. But there is  still an abundance of fish.

Last week I saw plenty of big Tarpon.  Sea Turtles, under protection, are making a come-back. Lots of colorful reef fish like Sgt. Majors and Parrotfish.  Big clouds of Silversides by the million being herded around like cattle by Bar Jacks. And I saw lots of Stingrays, more than I remember.  But I’ve never been there quite this late in the summer before. The best thing was the distinct lack of tourists encountered in the last week of August, the middle of hurricane season, which so far this year is a big miss.

A 3 to 4 ft Tarpon feeding in a cloud of Silversides

I wonder what will happen when travel gets really expensive. No more full occupancy at the big resorts…or even my beloved Cinnamon Bay campground, with it’s little cottages, most of which were unoccupied last week. The Park will still be the Park, of course. As long as the tax money is there to pay the higher echelons, which have been and continue to be U.S. trained, and who typically stay there a few years before moving up and moving on, the way bureaucrats do in bureaucracies.

I don’t see the black population returning to subsistence living. Too many skills lost. Too many toxic fish. Not enough non-park land to farm. When the supermarkets close they will be in the same boat with all the other inhabitants of the modern world who live at the mercy of  JIT delivery. And if climate change does destroy the life of the oceans, they will be among the first and most profoundly affected.

I will continue to observe…and wait. But I’m just not sure that I will be able to see the changes. They happen slowly, and in a few more years I’ll be joining Larry R. and Robert O. in the Great Beyond. For me, that’s one of the hardest things to accept..that collapse is happening here and now…and I just lack the right kind of perceptive abilities to see it or feel it.

I suppose that could change someday soon, in a heartbeat. I should just count myself lucky.

And I do.

Yes, We Have No Bananas

Off the keyboard of RE

Published on the Doomstead Diner on April 2013

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As the Collapse marches its way around the world and both Sovereigns and Banks are “discovered” to be completely Insolvent and BROKE, the BIGGEST of Newzpeak inventions is the idea of “Recapitalization”. This sounds Technical and Capitalist enough that most J6Ps buy it without a PEEP, even when their own Deposit Money is stolen for the purpose of “Recapitalizing” a Bank which has just gone BK and lost everybody’s money!

If I go BK, does anybody Recapitalize ME? WTF do people accept the idea FAILING Banks who JUST lost EVERYBODY’s Money should be “Recapitalized”, with the SAME jackasses running the show who just lost everything?

What a fucking RACKET! Anytime you Go Broke in the Casino, you just “Recapitalize” and go out gambling AGAIN!  You just gotta be close enough to the Nodes of Power at the Top of this Game to ALWAYS get “Recapitalized”, even when the whole SYSTEM goes Kaput!

Then there is the Nonsense of Splitting Failed Banks into a “Good Bank” with performing Assets and a “Bad Bank” with all the garbage. Who will Buy Stock in the “Bad Bank”?  The Bad Bank is just a Newzpeak Euphimism for TAXPAYER LIABILITY.  Da Goobermint gets the Bad Bank, the Illuminati get the Good Bank! There’s a Fair Deal for you! Privatize the Profits, Socialize the Losses in a NUTSHELL!

Next is the Dumbass idea of “Nationalizing” Failing Banks. WTF do I want to Nationalize a LOSER company? Put the whole NATION on the Hook for the bad debt of said Bank, that’s a GREAT IDEA! Why not just let the LOSER Bank go to the Great Beyond and start a NEW Bank on a National Level?

Why NOT is because of course everyone bought into the system, and if you let those Bad Banks go Belly Up, lotsa folks won’t get their Pension Checks.  Hell, they won’t even get back their Savings or Checking Account Money nowadays!

