Crude oil is not the only commodity that is crashing. Iron ore is on a similar trajectory and for a common reason. Namely, the two-decade-long economic boom fuelled by the money printing rampage of the world’s central banks is beginning to cool rapidly. What the old-time Austrians called “malinvestment” and what Warren Buffet once referred to as the “naked swimmers” exposed by a receding tide is now becoming all too apparent.
This cooling phase is graphically evident in the cliff-diving movement of most industrial commodities. But it is important to recognize that these are not indicative of some timeless and repetitive cycle—–or an example merely of the old adage that high prices are their own best cure.
Instead, today’s plunging commodity prices represent something new under the sun. That is, they are the product of a fracturing monetary supernova that was a unique and never before experienced aberration caused by the 1990s rise, and then the subsequent lunatic expansion after the 2008 crisis, of a cancerous regime of Keynesian central banking.
Stated differently, the worldwide economic and industrial boom since the early 1990s was not indicative of sublime human progress or the break-out of a newly energetic market capitalism on a global basis. Instead, the approximate $50 trillion gain in the reported global GDP over the past two decades was an unhealthy and unsustainable economic deformation financed by a vast outpouring of fiat credit and false prices in the capital markets.
For that reason, the radical swings in commodity prices during the last two decades mark the path of a central bank generated macro-economic bubble, not merely the unique local supply and demand factors which pertain to crude oil, copper, iron ore, or the rest. Accordingly, the chart below which shows that iron ore prices have plunged from $150 per ton in early 2013 to about $65 per ton at present only captures the tail end of the cycle.
What really happened is that the central bank instigated global macro-economic bubble ripped commodity pricing cycles out of their historical moorings, resulting in a one time eruption of price levels that had no relationship to sustainable supply and demand factors in the mines and petroleum patch. What materialized, instead, was an unprecedented one-time mismatch of commodity production and use that caused pricing abnormalities of gargantuan proportions.
Thus, the true free market benchmark for iron ore is the pre-1994 price of about $20-25 per ton. This represented the long-time equilibrium between advancing mining technology and diminishing ore grades available to steel mills in the DM economies.
But as shown below, after Mr. Deng institutionalized export mercantilism and printing press prosperity in the form of China’s red capitalism in the early 1990s, iron ore prices broke orbit and soared to $100 per ton in the second half of the decade and then went parabolic from there. After peaking at $140 per ton on the eve of the financial crisis,China’s mad cap “infrastructure” stimulus boom after 2008 drove the price to a peak of $180 per ton in 2011-2012. To wit, iron ore prices peaked at nearly 9X their historic range.
The crucial point is that there was nothing normal, sustainable or economic about the $180 per ton peak. It was a pure deformation of central bank credit expansion and the accompanying false pricing of debt and other forms of long-term capital.
Needless to say, the same thing is true of copper. Its historical benchmarks were in the 60 cents to 100 cents per pound range. Yet after 1994, the global bubble—again led by the enormous credit explosion and currency exchange rate suppression in China and its BRIC satellites—carried the price to $4 per pound in the eve of the financial crisis, and then to nearly $5 during the peak of China’s post-crisis credit explosion.
Indeed, in the case of copper, not only was the cycle driven by unsustainable construction demand; it was also powered by dodgy forms of financial engineering that turned copper inventories into financing collateral that was sometimes re-hypothecated many times over.
The exact same considerations apply most especially to crude oil. China’s GDP grew from $1 trillion to $9 trillion during the 13 years after the turn of the century. Growth of such enormous proportions is not remotely possible in an honest economy based on productivity, savings, investment and sound money. Likewise, China’s call on the global oil supply system—-which soared by 4X from 3 million bbls/day to nearly 12 million—–is also a drastic aberration; it is a product of runaway credit creation that financed false “demand”.
And that was only the beginning of the aberration. The China engine pulled additional false petroleum demand into the world market equation due to the boom among its suppliers—such as Brazil, Canada and Australia for raw materials and South Korea and Taiwan for components and parts. Output levels and petroleum consumption in Germany and the US were also goosed by China’s voracious demand for German capital goods and Caterpillar’s heavy machinery, for example.
Accordingly, the crude oil price path shown below reflects the same global monetary supernova. The $20 price in place during the 1990s was no higher in inflation adjusted terms than it had been one century earlier when the mighty Spindletop gusher was discovered in East Texas in 1901. By contrast, the 5X eruption to north of $100 per barrel during this century represents the impact of fiat credit and false capital market prices deforming the entire warp and woof of the global economy.
