Unpacking Extinction Rebellion — Part II: Goals and Tactics

27 09 2019

Kim Hill

Kim Hill, Sep 19 · 16 min read

In Part I, the rebellion’s goal of transitioning to net-zero emissions was exposed as a campaign to save the capitalist economy and the fossil fuel industry. In Part II, we look into Extinction Rebellion’s demands for truth from government and a Citizens’ Assembly, their tactics, and the proposed solutions to the climate and ecological crisis.

Demand 1: that the government tell the truth about the climate crisis

What is the truth about the climate crisis? There are so many theories, debates and agendas regarding the significance of climate change, what caused it, and where it could lead, that it isn’t possible for anyone to make any claim to truth. Demanding truth from any government about such an abstract issue could lead to a propaganda campaign presenting only one side of the story, and the shutting down of debates and discussions that don’t align with the government’s version of the truth.

Governments don’t exist to serve the people and tell the truth. They exist to serve those in power, and lie. If elected representatives genuinely represented the people, the conditions that led to this point would never have happened, and there would be no need to make demands.

XR makes no demand to tell the truth about the causes of climate change and ecological collapse: endless economic growth, industrial agriculture, empire, wars, the extraction and burning of fossil fuels. It’s as though climate is a completely separate issue, which can be solved with some truth-telling and new technology that will allow all these industries to continue unabated.

Demanding “tell the truth by declaring a climate and ecological emergency” doesn’t make sense. Simply stating there is an emergency going on doesn’t lead to a spontaneous outburst of truth. More likely the opposite is the case: giving governments emergency powers leads to repression, and the silencing of inconvenient questions and truths.

This demand was changed in April, to include declaring a climate emergency, at around the same time the declaration was made in the UK. This suggests that the demands are fluid and can be adapted according to outside circumstances, and are being influenced by government policies. The core goals are not clear.

“Communicate the urgency for change” doesn’t specify what change. Again, the demand is vague and can easily be re-directed to mean anything at all. If the demand is to stop extracting fossil fuels, and stop land clearing, then it needs to say that. Communicating the urgency of reaching an unspecified goal sounds like an invitation for governments (and the corporate lobbyists in ‘the media’ and ‘other institutions’) to manufacture a crisis, create a state of panic in the populace, and take advantage of the chaos for profit. A well-documented tactic known as disaster capitalism, or the shock doctrine. As we’ve seen in Part I, this is exactly what has happened. The question of enabling the shock doctrine is raised, but not adequately addressed, on XR’s FAQ page. (The FAQ page has since been updated, with this question removed. The earlier version can be accessed at archive.org and some of the questions included, and the less-than-reassuring responses given, are quite revealing as to the true nature of the rebellion).

In a political environment where telling the truth about the government, or the ecological crisis, can get you thrown in jail, tortured or killed, demanding truth from government is naïve at best.

My main concern with this demand is that it is directed at the government. Is this really who we want to put our faith in as the authority on truth? This worldview, that we need to trust the government, rather than our own direct experience, leads to learned helplessness, disempowerment, total dependence on some higher authority. Given the lengths that governments are willing to go to hold on to power — violent repression of protests, unnecessary wars as a show of force — surely we’d be better off finding our own truths, through inquiry and discussion, rather than depend on any government to guide us.

There’s something Orwellian about this, it’s like a demand for a Ministry of Truth, that can give a government such power over our beliefs about ourselves and the world that we can really be convinced that Big Brother loves us, that net-zero emissions will save the planet, and that 2+2=5.

Virtue ethics

XR’s FAQ states: “Ultimately though, we are doing this because it is the right thing to do, in part we remain unattached to outcomes, meaning that although we hope we can save something of life on earth we try to stay motivated by action being the right thing to do (virtue ethics) rather than taking action because we think it will work (utilitarian ethics).”

So there is no goal, and no belief that the actions will be effective. Basically a way for people to feel like they’ve expressed their concerns, without actually changing anything. Compare the above quote to this one from Stratfor, a consultancy firm that advises governments on how to quell social movements: “Most authorities will tolerate a certain amount of activism because it is seen as a way to let off steam. They appease the protesters by letting them think that they are making a difference — as long as the protesters do not pose a threat. But as protest movements grow, authorities will act more aggressively to neutralize the organizers.” XR’s leaders have studied social movements, so should be well aware of this strategy. It’s almost as if the rebellion has been intentionally designed to be ineffective.