Money is a SYSTEM people become dependent on, just like say having a Smart Phone. When I was a kid, you had a Phone at your house, that is how people could talk to you from far away, but you did have to be HOME to receive the call. “Answering Machines”, the precursor of Voicemail didn’t exist at the time.  Those Cassette Driven Recorders didn’t emerge until I was well into my teens. Nowadays though, you simply can’t EXIST and be a part of the Techno-Economy without a Smart Phone, to not only keep you Hooked in to communication with your Workplace (why didn’t you pick up?  we NEEDED you to come in and fix the Server Crash!), but of course also to Tweet to all the WORLD your latest 1 sentence declaration on Monetary Collapse! Even fucking Bill Gross of PIMPCO Tweets idiocy!

Somehow though,before Voicemail, before Answering Machines, before even the Fucking TELEPHONE was invented, society managed to function OK, to one extent or another.  In my parents time when they were kids, though the Telephone had been invented, almost nobody even had a phone in their domicile. How did they “Call in Sick” to work in those days? Answer, they didn’t of course.  Workplace made do, so-and-so isn’t here today. If SaS does this too often, he gets fired. Now though, you gotta answer the phone, concoct a REASON (my dog is having a mid-life crisis!) and show up next day with a note & diagnosis from the Canine Social Worker to explain yourself and your Dog’s emotional angst. LOL.

Dependent most of us are in the Industrial Economy on our Automobiles, and Cheap Fuel to push them down the Road to get us to Walmart to buy Everything at Low, Low Prices Every Day and to get to the Workplace or to get the Kids to Skule…etc.  That is a tough dependency to BREAK, but NOTHING compared to breaking the dependency on the Monetary System.  Removing yourself from this inside Industrialized Nations is for all intents & purposes quite impossible for most people, there isn’t any real Wilderness left to escape to and do Jeremiah Johnson. OK, up here in Alaska you can still sorta do it if you stay on the move all the time, but soon as you drop down a Cabin anywhere the Rangers will drop in on you. You certainly can’t start a COMMUNITY out in the Bush without Goobermint dropping in to regulate your lives.  A LAW up here is if you have kids, your Domicile has to have Hot Water and Toilets. You can’t keep your kids if you live in TeePees and use the Great Outdoors as a Toilet like every other mammal does. Child Protective Services will drop in and take the kids and drop them into the Foster Care system.  Which is a pretty good Racket also if you DO live in a McMansion with Hot Water, you get around $700/mo from the state for every kid you take in this way. The state does NOT however pay the Original/Biological Parents 700 Bananas/mo to maintain the kid. How fucking STUPID is this system?

The coming REALITY of course is that the State is FRESH OUT of Bananas. Amongst the FIRST Casualties of Banana Shortage will be the Pension Funds of J6P, first the Corporate Ones from BK companies, then the Municipal and State ones, finally the large Goobermint ones like Social Security.  All these funds are already being raided to keep the failing banking system propped up with creative accounting tricks.

Sadly of course, JUST raiding Pension Funds isn’t sufficient to prop up a system which in Euotrashland is leveraged probably 100:1, and here is probably 50:1, though nobody KNOWS really because so much of the leveraging is in the Shadow Banking System of Derivatives. No, now they ALSO gotta “Haircut” the Depositors, who don’t REALLY own their Money as soon as they Deposit it in a Bank. Once deposited, the Bank is free to Legally Gamble it however they like, Pledge it as Collateral 10 times over in Rehypothections schemes, and it just ONE of those bets goes South and they get a Margin Call, you can say Bye-Bye to your Money.

So, due to insufficient Pension Funds and Deposits to STEAL here to make good on all the various BAD BETS of Filthy Rich Pigmen Banksters, after everything is STOLEN, what is asked for NEXT?  RECAPITALIZATION!

Let me explain this concept to you in PLAIN ENGLISH.  Somebody else can translate it into Kraut for our Kraut readers. The Chinese Readers are SOL since we have no Han Diners I am aware of at the moment, and the Chinese are TOAST anyhow. LOL.

The folks who Own the World run this system of Ownership through the TBTF Banks they Own. If the Bank goes Belly Up, they lose everything, money and Ownership, it all gets thrown into a big Bankruptcy Pool to be divied up and sold off to whoever still has some money, which really is about nobody.

