(My letter in The Belleville Intelligencer, Saturday, April 5, 2008)
The economic meltdown in 2007 and 2008, due in part to sub-prime mortgages and the economic concomitants of the U.S.A.'s ‘war on terror’, raises an issue the ‘chattering classes’ should have seen coming. Something like 75 per cent of the money circulating in western economies is ‘debt money’, i.e., money sanctioned by reserve ratio legislations allowing banks to leverage deposits into loans at nominal rate of 5 to 1.
Of course, since these loans almost always appear as deposits somewhere, the actual leverage rate is much higher.
In this context, the principal utility of government-issued currency involves small retail and commercial transactions and the activities of criminals.
What has not been noticed is that this state of affairs constitutes a perilous circumstance for those of us whose lives depend upon debt-leveraged manufacturing and consuming. In a world struggling with pollution, resource depletion and envy-driven terrorism, the wealthy enjoy unprecedented power and also face an unprecedented peril. The source of their growing proportion of wealth (in 2006, two per cent owned more than 50 per cent of the world's assets) includes fiscal devices syphoning wealth from lower and middle class populations. One such device is debt servicing costs – a perpetual mortgage upon ‘remaindered populations’.
The dependence of economies upon debt-money has another implication. Economies are under constant threat because debt-money can be extinguished in a heartbeat. This is important to think about because the wealthy face an unprecedented crisis. Environmental and resource depletion issues threaten their well-being in never before experienced ways. The rest of us should not doubt that the wealthy understand something Robert Malthus pointed out in 1798. A growing population seized with insatiable life-style expectations is unsustainable.
Even a few more decades of business as usual means the end of life as we know it. There is no safe place in this prospect.
Global warming portents mean that even the idea of wealth is becoming oxymoronic.
Fortunately for the wealthy, governments are now well positioned to rapidly wind down economies by diminishing the volume of money in circulation. All that is required are ‘needed adjustments’ to reserve ratios and credit-based economies will collapse into recession and depression.
Once this starts, lending institutions will tighten eligibility requirements, accelerating ‘difficulties’. Government monetary policy will then cause interest rates to drop, to “stimulate or sustain economic activities”. (This quietly transfers government expenditures from investment to earned income.) Then, as gas and food prices have been demonstrating in 2011, interest rates may have to rise "to control inflation" - although some wiggle room has been generated by distinguishing 'core inflation' from volatile necessities.
In short,no matter what happens, the rich will continue to prosper. They may, of course, stop becoming richer. ( After all, once you own everything, what is the point of becoming wealthier?)
The only wealthy agenda that makes sense these days is to cause the rest of us to fall into poverty as soon as possible.
Just two ‘fiscal harvesters’ – compounding investments and percentage driven income adjustments – would have soon achieved this conclusion soon enough, but time is of the essence, and time is running out.
As this project unfolds, we see police and military forces being expanded and right wing governments gaining ground. Many of these expenditures are economic depressants in their own right, significant, albeit ironic, contributors to the 'greening of the planet'. More importantly, armies and surveillance systems will have increasingly important work to do securing property rights as populations settle into the 10 per cent /90 per cent New World Order.
This is the only ‘Save the Planet’ plan that seems to have a snowball's chance of working. This is because this is the only plan on the table that does not rely upon you and I acting thoughtfully.
All this plan needs is for the wealthy to do globally what they have always done locally – organize populations to serve their own purposes.
You and I have a lot of explaining to do. After all, we know how good our betters are at giving us the business. This is how we came to live in cities, to educate ourselves in ways that make us hapless and dependent, to work and consume ourselves into a stupor.
There seems little doubt that we will also be herded through the next door and into the darkness beyond. Our new Commons is even now being prepared, one where our thoughts and esthetic sensibilities will find a congenial home.
There are garbage dumps on the dark side of every city. Millions have already made the journey from villages and farms to these new stomping grounds.
They await our arrival with bated breath, flying toilets at the ready.