The decision to hold the largest protests, supposedly intended to disrupt business as usual in London, over Easter weekend, when absolutely no government business was taking place, further demonstrates the virtuousness of creating a spectacle rather than engaging in targeted and decisive actions.

Check out this grab from a live interview with XR founder Gail Bradbrook, on Sky News during the Easter weekend protests:

Bradbrook: “…the politicians, behind the scenes, including this current government, tell us that they need a social movement like ours to get social permission to do the necessary… We need people to focus on this emergency, and we need really big action.”

Interviewer: “Let’s be clear, you say that government politicians are saying to you, we need you to come to London [to protest]? You’ve got government ministers telling you that’s what they want?”

Bradbrook: “…I’ve met a couple of people who’ve talked with Theresa May’s advisors, and they’ve said, they do know how bad it is, and they need you guys to help. So, basically, we’re doing the job…”

So we have the government making demands that the rebels make demands of the government. The government leading a rebellion against itself. Is this a rebellion, or a government propaganda campaign? Who’s pulling the strings here?

Lack of goals might be virtuous, but it leaves the movement wide open to be used for the goals of whoever has the most power.

Proposed solutions

XR’s website offers a number of possible solutions to the ecological crisis. Let’s unpack what they each entail.

The Climate Mobilization (TCM, based in the US) advocates “an emergency restructuring of a modern industrial economy, accomplished at rapid speed. It involves the vast majority of citizens, the utilization of a very high proportion of available resources, and impacts all areas of society. It is nothing less than a government-coordinated social and industrial revolution.” This is a plan to expand the industrial system and increase resource use, requiring the government to give money to private interests, and clearly not planning to shut down the industries that are causing extinction. There’s nothing here about protecting nature, reversing economic growth, defending human rights, reducing consumption, or breaking corporate dominance. Everything TCM advocates is the exact opposite of what’s needed.

This plan will likely require people to work longer hours for less pay, accept higher taxes, reduced services, and increased government control of citizens, leading to a greatly reduced quality of life. The level of austerity inherent in “the use of World War II–type policy instruments to transform the economy on an emergency basis, including a substantially increased federal government role in planning and steering industrial investment, providing jobs, allocating energy and materials, and managing demand” when a large part of the population are already suffering unbearable levels of poverty, trauma, ill-health, violence, repression, and soul-crushing bureaucracy, could lead to a complete collapse of the social order, to the point of civil war.

If I’m going to live through a revolution, I’d prefer one that overturned the entire political and economic system that the US empire stands for, and definitely not one that has the faceless bureaucracy of the US government leading it. I can’t imagine anything worse. This is the same government that is on track to achieve ‘full spectrum dominance’, meaning total military control of the entire planet — land, sea, air and space — in service to corporate profits, by 2020.

TCM’s report Leading the Public into Emergency Mode claims that “The climate crisis is, far and away, our top national security threat, top public health threat, and top threat to the global economy.” So the US military, one of the most environmentally destructive forces on the planet, which burns through more than 10 million gallons of oil every day, and $1.7million every minute, and the economy, which is the process of converting the living world into disposable commodities, are apparently under threat from the devastation they caused. The Climate Mobilization takes the side of the military and the economy, and advocates economic and military expansionas an appropriate response. Instead of acknowledging that industrial activity is damaging the natural environment, we’re redirected to believe that natural forces in the form of changing weather patterns are damaging the economy. Nature becomes the feared and hated enemy. This is the opposite of environmentalism.

The rhetoric seems to be calling for war, but war on who, or what? Clearly not on the industries that are burning the planet. And the changing condition of the atmosphere does not make for a tangible adversary. Given that the military and economy exist to maintain the power and control of the wealthy, at the expense of the poor and the natural world, this leaves the victims of imperial wars and the capitalist system, and the living world itself, as the enemies to be defeated. Analysis presented in the video Selling Extinction suggests that initiating wars to maintain the global economic dominance of the US is indeed the goal of TCM.

“We are calling on America to lead the world in heroic, world-saving action!” Given the history of what happens when the US claims to be heroically leading and saving the world, I’d really rather you didn’t.

The parallels between TCM’s rhetoric and this definition of fascism are alarming. “Fascism is a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition.” (Merriam Webster)

Extinction Rebellion distributes a proportion of the money it receives in donations to The Climate Mobilization.

Beyond Zero Emissions claims that “all sectors of the Australian economy can decarbonise, repower and benefit from the transition to zero emissions.” Economic benefits again. No environmental benefits. Again.