What “recapitalizing” a Bank really is takes theoretical Future Tax Revenue from the Taxpayer and GIVES it to the Uber Rich, the VERY SAME PEOPLE who just LOST EVERYTHING to begin with! As I said at the beginning of this Rant, WHAT A RACKET!  You can’t EVER go Broke, every time you lose your bets in a big CRASH of the monetary system you are running, you get J6P to “recapitalize” you because you so expertly handled his life savings last time.

In reality however, “Capital” is not Debt nor is it the Fiat Money representing that Debt nor is it even Piles of Gold stored in Basement Safes of Sovereigns, Illuminati or Small Time Zero Hedge Piglets either.  Capital is the Resources of the Earth, Energy stores in particular in the form of Fossil Fuels through the Industrial Era.  Through the process of the War Machine and the Legal System regulating Property Ownership, a small Cabal of People gained control over most of the important Resources of the Earth, Land to begin with, Energy stores in the form of Coal & Oil through the Industrial Era.  Here in the FSoA, around the time Da Fed was chartered in 1913, this Cabal was probably around 150 Industrialists and Banksters, probably somewhat larger now though the ones who got in earliest on the Ponzi remain the most powerful ones here. In the FSoA,you can identify the Rockefellers, Astors, Vanderbilts, Morgans et al, the “Robber Barrons” of the 1800s as the main players. Part of a still larger Ponzi which goes back to the Collapse of the Roman Empire, same general Monetary System has been perpetuated throughout the millenia, though it took a Big Hit during the Dark Ages. Did not disappear though, it was mainly perpetuated under the auspices of the Holy Roman Catholic Church through the Dark Ages. This crowd mainly identified by the Rothschilds, Kuhns and Warburgs on the Banking end, and the Plantaganets, Hapsburghs et al on the Political End in Eurotrashland.

Why is it every time there is a Massive Monetary Crash (and this is not the first one by any means, they occur regularly every 80 years or so), the SAME people get “Recapitalized” by J6P to remain in what appears to be Perpetual Control over the Resources of the Earth, and the Political Systems which Goobern the life of J6P? The reason was probably best stated by Henry Ford, who went BK around 5 times on his way to becoming one of the world’s most “Wealthy” men:

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

You see, probably 99% of people have ZERO understanding of how the Monetary Sytem works at ALL. They simply TRUST in it, and they don’t have smarts enough to separate and devise their own. In fact you DO have to be VERY SMART and CRAFTY to set up a Monetary system which will last any length of time at all, and even then you have to have Political Control over vast resources of the Earth to do it. Such has been the case for most of History, going right back as far as the Tower of Babel. Those IN CONTROL recruit and sift out people who can run such a system, Ben Bernanke and Mario Draghi are examples of that. “The Smartest Guys in the Room”. J6P can’t field anyone who holds a Candle to these guys, they ARE really smart, even if they are working from some really flawed basic principals.

So when a given iteration of the Monetary System fails, you get a buncha Wars as was the case in Eurotrashland from the collapse of the Roman Empire circa say 350AD or so, or WORLD WARS as was the case around 1900 to Present Day.  WWII never ended, its just been pursued at a somewhat lower level regionally since Armistice was signed between the major powers of the Industrial Era.

Why do we get stuck with a NEW iteration of the same Bad Old System every time so far? Because when the Monetary System collapses, the SAME people are in control of the Military Apparatus. J6P has no control over that, he just ends up as Cannon Fodder fighting the battles as new alighnments and geopolitical and economic structures are refabricated. This leads MANY people to believe this will be the case in perpetuity, it is a Popular Meme amongst many Diners even. I have Ranted at length on numerous occassions why this is not so, but I STILL don’t have too many BELIEVERS on this subject. It’s hard to get people to understand Money to begin with, still harder to explain a Paradigm Shift of this nature.

You see, all reconstructions of this type of Monetary System depend on a SURPLUS of Capital,aka NATURAL RESOURCES. Mathematically speaking, you simply cannot reconstruct such a system in the absence of such resource, THAT is the Capital! It’s not the money, it’s not even  the Gold. It is what those things REPRESENT, and when it is GONE, both represent nothing at all.

