BAU 2 of 3

BAU 2

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note: I've never heard it put better:
"We seem oblivious of the obvious, which is that money, having no intrinsic worth, commands value only as a claim on the output of a real economy driven by energy. When someone hands in his hat and coat at a reception, he receives a receipt which enables him to reclaim them later. But the receipt itself won’t keep him warm and dry. For that, he needs to exchange the receipt for the hat and coat. Money is analogous to that receipt."
Surplus Energy Economics
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If I were some rich puke that got all my money as an indirect government contractor and I listened to Rush Limbaugh, I’d be all, “bitches, sticky paws off MY money”.  Never mind that about a million poor bastards died to make our imperial colonialization in which the world as a whole subsidized you and the vast majority of citizens with free goods and without that wealth pump we would still be a nation of dirt farmers ( all our oil stolen by a real power across the sea ).  Never mind your parents and grandparents benefited greatly from the looting and exploitation.  It’s all your money.

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I don’t mean to sound like Obammy with that ridiculous “the government made that money for you”.  What I mean is that you simply don’t see how pervasive and widespread the government is in the economy.  You don’t see how dependent you are, usually indirectly, of government spending.  And that as soon as the economy ceases being able to be manipulated then you’ll be quite shocked and dismayed just how dependent you were.  I’m only asking that you do not allow your political passion for a freedom we lost long ago to blind you to danger.  Is that too much to ask?

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And it is far from mere Tax & Spend.  Go back fifty years for that to be a viable argument.  Now it is mostly debt.  Without debt, almost every corporation would be bankrupt ( a fine example of indirect government spending or dictate.  The central bank survives by the interest on the national debt.  What’s one percent on twenty friggin trillion?  But because the government allowed the bank to take over, and protects it, the corporations can also borrow at one percent ).  No local or state government could exist as it currently does without debt.  The FedGov could just print and spend, but everyone else would be screwed.

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So you don’t have the simplistic problem of the government not taking in enough taxes.  Without debt, the local government could tax your property at 10% annually and there still probably wouldn’t be enough money for them to operate.  Do you wonder why it costs more and more which sees less and less get done?  More and more debt.  Eventually the interest rate cannot get much lower and spending cuts must accompany increased borrowing.  You might make an argument that taxes will be raised, and it is true that the government never met a stone it didn’t try to squeeze blood from, but we have already gotten to the point that there are very few taxpayers.

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I don’t mean too few who pay taxes.  Someone on Food Stamps is paying taxes-they are all built into the price, hidden quite well.  I mean, the wealth engine is shutting down.  Oil has been our wealth machine for over a century ( over a century and a half if you put coal and oil together as carbon fuels ).  Conventional oil is decreasing in supply ( and that is even before the end of the PetroDollar stops imports [ unless it is oil for grain ] ) which means our wealth is decreasing.  To get actually taxes, a share of the wealth from activity other than government spending or credit creation, you need wealth being created.

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( and, yes, you knew I was going to waste a space debunking your fantasy fuel fracking.  Which takes conventional oil to pump and all the credit they can throw at it to get it above ground.  All fracking oil does is keep our transportation fleet moving.  It doesn’t create wealth, it uses it.  There isn’t enough net energy contained in it to qualify as real energy.  And this is HALF of our domestic liquid fuel.  Now add ethanol, another near net loss fuel.  See how little real oil we produce ourselves-and that includes the now drastically shrinking Alaska and Gulf Of Mexico fields.  And THOSE two, which saved our ass in the Seventies, surely by now qualify as such lower EROI fuels as to be fracking-like.  I would back of the envelope calculate that of the 18 million barrels a day we use [ it could be slightly lower by now ] we have only about 3 million barrels of conventional crude extracted domestically ).

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Which is to say, our crap is very weak and our wealth creation pump is pretty close to shut down.  Why do you think I worry so much about the PetroDollar?  It is the straw that breaks the camels back.  But, to return to the welfare state, you can probably be assured of two things.  Inflation and program cuts.  We all list these as if they are self evident, but what do you do when there is no employment and your Food Stamps are NOT indexed to inflation?  Okay, yes, they are indexed just as Social Security and Medicare is.  By a patently false system that at a minimum reports inflation as only a third of what it actually is to the average peon out there.

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Programs probably won’t be cut on the federal level, but you can bet the ranch that the cities and states will not give two thoughts or two craps about screwing the poor ( which soon includes you ) to keep themselves solvent.  Look how quick in 2009 the roads stopped being plowed or repaired, how few police cruisers swung by your neighborhood ( or how few even responded to calls that did not include a cooling corpse ).  Look how quick the states drained the retirement funds which isn’t looking too good ten years on.  The states WILL screw you.  Bank on it.

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The FedGove will make cosmetic cuts here and there.  Like when the BLM cut fire suppression or fighting, dumping it on the states ( which then dumped it on the counties ).  But I think mostly you can just count on inflation from them.  Once QE isn’t pumping up the stock market and real estate, inflation is going to channel back to the streets.  And the feds will still deny you pay rent or buy groceries or gas, giving the official inflation rate as close to nothing, a Soviet Dictate Whitewash.  You’ll forever be losing purchasing power, on your cash, on your benefits and on any retirement.  The solutions are nothing you want to hear, because you’ve heard them before and showed distaste and disdain.  Regardless, we finish up tomorrow with that.

END ( today's related link http://amzn.to/2ERwNUn )

 

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