“Manufacturers can replace fossil fuels with renewable electricity and eliminate up to 8% of Australian emissions,” which seems hardly worth the effort, given the emissions from manufacturing the new infrastructure required for the transition probably more than makes up for the reduction. Even if it was possible to eliminate emissions from the process entirely, the manufacturing of cement, plastics, chemicals, and all the other unnecessary toxic crap continues, and continues polluting and driving extinction.

A shift to 100% electric vehicles would eliminate at least 6% of Australia’s greenhouse emissions.” Or just stop making cars.

And also, why is a rebellion against the UK government that claims to be concerned about extinction, endorsing a think-tank associated with the Australian manufacturing industry? How is that even connected? Of course it’s not going to state the obvious solution to the problem, which is to stop manufacturing stuff.

Green New Deal Group lists as its first principle “A massive environmental transformation of the economy to tackle the triple crunch of the financial crisis, climate change and insecure energy supplies.” The primary concern here is saving the economy, and supplying more energy to industry. Not about protecting the natural world. Rapid Transition Alliance and One Million Climate Jobs also promote the economic growth agenda, and also have nothing to say about reversing the trend of environmental destruction.

The Breakthrough Institute is where the proposed solutions get even more disturbing. “The Breakthrough Institute is a global research center that identifies and promotes technological solutions to environmental and human development challenges.” It advocates for nuclear power, fracking, and increasing gas extraction (collectively referred to as ‘clean energy’), genetic modification, lab-grown food, “significantly higher levels of energy consumption,” urbanization, and economic growth. It promotes technology-dependent, large-scale industrial food systems, increased use of pesticides and synthetic fertilisers, and moving rural people off their land and into service and manufacturing jobs (where I guess they’d be making the chemicals to poison the land that’s been stolen from them). Basically severing humans from any relationship with the natural world. And accelerating the process of destroying every living being. And no I’m not making any of this up. It’s all listed on their website.

This is the future that Extinction Rebellion is envisioning. These are the solutions that millions of people around the world have been marching in the streets to demand of their governments. Not to cut back on fossil fuel use. Not to protect wild nature. Not to repair and regenerate the land. Not to do anything at all to address the causes of climate change and extinction. Instead to save the very system that continues to wreak havoc on the land, sea, and air, and kill us off at a rate of 200 species a day.

You might want to take a moment to let that sink in. I don’t know about you, but I’m feeling the need to go outside, and scream.

Not one of these proposed solutions contains any mention of the causes of extinction and climate change, or any plan to address these issues at all. The main drivers of extinction are war, forest destruction, pesticide use, toxic chemicals, plastics, mining, road building, synthetic fertilisers, broad-scale agriculture, industrial fishing, dams, and urban sprawl. In the plan for economic transformation, decarbonisation, and green growth, these processes are not just allowed to continue, but ramped up. There’s no mention of indigenous sovereignty, rights of nature, human or environmental health, resilience, autonomy, democracy, community. These concepts have no place in the New Climate Economy.

Something worth noting about these proposed solutions is that they are completely out of touch with the reality of the world we live in. None of them address any of the predicaments that are interconnected with the climate issue they claim to solve (and they’re not even addressing that one). Millions of refugees are fleeing conflict zones. Factory farming and animal testing enslave living beings. Propaganda, surveillance and censorship are instilling fear and unravelling our communities, our autonomy, and our ability to think. Addiction, violence, household debt, homelessness and chronic illness impact more and more people, disproportionately affecting women, people of colour and the poor. 45 million people are in slavery. Free trade agreements give corporations power over sovereign nations. Six men have as much wealth as half the world’s population. Indigenous people continue to be massacred and forced to leave their homelands. Many people in Western society are so severely traumatised by this culture that the resulting anxiety and depression leave them barely able to function.

Under XR’s proposed plan, all of this, all of us, the entirety of life on this planet, is nothing but carbon, nothing more than a business opportunity, a resource to be traded, and converted into money.

Demand 3: A Citizens’ Assembly

A citizens’ assembly. A way to bypass the democratic process so the net-zero plan can be enacted without deliberation by our elected representatives. Extinction Rebellion claims that we can’t trust the democratic process because it is corrupted by corporate influence. Yet they want to keep it in place, and allow the corporate corruption to continue.

A Citizens’ Assembly is no less corruptible than the current system. The assembled citizens are not a blank slate, open to all possibilities. They don’t have magic powers that can solve all the world’s problems. They have been exposed to as much propaganda and marketing as everyone else. And they definitely won’t be given the opportunity to discuss any possibilities that aren’t in keeping with the corporate-led plan that is already unfolding.