Are resources COMPLETELY gone?  Of course they are not, but relative to current population size, they are in serious DEFICIT.  You cannot get any REAL GROWTH out of this, no way no how, so you cannot pay any Interest.  Thus you get ZIRP. Under ZIRP, Pensions, Equity Investment, everything FAILS. ZIRP is a KLUDGE to keep the system rolling another day, but it fails to bring return on investement, regardless of money printing to prop up markets.  That is mainly just a redistribution of wealth mechanism, taking money from the Poor to Prop up investments of the Rich.  All going south though, just the poor get hit first here this way.

The structure is bound to implode mathematically speaking, it doesn’t have basic energy support to keep it running. It CANNOT be rebooted in the absence of copious energy, or a massive population die off of Homo Sapiens.  The latter is a likely outcome, but such a massive die off would deconstuct Global Power Structure, so you still don’t arrive at equilibrium this way. You’ll just get a lot of flux in the system as it re-equilibrates. I don’t think too many of the Pundits understand the equilibation dynamics, I am quite sure John Michael Greer doesn’t, nor Jimmy Kuntser. Dmitry Orlov to an extent. Steve from Virginia sorta gets it, but he traps himself in the 1700 Paradigm most of the time.

Anyhow, Recapitalization of Banks is COMPLETE garbage, and needs to be Politically Repudiated, which it will be. Unfortunate OUTCOME of that is most of the systems we take for granted will collapse, and and EXTRAORDINARY number of people will DIE. So it goes. You can’t make an Omellette without Breaking a Few Eggs.


Financing the Industrial Revolution

Off the Keyboard of RE

Discuss this article at the Economics Table inside the Diner

Along with most of the rest of the Financial Bloggers out there, I make it a daily practice to scan the articles being posted on Zero Hedge.  the Tyler Durdens have a plethora of contacts in the World of Wall Street, so they are often the Blog that Breaks Big Newz first.

I no longer read the commentary there, and to be honest most of the time don’t even read the articles either, because mostly they fall into the category of Helicopter Ben/Super Mario Draghi bashing or Gold Bitchez! articles.  You pretty much know the spin that will come off the pages of any Tyler Durden article.

In the case of a recent article, Tyler quoted from Diapason’s Sean Corrigan and the whole excerpt was on the Home Page of Zero Hedge to read under the title of The Circular Logic And Prayer Tactics Of Draghi Queens, Sinomaniacs, And Other Orwellians


“Companies in the steel sector should be prepared for a long-term depression,” Zhang Changfu, secretary-general of the CISA, told media earlier.

Strange then, that the official data for July suggest that Chinese steel outout hit a new, all-time high of 61.7M tonnes during the month, the YoY increase making up no less than 99% of the entire global increment over the year. Why on earth would this be?

Chalk it up to moral hazard – specifically, the same zombifying belief shared by the whole motley crew of Sinomaniacs, Draghi queens, and QEasers everywhere; that bad news equals good; that, in true Orwellian fashion, ‘Weakness Is Strength’ – that any shortfall in voluntary demand will elicit a large enough crank of the printing press handle that the glut will soon be removed from the market and so obviate the need to undertake any painful restructuring, or to quit the business and release scarce resources for use by those with a genuinely viable business plan.

Back in metal-bashing business, Wang Lei, the head of a Shandong ore trading company, bemoaned the current adversity, telling Caixin:

“If you had iron ore [last year], you could hold it for a couple months and then sell it and earn $20 to $30 per ton easily. We bought ore for about $135 per ton, but no one will take it, even if we try to sell it at a loss.”

Wang and his friends apprear to have drawn a deangerous lesson from the events of 2008-9 though. As he told the magazine, Wang remembers watching the value of his company’s inventories decline rapidly in 2008 until the price bottomed at US$60 per ton the following year.

When the ore prices fell, he reminisced, he and his fellow trades were not pessimistic because they correctly assumed that the Chinese government would step in with an economic stimulus to offset the crisis and so revive demand. Sure enough, as the boom progressed, prices soared, reaching close to $200 a tonne in 2010, a level they revisited some 18 months ago, before policy began to tighten and the long slide to sub-$100 began.