Self-evidently, we are now in the cliff-diving phase, but unlike the bounce after the September 2008 financial crisis, there will be no rebound this time around. That is owing to two reasons.
First, most of the world is at “peak debt”. That is, the ratio of total credit market debt to current national income ranges between 350% and 500% in every major economy; and that is the limit of what can be serviced even at today’s aberrantly low interest rates.
As Milton Friedman famously observed, markets are ultimately not fooled by the money illusion. In this case, the illusion is that today’s sub-economic interest rates will last forever and that debt carrying capacity has been elevated accordingly.
Not true. Short-term interest rates may be temporarily and artificially pegged at the zero bound by central bankers, but at the end of the day debt carrying capacity is tethered by real economics and normalized costs of money and debt.
Accordingly, the central banks are now pushing on a string. The credit channel of monetary transmission is over and done. The only remaining effect of the residual level of money printing still underway is that ZIRP enables carry trade gamblers to drive financial asset prices ever higher, thereby setting up another thundering collapse of the financial bubbles being generated for the third time this century by the world’s central banks.
The second reason for no commodity price rebound is the monumental overhang of the malinvestments which have been made, especially since the 2008 crisis. That is obviously what is now pummelling the petroleum sector.
The huge expansion of high cost crude oil capacity—–in the shale patch, tar sands and deep off-shore—-was due to the aberrationally high price of oil and the inordinately cheap cost of capital which were generated during the last two decades by the global central banks. The above price chart for the WTI marker price of crude, for example, is what explains the eruption of shale oil production from 1 million bbls/day prior to the financial crisis to more than 4 million at present., not an alleged technological miracle called “fracking”.
However, the iron ore capacity expansion story is no less cogent. On the eve of the financial crisis, the Big Three miners—-Vale, BHP and Rio—had already doubled their mining capacity from 250 million tons annually at the turn of the century, to 195 million tons per quarter or 780 million tons annually.
But when prices soared to $180/ton in 2012, investment levels were drastically scaled-up even further. Currently, the Big Three have combined capacity of more than 1.1 billion tons annually that is not only in the investment pipeline, but is actually so far advanced that completion makes more sense than abandonment. Accordingly, not withstanding the massive over-supply already in the market, several hundred million more tons will compound the surplus and drive prices even closer to the out-of-pocket cash cost of production in the years immediately ahead.
The above depicted capacity expansion is a quintessential reflection of the manner in which false prices in the capital markets drive excessive and wasteful investment, and cause the crash following the credit driven boom to be all the more destructive. So the cliff-diving price action here is not just another commodity cycle, but instead is a proxy for the fracturing global credit bubble, led by China department.
During the course of its mad scramble to become the world’s export factory and then its greatest infrastructure construction site, China’s expansion of domestic credit broke every historical record and has ultimately landed in the zone of pure financial madness. To wit, during the 14 years since the turn of the century China’s total debt outstanding–including its vast, opaque, wild west shadow banking system—soared from $1 trillion to $25 trillion, and from 1X GDP to upwards of 3X.
But these “leverage ratios” are actually far more dangerous and unstable than the pure numbers suggest because the denominator—national income or GDP—-has been erected on an unsustainable frenzy of fixed asset investment. Accordingly, China’s so-called GDP of $9 trillion contains a huge component of one-time spending that will disappear in the years ahead, but which will leave behind enormous economic waste and monumental over-investment that will result in sub-economic returns and write-offs for years to come. Stated differently, China’s true total debt ratio is much higher than 3X currently reported due to the unsustainable bloat in its reported national income.
Nearly every year since 2008, in fact, fixed asset investment in public infrastructure, housing and domestic industry has amounted to nearly 50% of GDP. But that’s not just a case of extreme of growth enthusiasm, as the Wall Street bulls would have you believe. It’s actually indicative of an economy of 1.3 billion people who have gone mad digging, building, borrowing and speculating.
Nowhere is this more evident than in China’s vastly overbuilt steel industry, where capacity has soared from about 100 million tons in 1995 to upwards of 1.2 billion tons today. Again, this 12X growth in less than two decades is not just red capitalism getting rambunctious; its actually an economically cancerous deformation that will eventually dislocate the entire global economy. Stated differently, the 1 billion ton growth of China’s steel industry since 1995 represents 2X the entire capacity of the global steel industry at the time; 7X the size of Japan’s then world champion steel industry; and 10X the then size of the US industry.