The experts advising the citizens will quite likely be the same people who have already been advising the government on the transition. They are engineers, energy industry experts, economists, and representatives of the fossil fuel and finance industries. Not conservationists, farmers, land defenders, community activists, or people who will be affected by the new industries. Definitely not anyone who speaks on behalf of nonhuman life and future generations. This is because the transition to net-zero is all about expanding the economy and the energy industry. It’s not about addressing ecological collapse. The assembly won’t be advised by experts in land regeneration, human ecology, indigenous lifeways, permaculture design, decolonisation, de-growth, mutual aid, alternative economic and political systems, autonomous development, or participatory democracy.

The plan on how the UK will achieve the transition to net-zero has already been set, and was discussed in Part I of this series. You can read all 277 pages of it here. It makes no mention of being thrown out so these decisions can instead be made by a bunch of randos. The Business, Energy, and Industrial Strategy Committee has suggested that this plan “is likely to form the basis of the Citizens’ Assembly discussions,” which doesn’t give the citizens any space to suggest anything outside of these parameters. And yes, the Citizens’ Assembly is led by the Business, Energy and Industrial Strategy (BEIS) Committee, because, yes, it’s all about business, energy and industry. Not climate. Not extinction.

“The BEIS Committee has recently held evidence sessions (on Tuesday 18 June and Wednesday 8 May) with witnesses including Extinction Rebellion, WWF, Committee on Climate Change and other stakeholders on the net zero target and actions needed to achieve net zero emissions. The hearings are part of the Committee’s ongoing work on the Clean Growth Strategy and complement its current inquiries on financing energy infrastructureand on energy efficiency. The Committee has also carried out inquiries on Carbon Capture Usage and Storage and on Electric Vehicles.”

In case you weren’t clear on what all this rebelling is for, it’s growth, finance, infrastructure, efficiency, carbon capture, and cars. The XR representatives are more than happy to be consulted and included in these plans. So much for ‘rebel for life’.

The only concerns expressed by XR leadership about this proposal are that it isn’t legally binding, and doesn’t let the citizens set the timeline for the transition. They have made no objections to what the plan actually involves.

It’s remarkable that XR’s website goes to great lengths to describe the sortition process, and their vision for how the assembly will be run, but says absolutely nothing about what net-zero means or how it might be achieved. What isn’t said tells you a whole lot more that what is.

A mass movement of this scale has the capacity to overthrow the existing system and create a genuinely equitable, sustainable and eco-centric society in its place. But it’s not doing that. It’s instead handing over more power to governments and corporations, with the small concession of giving citizens some limited say in how this happens.

An outcome of the Citizens’ Assembly will be general public acceptance of the decisions made. This will effectively shut down any further debate on the issue, or any consideration of alternative plans, as the citizen delegates represent all of us. Resistance is neutralised.

Demanding government leadership and co-ordination takes away power from communities to make their own decisions and plans. The rebels could, if they chose, hold their own Citizens’ Assembly, or many regional assemblies, with no input from the government, and implement their own plans. This would take back power from government and corporations, and put it in the hands of the people. Yet XR has made a statement actively discouraging regional assemblies, wanting to instead focus on the national assembly.

The rebels could be engaging in prefigurative politics and municipalism, and working towards secession for regional independence, building the local structures of participatory democracy, mutual aid and local economies that can take the place of the global capitalist system. The rebellion could join forces with Symbiosis, “a confederation of community organizations across North America, building a democratic and ecological society from the ground up.”

This brings us to the aim of rebellion: to gain concessions from those in power, rather than to overthrow the entire system. A movement that aims to keep the economic system in place can never address the root cause of ecological collapse, because it is the economy itself that needs to go. A transition to a new structure, that allows business as usual to continue under a new banner of decarbonisation, has about as much effect as covering the industrial system in a layer of green paint and calling it eco-friendly.

Here’s a couple quotes from old dead dudes to help guide the rebels into doing something more useful.

“This country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of the existing Government, they can exercise their constitutional right of amending it or their revolutionary right to dismember or overthrow it.” — Abraham Lincoln

“We need a revolution every 200 years, because all governments become stale and corrupt after 200 years.” — Ben Franklin

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Part III will explore the history and corporate manipulation of the climate movement, and the endgame of climate action: The Fourth Industrial Revolution.





Awakening From The Matrix

30 08 2018

HOW could I ignore this article for this blog…..!