So, once bailed out, always bailed out seems to be the guiding inference. Meantime, close your eyes and pray.


Why do I find this particular snippet interesting?   The reason is that embedded in this is how the whole Industrial paradigm got funded in the first place, and why the same old tricks aren’t working now.

The whole Industrial Revolution got funded by a few people who hold the power to issue essentially Infinite Credit.  Ever wonder where Henry Ford got the money to build his first Model T plants with his novel Production Line method?  Henry had gone BANKRUPT not once, but at least TWICE before he got Ford Motor Company off the ground making Affordable Carz.  Some websites put his Bankruptcies as high as 5 before getting Rolling.

Henry Ford

In 1893, Henry Ford was the chief engineer at the Edison Illuminating Company. Within nine years, Ford had built his first automobile, named the Quadricycle, and started the Detroit Automobile Company. A gifted engineer, Ford focused heavily on the mechanics of his auto, and completely ignored the idea of marketing   his invention. Ford’s first product failed to capture the public’s attention, and Ford was forced to leave his company and file bankruptcy. One year later, Ford started the Ford Motor Company and designed a car that broke the land-speed record. In 1908, Ford released the Model-T to an eagerly awaiting public, and changed the face of American industry.

Henry Ford

Filed Bankruptcy when his first automotive company failed. His second automotive company failed also. In June 1903, at the age of 40, he created a third company, the Ford Motor Company, with a cash investment of $28,000.00

He also apparently was nearly outta cash AGAIN before he started selling some Model Ts.  One suspects though had he gone BK again, he would have drummed up some more money AGAIN from “Investors”.

WTF was investing in this guy and why, after failing before?  Notice who Hank worked for as Chief Engineer?  The Edison Illuminating Company. Basically the same folks who backed Edison were backing Henry Ford.  Who backed Edison?

Edison General Electric
Edison’s businesses in Schenectady grew quickly.  He moved his underground tube company to Schenectady.  But Edison’s businesses were struggling financially.  His decision to stick to direct current hindered the success of his electrical and lighting companies.  Electric lighting was still expensive, affordable only by the wealthy.  Despite widespread interest, it was not available to the average person.
In 1889, Edison’s chief financial backer, J.P. Morgan, had concerns about the operation of Edison’s businesses.  He worked with some of Edison’s financial associates, including Samuel Insull, and created the Edison General Electric Company, a merger of Edison’s lighting and electric companies, which included the Edison Electric Light Company, Edison Lamp Works, and Edison Machine Works.

Unsurprisingly, J.P. Morgan was the primary backer, but all the Big Money names of the era were involved, the Vanderbilts, Astors, and of course the Rockefellers as well.  these are the folks who had the Open Tap to Unlimited Credit, which really was coming from over in Europe at the time.

Notice also that just like Henry Ford, Edison’s Electric Bizness ALSO had financial problems early on, yet he never went completely Outta Biz either.  Electricity remained available only for the Wealthy, it was not an every J6P sorta thing in those days powering Refrigerators and Plasma TVs.

Our Industrialist friends however were enamored of the Progress involved here, and with the spigot of Unlimited Credit available to them, BY GOLLY they were gonna MAKE IT WORK!

How to make it work though?  If J6P doesn’t have the MONEY to buy the Expensive Electricity, you can’t sell it to him.  So you first gotta make the Electricity CHEAP enough to buy, and that takes CHEAP ENERGY. Fortunately for said Industrialists of the era, they HAD a source of Cheap Energy, the Oil coming a bubblin’ up from Jed Clampett’s farm, which Standard Oil’s John D. Rockefeller handed Jed enough money to move to Beverly Hills while he pumped Jed’s old farm dry for its Oil.

Still though, even pricing out this Oil dirt cheap, unless J6P had money to buy it with he wasn’t going to be buying the Thomas’ Electricity OR Hank’s Carz!  So now you gotta get Money to the Customers, but of course you don’t GIVE it away, you LOAN it out.  Who do you loan this money to, and where do you get it from?