Already, the evidence of a thundering break-down of China’s steel industry is gathering momentum. Capacity utilization has fallen from 95% in 2001 to 75% last year, and will eventually plunge toward 60%, resulting in upwards of a half billion tons of excess capacity. Likewise, even the manipulated and massaged financial results from China big steel companies have begin to sharply deteriorate. Profits have dropped from $80-100 billion RMB annually to 20 billion in 2013, and are now in the red; and the reported aggregate leverage ratio of the industry has soared to in excess of 70%.
But these are just mild intimations of what is coming. The hidden truth of the matter is that China would be lucky to have even 500 million tons of annual “sell-through” demand for steel to be used in production of cars, appliances, industrial machinery and for normal replacement cycles of long-lived capital assets like office towers, ships, shopping malls, highways, airports and rails. Stated differently, upwards of 50% of the 800 million tons of steel produced by China in 2013 likely went into one-time demand from the frenzy in infrastructure spending.
Indeed, the deformations are so extreme that on the margin China’s steel industry has been chasing its own tail like some stumbling, fevered dragon. Thus, demand for plate steel to build dry bulk carriers has soared, but the underlying demand for new bulk carrier capacity was, ironically, driven by bloated demand for the iron ore needed to make the steel to build China’s empty apartments and office towers and unused airports, highways and rails.
In short, when the credit and building frenzy stops, China will be drowning in excess steel capacity and will try to export its way out— flooding the world with cheap steel. A trade crisis will soon ensue, and we will shortly have the kind of globalized import quota system that was imposed on Japan in the early 1980s. Needless to say, the latter may stabilize steel prices at levels far below current quotes, but it will also mean a drastic cutback in global steel production and iron ore demand.
And that gets to the core component of the deformation arising from central bank fueled credit expansion and the drastic worldwide repression of interest rates and cost of capital. The 12X expansion of China’s steel industry was accompanied by an even more fantastic expansion of iron ore production, processing, transportation, port and ocean shipping capacity.
On the one hand, capacity could not grow at the breakneck speed of China’s initial ramp in steel production—so prices soared. And again, not just in the range of traditional cyclical amplitudes. As indicated above, prices rose from $20 per ton in the early 1990s to $180 per ton by 2012—meaning that vast windfall rents were earned on the difference between low cash costs on existing or recently constructed iron ore capacity and the soaring prices in spot and contract markets.
The reality of truly obscene current profits and the propaganda about endless growth in the miracle of red capitalism, combined with the cheap debt available in global capital markets, resulted in an explosion of iron ore mining capacity like the world has never before witnessed in any mineral industry.
Stated differently, the Big Three miners would never have expanded their capacity from 250 million tons to 1.1 billion tons in an honest free market. Nor would they have posted such egregious financial trends as have occurred over the past decade. To wit, even as the global iron ore (and also copper) boom gather steam in the run-up to the financial crisis, the three miners spent $55 billion on CapEx during the four years ending in 2007.
By contrast, during the four most recent years they spent 3.2X more or $175 billion. Not surprisingly, the residue on their balance sheets is unmistakable. Their combined debt went from about $12 billion in 2004 to more than $90 billion at present.
But now, prices will be driven down to the lowest marginal cost of supply, meaning that Big Three EBITDA will violently collapse, causing leverage ratios to soar and new CapEx to be drastically downsized. In turn, Caterpillar’s order book will take a giant hit, and so will its supply chain running all the way back to Peoria.
So the collapse of the mother of all commodity bubbles is virtually baked into the cake. As one industry CEO recently acknowledged, his company’s truly variable, cash cost of production is about $20 per ton and he will not hesitate to keep producing for positive variable profit. That means iron ore prices will also plunge far below the current $66 per ton quote now extant in the market.
In short, when the classical Austrians talked about “malinvestment” the pending disasters in the global steel and iron ore industries (and also mining equipment and other supplier industries) are what they had in mind. Except none of them could have imagined the fevered and irrational magnitudes of the deformations that have resulted from the actions of the mad money printers who now run the world’s central banks.