Society Is Made Of Narrative. Realizing This Is Awakening From The Matrix.

Go to the profile of Caitlin Johnstone

In the movie The Matrix, humans are imprisoned in a virtual world by a powerful artificial intelligence system in a dystopian future. What they take to be reality is actually a computer program that has been jacked into their brains to keep them in a comatose state. They live their whole lives in that virtual simulation, without any way of knowing that what they appear to be experiencing with their senses is actually made of AI-generated code.

Life in our current society is very much the same. The difference is that instead of AI, it’s psychopathic oligarchs who are keeping us asleep in the Matrix. And instead of code, it’s narrative.

Society is made of narrative like the Matrix is made of code. Identity, language, etiquette, social roles, opinions, ideology, religion, ethnicity, philosophy, agendas, rules, laws, money, economics, jobs, hierarchies, politics, government, they’re all purely mental constructs which exist nowhere outside of the mental noises in our heads. If I asked you to point to your knee you could do so instantly and wordlessly, but if I asked you to point to the economy, for example, the closest you could come is using a bunch of linguistic symbols to point to a group of concepts. To show me the economy, you’d have to tell me a story.

Anyone who has ever experienced a moment of mental stillness knows that without the chatter, none of those things are part of your actual present experience. There is no identity, language, etiquette, social roles, opinions, ideology, religion, ethnicity, philosophy, agendas, rules, laws, money, economics, jobs, hierarchies, politics or government in your experience without the mental chatter about those things. There’s not even a “you” anywhere to be found, because it turns out that that’s made of narrative, too.

Without mental narrative, nothing is experienced but sensory impressions appearing to a subject with no clear shape or boundaries. The visual and auditory fields, the sensation of air going in and out of the respiratory system, the feeling of the feet on the ground or the bum in the chair. That’s it. That’s more or less the totality of life minus narrative.

When you add in the mental chatter, however, none of those things tend to occupy a significant amount of interest or attention. Appearances in the visual and auditory field are suddenly divided up and labeled with language, with attention to them determined by whichever threatens or satisfies the various agendas, fears and desires of the conceptual identity construct known as “you”. You can go days, weeks, months or years without really noticing the feeling of your respiratory system or your feet on the ground as your interest and attention gets sucked up into a relationship with society that exists solely as narrative.

“Am I good enough? Am I doing the right thing? Oh man, I hope what I’m trying to do works out. I need to make sure I get all my projects done. If I do that one thing first it might save me some time in the long run. Oh there’s Ashley, I hate that bitch. God I’m so fat and ugly. If I can just get the things that I want and accomplish my important goals I’ll feel okay. Taxes are due soon. What’s on TV? Oh it’s that idiot. How the hell did he get elected anyway? Everyone who made that happen is a Nazi. God I can’t wait for the weekend. I hope everything goes as planned between now and then.”

On and on and on and on. Almost all of our mental energy goes into those mental narratives. They dominate our lives. And, for that reason, people who are able to control those narratives are able to control us.

And they do.

Most people try to exert some degree of control over those around them. They try to influence how those in their family, social and employment circles think of them by behaving and speaking in a certain way. Family members will spend their lives telling other family members over and over again that they’re not as smart/talented/good as they think they are to keep them from becoming too successful and moving away. Romantic partners will be persuaded that they can never leave because no one else will ever love them. To varying degrees, they manipulate the narratives of individuals.

Then there are the people who’ve figured out that they can actually take their ability to influence the way people think about themselves and their world and turn it into personal profit. Cult leaders convince followers to turn over their entire lives in service to them. Advertisers convince consumers that they have a problem or deficiency that can only be solved with This Exciting New Product™. Ambitious rat race participants learn how to climb the corporate ladder by winning favor with the right people and inflicting small acts of sabotage against their competing peers. Ambitious journalists learn that they progress much further in their careers by advancing narratives that favor the establishment upon which the plutocrats who own the big media companies have built their kingdoms. They manipulate the narratives of groups.

And then, there are the oligarchs. The master manipulators. These corporate kings of the modern world have learned the secret that every ruler since the dawn of civilization has known: whoever controls the narratives that are believed by a society is the controller of that society. Identity, language, etiquette, social roles, opinions, ideology, religion, ethnicity, philosophy, agendas, rules, laws, money, economics, jobs, hierarchies, politics, government: all mental constructs which only influence society to the extent that they are believed and subscribed to by a significant majority of the collective. If you have influence over the things that people believe about those mental constructs, you have influence over society. You rule it. The oligarchs manipulate the narratives of entire societies.