First and foremost, you loan the money to Goobermints to build roads and build an electric grid.  You create the money on a Balance Sheet the moment Da Goobermint signs up to Build these Improvements for J6P.  The Money begins to Trickle out to J6P as he gets employed building the new roads and wiring up all the McMansions for Electric Lights.

You also loan out the money to other Brainy Entrepreneurs who come up with novel ways to use the Electricity, like Wireless Radios and TVs; and also novel ways to use the Carz, like Fast Food Drive Ins and Shopping Malls.  Everybody LOVES this stuff!  They are also Happy because there are new Jobs in the Industrial Economy and if they are smart guys like Henry Ford they can get an Engineering Degree and hop on the High Paid Gravy Train also!

Reminder here, Henry Ford is ALSO the guy who said this with respect to our Monetary system:

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford

Interesting of course that someone who was the most direct benficiary of this corrupt system of Cronyism would make such a statement.  Essentially Hank had a line of virtually unlimited credit, and by virtue of the Limited Liability Corporation the losses taken on his first two Bankruptcies were not borne by Investors like JP Morgan, who did the old Pump and Dump with the stock and were out from under the loss well before his first companies tanked.  Your more average dummy financial speculator of the time took the losses, and of course with them came the various Financial Panics of the era.

The KEY to getting this all matched up and Rolling Along was to marry the Cheap Energy to a Centrally Controlled money distribution system, and this of course was the genesis of the Federal Reserve Bank, which most everyone knows now isn’t Federal or goverment at all, but rather a Privately Owned consortium by the TBTF Banks, the same ones JP Morgan, John D. Rockefeller and Andrew Mellon founded, all with direct connections to European Banks run by the Rothschilds and Warburgs.

Thus began the real ramping up of the Debt of the Industrial Revolution, and speculative Money flew out the door, unfortunately a whole lot faster than the whole system could absorb all the new production and faster than jobs could be created for people to them have money to buy the products.  That whole specualtive bubble came crashing down a little over 16 years after the founding of the Federal Reserve with the Great Depression.

Again here, the Bath is not taken by the Industrialists who made the Loans and undewrote the Stock issues in the first place for these Boondoggles, the bath is taken by Goobermints that put up Power systems they could not pay for, which then got repoed and Privatized.  Edison Electric was NEVER a money making Bizness, it always got subsidized in some way on the backs of the Taxpayers to keep it running.  Since the Taxpayers never could really afford it, Goobermints kept on taking on more and more debt to keep the system running.  They have been rolling over and refinancing this debt for over a Century now.

The story of the Automobile is not a whole lot different than that, although in this case rather than many local municipalities putting up small Electric Grids they could not pay for, in the aftermath of WWII the Eisenhower Interstate Project was undertaken, the single Largest Public Works Project ever undertaken inthe History of Mankind.  Bigger than the Colossus of Rhodes, bigger than the Pyramids of Egypt, Bigger than even the Great Wall(s) of China built over Centuries of time.  Where do you suppose the Money for that came from?  Taxes?  No Sirree Bob, the Interstate was Financed on Debt through a new Goobermint Special Purpose Vehicle, the Highway Trust Fund.

From Wiki:

The United States Highway Trust Fund is a transportation fund which receives money from a federal fuel tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon of diesel fuel and related excise taxes.[1] It currently has three accounts, the Highway Account which funds road construction, a smaller ‘Mass Transit Account’ which supports mass transit and also a ‘Leaking Underground Storage Tank Trust Fund’. It was established 1956 to finance the United States Interstate Highway System and certain other roads. The Mass Transit Fund was created in 1982. The federal tax on motor fuels yielded $28.2 billion in 2006.[2] In 2008 the fund required an additional $8 billion from general taxation due to reduced receipts from fuel tax in order to meet its obligations.