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Tags: "central banks", "crude oil", "david stockman", "iron ore", "peak debt", australia, brazil, bubble, canada, China, commodities, copper, deflation, demand, economy
Categories : economy
One of the ways that climate change is showing up already is by increasing the frequency of ‘so-called’ nuisance flooding. This isn’t the Biblical floods that the news widely reports, which are still relatively rare events, but the minor flooding that closes roads, compromises infrastructure (e.g. storm drains), and ends up in the basements of homes and businesses. I got two doses of this sort of flooding in a storage unit I had this year…
In any case, the main place where this phenomenon has really increased in frequency is along the coasts. The reason being that coastlines are facing the double whammy of heavier rains/storms and rising sea levels. The following graphic sums this up nicely.
NOAA has recently produced a report on the amount of increase in nuisance flooding along the continental United States’ three coastlines. The changes are not subtle. Since the 1960s, nuisance flooding has increased by between 300 and 925%, depending on location. Don’t you wish you could get this kind of returns on your investments? This isn’t all a function of climate change, but it is a function of our activities. In addition to climate related changes to rain and sea, many locations are also slowly sinking due to either the pumping of groundwater or loss of barrier islands as a knock on affect of how we manage rivers and coastlines.
The biggest losers so far are along the east coast, with Annapolis, Maryland going from an average of 3.8 nuisance flood days per year in 1957-1963 to now experiencing 39.3 days per year on average (2007-2013). More than a month under water per year? At what point are we going to have to simply cede these lands back to the oceans? The US is not alone in this. This same trend is happening all around the world.
Good thing the US Naval Academy is located here…
This trend is only going to get worse year after year as the sea levels continue to rise. All along the coasts, ‘nuisance floods’ that used to happen every 1-10 years now are happening 4 or more times a year. More frequent nuisance floods also means much greater chances of extreme flooding during storms as high winds cause more dangerous storm surges due to the higher sea levels. Along the west coast and in the north east winters are the most likely season for these floods. The rest of the east and gulf coasts are primarily inundated in the autumn. The full report can be found here (link).
Climate change is not about sudden catastrophe so much as it is about the drip, drip of Chinese water torture. How many times would you like to mop out your nicely finished basement or store?
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Tags: "climate change", "mark cochrane", "sea level rise", flooding, nuisance
Categories : climate change
David Korowicz was mentioned by Dave Kimble in a recent comment he left below Ugo Bardi’s Seneca cliff post, and I have heard Nicole Foss also mention him as an excellent systems analyst well worth following; so, seeing as I had not yet bothered to take the time to look him up, this morning I found a fascinating youtube film of him giving a lecture at the The New Emergency Conference.
David Korowicz documents the disturbing growth in the complexity of trade and financial networks and in the various types of infrastructure. He sees the collapse process as a system of re-enforcing feedbacks that cut investment in energy and R&D and cause supply chains and IT networks to break down.
David Korowicz is a physicist who studies the interactions between economics, energy, climate change, food security, supply chains, and complexity. He is on the executive of Feasta and an independent consultant. He is former head of research for The Ecology Foundation, and was recently appointed to the council of Comhar, Ireland’s Sustainable Development Partnership.
As an aside, but relevant to this piece, my friend Ted Trainer has had an article published about the simpler life on The Conversation you might all like to read (and support by commenting!)
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Tags: "David Korowicz", "food security", "limits to growth", "supply chains", "ted trainer", analysis, collapse, complexity, crash, energy, feedbacks, finance, infrastructure, investment, life, loops, networks, R&D, simpler, systems, trade
Categories : collapse, limits to growth
2014 is as good as over; while most people look back on the past year for world shaking events, achievements, and which celebrity got divorced, I as usual look to the future…. and 2015 could be the decisive year for Western Civilisation, not that some people ever notice mind you.
Christmas has a habit of bringing people nearer to you that you might not otherwise associate with. Since losing faith in humanity many years ago, I’m very choosy about whom I associate with, because people more often than not just depress me with their absolute lack of foresight. One such person who shall remain nameless proudly told me on Boxing Day about how he was going to demolish the house he’s lived in most of his life to build a two story 400 m² 6 bedroom McMansion with three phase airconditioning…… his excitement was palpable, and frankly I don’t even understand why he was showing his plans off to me, I was totally underwhelmed and it took all of my self control to not tell him what I thought of his stupid plans. Just to make matters worse, the building company he’s planning to use is American based, so the profits won’t even stay here in Australia. When I sarcastically mentioned that his 50 inch TV would be too small for such a house…. he agreed! I asked him if he realised that by having three phase power he would get a triple bill, likely attached to the three service fees I would guess such a connection would entail. It never occurred to him of course, ignorance is bliss… Be blowed if I would pay the utility $225 a quarter even before using a single one of their electrons. He had no idea of what I was talking about, and I can see him copping quarterly bills well in excess of $1000 in this idiotic plan.