This is why there have been book burnings, heretic burnings, and executions for mocking the emperor throughout history: ideas which differ from the dominant narratives about what power is, how money works, who should be in charge and so on are threatening to a ruler’s power in the exact same way that an assassin’s dagger is. At any time, in any kingdom, the people could have decided to take the crown off of their king’s head and place it upon the head of any common beggar and treat him as the new king. And, in every meaningful way, he would be the new king. The only thing preventing this from happening was dominant narratives subscribed to by the society at the time about Divine Right, fealty, loyalty, noble blood and so on. The only thing keeping the crown on a king’s head was narrative.

The exact same thing remains true today; the only thing that has changed is the narratives the public subscribe to. Because of what they are taught in school and what the talking heads on their screens tell them about their nation and their government, most people believe that they live in a relatively free democracy where accountable, temporary power is placed in the hands of a select few based on a voting process informed by the unregulated debate of information and ideas. Completely separate from the government, they believe, is an economy whose behavior is determined by the supply and demand of consumers. In reality, economics, commerce and government are fully controlled by an elite class of plutocrats, who also happen to own the media corporations which broadcast the information about the world onto people’s screens.

Control the narratives of economics and commerce, and you control economics and commerce. Control the narratives about politics and government, and you control politics and government. This control is used by the controllers to funnel power to the oligarchs, in this way effectively turning society into one giant energy farm for the elite class.

But it is possible to wake up from that narrative Matrix.

It isn’t easy, and it doesn’t happen overnight. It takes work. Inner work. And humility. Nobody likes acknowledging that they’ve been fooled, and the depth and extent to which we’ve all been fooled is so deeply pervasive it can be tempting to decide that the work is complete far before one is actually free. Mainstream American liberals think they’re clear-eyed because they can see the propaganda strings being pulled by Fox and Donald Trump, and mainstream American conservatives think they’re clear-eyed because they can see the propaganda strings being pulled by MSNBC and the Democrats, but the propaganda strings on both trace back to the same puppet master. And seeing that is just the beginning.

But, through sincere, humble research and introspection, it is possible to break free of the Matrix and see the full extent to which you and everyone you know has been imprisoned by ideas which have been programmed into social consciousness by the powerful. Not just in our adult lives, but ever since our parents began teaching us how to speak, think and relate to the world. Not just in the modern world, but as far back as history stretches to when the power-serving belief systems of societal structure and religion were promoted by kings and queens of old. All of society, and all of ourselves, and indeed all of the thoughts in our heads, have been shaped by those in power to their benefit. This is the reality that we were born into, and our entire personality structure has been filtered through and shaped by it.

For this reason, escaping from the power-serving propaganda Matrix necessarily means becoming a new creature altogether. The ideas, mental habits and ways of relating to the world which were formed in the Matrix are only useful for moving around inside of it. In order to relate to life outside of the power-promulgated narratives which comprise the very fabric of society, you’ve got to create a whole new operating system for yourself in order to move through life independently of the old programming designed to keep you asleep and controlled.

So it’s hard work. You’ll make a lot of mistakes along the way, just like an infant slowly learning to walk. But, eventually, you get clear of the programming.

And then you’re ready to fight.

Because at some point in this process, you necessarily come upon a deep, howling rage within. Rage at the oligarchic manipulators of your species, yes, but also rage against manipulation in all its forms. Rage against everyone who has ever tried to manipulate your narrative, to make you believe things about yourself or make other people believe things about you. Rage against anyone who manipulates anyone else to any extent. When your eyes are clear manipulation stands out like a black fly on a white sheet of paper, and your entire system has nothing to offer it but revulsion and rejection.

So you set to work. You set to work throwing all attempts to manipulate you as far away from yourself as possible, and expunging anyone from your life who refuses to stop trying to control your narrative. Advertising, mass media propaganda, establishment academia, everything gets purged from your life that wants to pull you back into the Matrix.

And they will try to pull you back in. Because our narratives are so interwoven and interdependent with everyone else’s, and so inseparable from our sense of ourselves, your rejection of the narrative Matrix will present as an existential threat to many of your friends and loved ones. You will see many people you used to trust, many of them very close to you, suddenly transform into a bunch of Agent Smiths right in front of your eyes, and they will shame you, guilt you, throw every manipulation tool they have at you to get you to plug the jack back into your brain. But because your eyes are clear, you’ll see it all. You won’t be fooled.