So here, on the expectations of the Revenue it would generate from Gas and Diesel burning in taxes over these new Roads, billions of new dollars are created out of thin air to establish this “Trust Fund”, which sorta remained solvent up until 2008, when reduced Tax income and rising maintenance costs finally crossed over and the Fund could not service its own debt.

Who did the Interstate Highway REALLY benefit?  The Industrial Monopolists who built the Carz and owned the Oil production and refining facilities of course.  The more people you got to consume the Oil faster, the Richer you got, and boy did they EVER get Rich!  J6P of course is completely clueless about how this all got financed up, as Henry Ford said if he actually DID have a clue there would have been a Revolution quite some time back here.

The Debt Financing of Industrialization was not of course just limited to the Electric Grid and the Interstate Highways, just about as big a Boondoggle was undertaken to finance the Biggest War Machine ever built, which I refer to as the BAM or Big Ass Military.  Billions upon Billions of Dollars of Debt Money created to finance corporations like General Electric, Lockheed and McDonnell-Douglas to build ever more powerful and expensive War machines of all sorts.  Concurrent with that expenditure was the expense of Large Public Works Projects like the NASA Space Program, which did a lot of the basic research into Rocket & Jet engines that power Supersonic Fighter Jets and Electronics systems that run the Fly-by-Wire systems necessary to control such aircraft.  Still more debt money went into the Super Conducting Super Colliders in the effort to develop the Holy Grail of the industrialist, unlimited Cheap Energy from Fusion Power.  With Fusion, the Jetson’s Futre was ASSURED, and they gambled very BIG MONEY on that idea.  Those SCSCs don’t come cheap.  Sadly of course, 40 years after reading my first articles about the Promise of Fusion Power on the Pages of Popular Science and Popular Mechanics we aren’t really any closer to it now than we were then.

Industrialists have always held out the Jetsons future for general consumption as Inevitable Progress.  It’s everywhere in Pop Culture and Media, from Star Trek and Star Wars right back to the early Scifi of Jules Verne.  Probably 90% of people inside the Industrial World really do believe this stuff is inevitable and we are just going through a temporary Economic Glitch here.  The Mars Landings, the “Discovery” of new Exo-Planets, all the Science Newz you read every day is designed to reinforce that belief in the inevitability of Progress and the Techno-Future.

Industrialists close to the Credit Spigot like Richard Branson even try to Live Out these dreams, with their own Private Spaceships, financed of course on Debt on the idea they will get tons of people involved in Space Tourism on Virgin Milky Way Spaceships.  or they will be Mining Asteroids for Mineral or Jupiter for Methane or other such Pie in the Sky nonsense.

What all these folks remain Willfully Blind to is the fact that not only do we not have sufficient Energy to Conquer the Final Frontier, we really do not even have enough just to maintain all the systems build over the last century on gobs of debt money.  The Debt is coming due, and it can’t be Rolled Over anymore because the Growth has STOPPED, regardless of what massaged GDP statistics say.  Money creation right from the Get–Go in the time of John D. Rockefeller has been tied to Energy production, and as long as Energy production (or rather extraction is the better term) kept increasing, the Debt Money kept on flowing outward.  Long as you had the Inside Track on any new technology, you could always invest and Pump & Dump it for a profit.  This of course was what the whole Dot Com Bubble was all about, and you see the last gasp of this type of action with the Facepalm and PoopOn IPOs.

Really though, those in charge of Credit Creation now are less concerned with Investing in any New Biznesses than they are in trying to figure out where and how to sequester their money in “safe” inestments like USTs and Gold, either of which are very productive enterprises which create any Jobs of course.  The same priniciples of vast expansion of Debt which came in the runnup to and aftermath of WWII can’t work this time, because the cheap energy that Debt was issued to buy does not exist anymore.  All the cheap stuff has been converted to CO2 molecules floating around willy nilly in the atmosphere doing nobody any good at all, and quite possibly doing a lot of harm as well.  Only EXPENSIVE energy remains, and a world of increasingly impoverished people cannot afford it, and they aren’t “credit worthy” either.