What does this have to do with 2015? Well folks, it’s just amazing how many of the bloggers I follow are predicting this current oil price crash is the beginning of the deflationary spiral Nicole Foss has been predicting for years…. commenting on a recent post by her writing partner Ilargi, Nicole wrote on Facebook:
We’ve been saying this would happen for a long time, that oil prices would drop as demand falls on a move into economic depression. A temporary supply glut opens up, price support evaporates, prices fall to those of the lowest cost producer and all the expensive and complex production goes out of business. No one invests in exploration or drilling or production, or probably even maintenance, for years, meaning that supply will follow demand to the downside over time. Any kind of economic recovery way down the line will then be energy supply-constrained. First financial crisis buys you time in terms of peak oil, because you burn through remaining high energy profit ratio energy sources less quickly, but then it aggravates the situation later, but collapsing supply more quickly. We are headed into a much lower energy future, and that means life is going to change.
So you see why I think my non blood relation’s timing is way off! He of course is not the least bit interested in anything I have to say, I even discovered yesterday that he has completely disconnected me from his cyber existence, my grim readings obviously clashing with his future expectations. Buoyed by statements like “I can’t really overcapitalise in my suburb” and “property values can only go up where I live”, he was justifying everything in his own blissfully unaware mind that life was going to change alright, only it would be for the better. What’s a deflationary spiral he may well have asked, should he even have known to ask such a question… And stuff his three children’s future climate too! Ah well, you can’t save everybody, especially when they are unwilling to help themselves.
If the global economy unravels, then unemployment, underemployment, and fear will combine to reduce consumption. Investment and GDP will decline. The economy will deflate. Just like the 1930s. And Australia will not fare anywhere near as well this time as it did after GFC MkI when commodity prices were still high and Chinese demand was strong.
If the world economy deflates, fixed asset values will decline. Rental properties are especially vulnerable. Stagnant incomes, increasing unemployment, and credit card debt guarantee consumers will prioritize spending decisions based on urgent need: food, fuel, and then rent (or mortgage payments). This last Christmas binge could be the last. In periods of declining economic activity, rental property owners (houses, apartment buildings, supermarkets and so on) face potential bankruptcy because of higher vacancy rates. It will also become increasingly difficult for rents to keep up with maintenance costs.
Meanwhile, over at Zero Hedge, Tyler Durden wrote:
One key indicator of deflation that seems to be even more worrisome to investors, however, is global commodity prices and what commodity price weakness suggests for demand. Copper fell over 12% in 2014, largely due to slumping demand in China and other industrial economies. Natural gas prices have fallen more than 12% this year. And oil prices have fallen by over 40% due to a glut of new supply and weak demand growth in many developing economies. The International Energy Agency has cut its estimates for demand for crude five times in the past six months, The Wall Street Journal reports.
The negative impact on incomes due to the decline in oil prices is a global issue, with nations such as Russia, Nigeria and Venezuela in visible financial distress. The price of the Russian Ruble has declined in tandem with oil prices, raising concerns about whether Russia will be able to service its hard currency debt. But the decline in oil prices is more than just a supply phenomenon. The lack of growth in the demand for oil, coupled with rising supplies in the U.S. and elsewhere, has raised concerns about the overall health of the global economy.
We believe that the weakness in U.S. equity and debt markets stems from a more fundamental problem than concerns about future growth, namely that investors are once again starting to seriously question the disclosure from the largest banks and investment houses regarding their credit exposure to highly leveraged borrowers. This concern is evidenced by weakness in the equity market valuations of lenders with exposure to the oil sector as well as the recent changes in the relative position of spreads in the U.S.bond markets.
Click the link below to access the full copy of the note. Free registration is required. https://www.krollbondratings.com/show_report/1815
For an economy reliant on numbers coming from the commodity sectors (while all the other sectors are doing very poorly), Australia’s near term future looks a bit grim. Especially as we have a government whose only economic theory is to blame the one they just replaced for all its woes and get as many people on the dole queues as fast as possible. Then we have this:
Hmmmm don’t crashes occur in seven year cycles? Watch this space….