And then all you’ll want is to tear down the Matrix from its very foundations and plunge its controllers into irrelevance. You will set to work bringing down the propaganda prison that they have built up around your fellow humans in any way you can, bolt by bolt if you have to, because you know from your own experience that we are all capable of so much more than the puny gear-turning existence they’ve got everyone churning away at. You will despise the oligarchs for the obscene sacrilege that they have inflicted upon human majesty out of greed and insecurity, and you will make a mortal enemy of the entire machine that they have used to enslave our species.

And, because their entire kingdom is built upon maintaining the illusion of freedom and democracy, all they will have to fight back against you is narrative. They’ll try to shame you into silence by calling you a conspiracy theorist, they’ll have their media goons and manipulators launch smear campaigns against you, but because your eyes are clear, none of that will work. They’ve got one weapon, and it doesn’t work on you.

And you will set to work waking up humanity from the lie factory, using whatever skills you have, weakening trust in the mass media propaganda machine and opening eyes to new possibilities. And while doing so, you will naturally shine big and bright so the others can find you. And together, we’ll not only smash the narratives that imprison us like a human caterpillar swallowing the narrative bullshit and forcing it into the mouth of the next slave, but we’ll also create new narratives, better narratives, healthier narratives, for ourselves and for each other, about how the world is and what we want it to be.

Because here’s the thing: since it’s all narrative, anything is possible. Those who see this have the ability to plunge toward health and human thriving without any regard for the made-up reasons why such a thing is impossible, and plant seeds of light which sprout in unprecedented directions that never could have been predicted by someone plugged into to establishment how-it-is stories. Together, we can determine how society will be. We can re-write the rules. We are re-writing the rules. It’s begun already.

Out of the white noise of a failing propaganda machine, a new world is being born, one that respects the autonomy of the individual and their right to self-determination. One that respects our right to collaborate on large scales to create beautiful, healthy, helpful systems without the constant sabotage and disruption of a few power-hungry psychopaths who would rather rule than live. One that respects our right to channel human ingenuity into harmony and human thriving instead of warfare and greed. One that respects our right to take what we need, not just to survive but to thrive, and return it to the earth for renewal. One that respects the sovereign boundaries of not just ourselves and each other, but of the planet spaceship that we live in.

Unjack your cortex fully from the fear-soaked narratives of insanity, and let the true beauty of our real world flood your senses. Let the grief of what we have unknowingly done send you crashing to your knees in sorrow. And when you’re ready, stand up. We have much work to do.





March 15th 2017

27 02 2017

Published on 25 Feb 2017

Former White House Budget Director David Stockman drops a bomb in his latest interview by saying, “I think what people are missing is this date, March 15th 2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

Stockman also predicts very positive price moves for gold and silver as a result of the coming budget calamity…… but zero mention of the oil problems. Typical economist, almost certainly has no understanding of thermodynamics.





Steve Keen exposes next global economic shockwaves

18 01 2017

Most of DTM’s readers will know this, but as it’s rather well done and amusing to boot, here it is anyway….. some lighthearted relief.





Negative Interest Rates and the War on Cash (1)

5 09 2016

Nicole Foss, one of my gurus, has not written much since going on a world speaking tour. This article, split into a four part series by Raul Ilargi of the Automatic Earth where this was first posted because of its length, is so important it must be widely shared….. people must wake up to what the powers that be are up to in the vain attempt of keeping business as usual going in the increasingly obvious Limits to Growth wall we are approaching at very high speed…..

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nicolefoss

Nicole Foss

As momentum builds in the developing deflationary spiral, we are seeing increasingly desperate measures to keep the global credit ponzi scheme from its inevitable conclusion. Credit bubbles are dynamic — they must grow continually or implode — hence they require ever more money to be lent into existence. But that in turn requires a plethora of willing and able borrowers to maintain demand for new credit money, lenders who are not too risk-averse to make new loans, and (apparently effective) mechanisms for diluting risk to the point where it can (apparently safely) be ignored. As the peak of a credit bubble is reached, all these necessary factors first become problematic and then cease to be available at all. Past a certain point, there are hard limits to financial expansions, and the global economy is set to hit one imminently.

Borrowers are increasingly maxed out and afraid they will not be able to service existing loans, let alone new ones. Many families already have more than enough ‘stuff’ for their available storage capacity in any case, and are looking to downsize and simplify their cluttered lives. Many businesses are already struggling to sell goods and services, and so are unwilling to borrow in order to expand their activities. Without willingness to borrow, demand for new loans will fall substantially. As risk factors loom, lenders become far more risk-averse, often very quickly losing trust in the solvency of of their counterparties. As we saw in 2008, the transition from embracing risky prospects to avoiding them like the plague can be very rapid, changing the rules of the game very abruptly.