Few in the Industrialized world want to see the Gravy Train end here, certainly not the Elite running the show so they keep  trying the same old straategies that worked before, but they aren’t WORKING.  Well, at least not to fix the general problem they aren’t working; they are working pretty good to transfer the last of the reamining wealth into their grubby little hands though.  For the most part though, that wealth is ephemeral, and there really are not any “safe havens” to sequester this stuff anymore.  In the Bye and Bye, it will all collapse, possibly quite suddenly given how fast HFT programs run these days.

Industrialization was the equvalent of a Harvard Keg Party, run pretty much by the same Harvard Frat Boys that ran the Keg Parties themselves in Hahvahd Yahd.  The problem here is they are Outta Beer to sell at a price 90% of the population can afford to buy, and you just cannot scale down this type of infrastructure too much before it all collapses.  Even if you are a Pigman with enough Bonus Money to buy a Lamborghini, its not gonna last too long driving on pothole ridden streets.  Hell, they don;t last long on well paved streets!  LOL.

Until the population as a whole grasps how they were taken for a ride here though, and as long as this population itself continues to hold onto the dreams of a techno future that will never come, those in control of the credit creation Biz will continue pulling rabbits out of the hat here to keep it going one week, one day, one hour longer, until at last it can go no more.

Coming Soon to a Theatre Near You.


Too Low for Too Long

A response made to Steve from Virginia’s Too Low for Too Long  thread on Economic Undertow


Discuss this post inside the Diner 

Too Low for Too Long?  For sure, but why so low for so long?

Those who took control over the Oil resource early on in the game, aka John D. Rockefeller and Pals had to make it Affordable for people to buy, elsewise why control the resource at all, eh?

Who issues the Credit to buy this resource from John?  John issues it of course, and places an interest charge on his loan.  John keeps the interest low as long as he has plenty of Oil flowing cheaply out of the ground around Jed Clampett’s farm, but when he starts running Short on Oil to sell, the prices rise and the credit cost in interest to buy it rises also.  John is still doing fine of course despite the shrinking supply and falling demand, and will continue to do fine right up until it completely runs dry here.  He’ll just keep downsizing and selling to Boutique Economies until the system shrinks so much as to no longer being able to support even one Oil field and One Tanker Ship and One Refinery and One distribution network for the finished product.

Along the way, John ALSO invested in and built many structures all dependent on the Oil he controlled and sold.  He invested in Henry Ford’s Carz of course, and Edison’s Lightbulb.  Lovely inventions all these things were also, and EVERYBODY wanted one, to be part of the great Future they all promised.  Just look at the photos from the Chicago World’s Fair of 1893 to see the Gleaming Future promoted, and really every World’s Fair thereafter also right up to the one I attended in 1964 in Flushing Meadows park in NYC.

It was all of course a Dream, a Bubble created which sieved great wealth into the hands of the people who controlled this once seemingly inexhaustible resource, while at the same time “improving” the lives of everyone suckered into the game here.  The Bubble is Burting now, fittingly first going down the tubes in the place where accessing thermodynamic energy from fossil fuels all began, in Eurotrashland where the Stem Engine was first used to pump the water from Coal Mines.

Nobody can issue credit to buy stuff that just is not there to buy anymore, not at prices which make a Profit on the extraction anyhow.  Not even John D. Rockefeller or his heirs can Make Something from Nothing of course.

So one by one here the Dominoes topple, the weakest like Greece going first down the Toilet hear, Spain soon to follow.  The Powerful are Ringfencing and using the Big Ass Military they control to keep their own systems running a bit longer here than everybody else.  How long that can last is anybody’s guess, but I suspect not all that long.

Nothing wil stop this cascade failure, no monetary fix can work, no Fiscal Union of Europe and no amount of QE by Helicopter Ben and his CB Cronies either.  The PARTY is OVER.   The Keg has run dry here.  Now we will REVERSE ENGINEER our way back to a low per capita energy footprint on Mother Earth, or we wll go the way of the Dinosaur.  Over/Under on this is about 50-50 at the moment, getting worse all the time though.

Knarf plays the Doomer Blues

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