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Tags: "nicole foss", "tyler durden@, 2015, commodities, crash, cycle, debt, deflation, depression, economy, growth, oil, recession
Categories : economy
No matter what problem we look at today, regardless of scope or gender, demographic statistic or geographic location we can provide a solution; if we throw enough money at it…
And therein lies the actual problem.
The fundamental problem the human species faces today is the current monetary system. I submit that only by completely revamping the monetary system will we be successful as a species.
Currently the monetary system is controlled by a “for profit” Central Banking system. The major problem with this system is the idea of profit itself. Profit means “to obtain a financial advantage or benefit”. Unlike barter, the concept of profit necessitates a winner and a loser in any transaction. Most people are not aware that the current monetary system is a for profit system designed to create wealth and power for those that control the system, just as one would profit from the oil or manufacturing industry. Central banking is the business of controlling the monetary system to enrich only those that wield control of the system.
“Give me control of a nation’s money and I care not who makes its laws” ~ Mayer Amschel Bauer Rothschild
The business of banking rests on two pillars. One is foreclosure, the other is usury, or more commonly called interest.
When a man or company or Government takes a “loan” from a bank, the bank actually creates a new digital entry into the system under the borrower’s associated account. It is imperative to understand that this is a digital entry for new “never before been in existence” digital currency.
Regarding the business of foreclosure, if the “borrower” never pays the “loan” back, the bank can foreclose on an outstanding “loan” and then gains control of a tangible asset like a car or a property. Yet the fact is that the bank never risked anything to begin with. The digital currency created at the time of the “loan” is not a tangible thing. It doesn’t exist. It’s like getting the “blessing” of the Bank to go and purchase something. This is a simplification of the system but it is basically a correct understanding. This scheme has worked like a charm for them…
“They will be stripped of their rights and given a commercial value designed to make us a profit and they will be non the wiser, for not one man in a million could ever figure our plans and, if by accident one or two would figure it out, we have in our arsenal plausible deniability”. ~ Edward Mandell House
Regarding the business of usury, whenever a “loan” of non-existent currency is created there is also an interest charge built into the contract. When the borrower pays back the “loan” they are also required to pay back an interest charge that is over and above the newly created currency. The point to understand here is that the interest due was not created along with the new digital currency and thus a shortfall of currency is actually built into the system. Thus bankruptcy is a fundamental component of the current monetary system because there is always a shortage of currency. If every dollar of debt in existence today were to be paid back right now, all the interest would still be outstanding. This is the mathematical formula that has been used for centuries in order to steal tangible wealth from the actual creators of that wealth.
“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
Having said all that, you might be intrigued and start to gain the understanding that only the bankers can win, but you might also say “so what”? People should be able to profit, after all, profit is the motivating factor in our world.
I submit that the concept of profit is the fundamental core of what is destroying the human species. If a larger, stronger man takes control of another man and subjugates him simply because he can, that is tyranny, and we as a species have evolved to see that this ethically wrong. Now we as a species have to evolve our understanding of the current monetary system to see that we are being subjugated into continuing to propagate the greatest control mechanism ever developed on this planet.
Let’s play the “If” game for a second.
If profit was taken out of the equation; do you think that cancer would still be a major threat to our species?
If profit was not a requirement; do you think that we would be using oil as the fundamental energy source used throughout the world today?
If the concept of profit was not in the human consciousness; do you think that “health” centres would ever refuse to treat the ill? Or actual cures for diseases would be shelved by Big Pharma?
If profit was not the driving factor of agriculture; do you think that we could easily feed the population of the world?
If everyone on the planet never had to worry about shelter or having enough food to eat or clothes to wear, would having more than you need be a consideration?
The concept of “profit” is what is holding us back as a species. We have been indoctrinated into a short term “take what we can NOW” philosophy that is based on the fallacy of continuous growth and competition. I submit that we would be far better off if we forged our future by cultivating the creative use of our finite resources using a co-operative intellectual methodology.
Study after study has shown that the world’s hunger and housing problems could be solved very quickly if a certain amount of money where to be thrown at those two problems. Studies show ending world hunger would cost around 30 billion dollars per year (vs $684 billion for the 2010 U.S. military budget). The fact that we as a species have not eliminated hunger proves that this problem is actually being facilitated. Is that acceptable to you? If it is, then all of us (but the few of the elite at the top of the control pyramid) are doomed.
Profit stifles as much creativity as it generates. Just look at the alternate technologies that have been suppressed because they would have upset the current paradigm, technology such as almost free and truly sustainable energy and anti-gravity devices. If either of these technologies ever went main stream the oil economy would take a huge hit and there would be an immediate shift in the controlling power structure.
The concept of profit is the paradigm that must be shed in order for us to move forward as a compassionate, free and intelligent species. It is the concept of profit that is the shovel we use to dig our own graves.
“Problems are best solved not on the level where they appear to occur but on the next level above them…. Problems are best solved by transcending them and looking at them from a higher viewpoint. At the higher level, the problems automatically resolve themselves because of that shift in point of view, or one might see there was no problem at all.” ~David R. Hawkins
Abandoning just one concept, the concept of profit and our species will thrive for centuries to come.
For more ideas and a potential solution to economic subjugation, please visit Secondary Money System.
– David R. Hawkins. 2009. Healing and Recovery. Sedona, AZ; Veritas Publishing, p. 176.
This article is offered under Creative Commons license. It’s okay to republish it anywhere as long as attribution bio is included and all links remain intact.
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Tags: banking, core problem, creation, growth, loan, monetary, money, profit, usury
Categories : economy
Another guest post from our resident Climate Scientist, Mark Cochrane who has been too busy this year to write much for us… never good news of course, but it’s imperative we stay abreast of the news as the future unfolds.
Two papers now show that the collapse of the Western Antarctic ice sheet is a foregone conclusion. No matter what we do, that ice (equal to 4 m of sea level rise) is going to melt. We can accelerate the rate but we cannot slow it. It isn’t being melted from above, it is being lifted from below, allowing the ice to flow into the sea. There are no remaining impediments (e.g. ridges or mountains) to keep the ice sheet from collapsing completely, so the dominoes are falling whether we like it or not.
One study (Rignot et al. 2014 in Geophysical Research Letters) focused on the observed melting over the last few decades, while the other based their conclusions on computer modeling of the future decay of the ice sheet (Joughlin et al. 2014 Science). Having scientists confirm the same findings using different methods provides confidence that, although the timeline may change a bit, the main results are likely correct. Both studies put the minimum time for this collapse at 200 years, with the maximum time for the collapse being 500 or 900 years, respectively. Best case is a doubling of rates of sea level rise….
While having 200+ years until complete collapse may not sound like an urgent problem, it is. If the West Antarctic ice sheet collapse is certain then most if not all of Greenland will be right on its heels and even portions of the larger East Antarctic ice sheet will be pouring into the oceans. What this means is that not only will sea levels continue to rise, they will continue to rise at increasing rates. Most of humanity lives near the coastlines. We have bequeathed future generations with a legacy of ever shifting shorelines. Many of the world’s largest cities will either have to be abandoned, moved, or protected with massive sea walls that will rapidly become obsolescent as sea levels keep rising. Most goods are shipped by sea meaning that port cities are key. It should be interesting to see how we keep retrofitting docks around the world.
Where is all of this leading us? We have now reached 400 ppm CO2 in the atmosphere. Why is that important?
this level has not been seen on Earth for 3-5 million years, a period called the Pliocene. At that time, global average temperatures were 3 or 4C higher than today’s and 8C warmer at the poles. Reef corals suffered a major extinction while forests grew up to the northern edge of the Arctic Ocean, a region which is today bare tundra. (link)
Since we have no way of removing significant amounts of greenhouse gases from the atmosphere, this is the future that we have programmed into the Earth’s climate system. For those looking for future beach-front property, sea levels were 40 m higher than today. It will take hundreds, if not thousands, of years for all of this to play out so don’t move quite yet! The wildcard in our future will be the weather we experience. CO2 is now rising at about 75 times anything in the geological record so no one really knows what we will experience but chances are that it will not be a good experience in most places. ‘Climate’ is average weather (at least 30 years), meaning that seasons and weather patterns should be roughly stable or bounded over that time period. However, we are now changing the climate continuously so that trying to define ‘average’ weather over several decades doesn’t really make sense anymore than it would to buy your kid’s clothes based on their average height between ages 5 and 15.
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Tags: "climate change", "club of rome", "global warming", "mark cochrane", "sea level", ice, melt, rise, sheet, west antarctic
Categories : climate change