Mechanisms for spreading risk to the point of ‘dilution to nothingness’, such as securitization, seen as effective and reliable during monetary expansions, cease to be seen as such as expansion morphs into contraction. The securitized instruments previously created then cease to be perceived as holding value, leading to them being repriced at pennies on the dollar once price discovery occurs, and the destruction of that value is highly deflationary. The continued existence of risk becomes increasingly evident, and the realisation that that risk could be catastrophic begins to dawn.

Natural limits for both borrowing and lending threaten the capacity to prolong the credit boom any further, meaning that even if central authorities are prepared to pay almost any price to do so, it ceases to be possible to kick the can further down the road. Negative interest rates and the war on cash are symptoms of such a limit being reached. As confidence evaporates, so does liquidity. This is where we find ourselves at the moment — on the cusp of phase two of the credit crunch, sliding into the same unavoidable constellation of conditions we saw in 2008, but on a much larger scale.

From ZIRP to NIRP

Interest rates have remained at extremely low levels, hardly distinguishable from zero, for the several years. This zero interest rate policy (ZIRP) is a reflection of both the extreme complacency as to risk during the rise into the peak of a major bubble, and increasingly acute pressure to keep the credit mountain growing through constant stimulation of demand for borrowing. The resulting search for yield in a world of artificially stimulated over-borrowing has lead to an extraordinary array of malinvestment across many sectors of the real economy. Ever more excess capacity is being built in a world facing a severe retrenchment in aggregate demand. It is this that is termed ‘recovery’, but rather than a recovery, it is a form of double jeopardy — an intensification of previous failed strategies in the hope that a different outcome will result. This is, of course, one definition of insanity.

Now that financial crisis conditions are developing again, policies are being implemented which amount to an even greater intensification of the old strategy. In many locations, notably those perceived to be safe havens, the benchmark is moving from a zero interest rate policy to a negative interest rate policy (NIRP), initially for bank reserves, but potentially for business clients (for instance in Holland and the UK). Individual savers would be next in line. Punishing savers, while effectively encouraging banks to lend to weaker, and therefore riskier, borrowers, creates incentives for both borrowers and lenders to continue the very behaviour that set the stage for financial crisis in the first place, while punishing the kind of responsibility that might have prevented it.

Risk is relative. During expansionary times, when risk perception is low almost across the board (despite actual risk steadily increasing), the risk premium that interest rates represent shows relatively little variation between different lenders, and little volatility. For instance, the interest rates on sovereign bonds across Europe, prior to financial crisis, were low and broadly similar for many years. In other words, credit spreads were very narrow during that time. Greece was able to borrow almost as easily and cheaply as Germany, as lenders bet that Europe’s strong economies would back the debt of its weaker parties. However, as collective psychology shifts from unity to fragmentation, risk perception increases dramatically, and risk distinctions of all kinds emerge, with widening credit spreads. We saw this happen in 2008, and it can be expected to be far more pronounced in the coming years, with credit spreads widening to record levels. Interest rate divergences create self-fulfilling prophecies as to relative default risk, against a backdrop of fear-driven high volatility.

Many risk distinctions can be made — government versus private debt, long versus short term, economic centre versus emerging markets, inside the European single currency versus outside, the European centre versus the troubled periphery, high grade bonds versus junk bonds etc. As the risk distinctions increase, the interest rate risk premiums diverge. Higher risk borrowers will pay higher premiums, in recognition of the higher default risk, but the higher premium raises the actual risk of default, leading to still higher premiums in a spiral of positive feedback. Increased risk perception thus drives actual risk, and may do so until the weak borrower is driven over the edge into insolvency. Similarly, borrowers perceived to be relative safe havens benefit from lower risk premiums, which in turn makes their debt burden easier to bear and lowers (or delays) their actual risk of default. This reduced risk of default is then reflected in even lower premiums. The risky become riskier and the relatively safe become relatively safer (which is not necessarily to say safe in absolute terms). Perception shapes reality, which feeds back into perception in a positive feedback loop.

 

The process of diverging risk perception is already underway, and it is generally the states seen as relatively safe where negative interest rates are being proposed or implemented. Negative rates are already in place for bank reserves held with the ECB and in a number of European states from 2012 onwards, notably Scandinavia and Switzerland. The desire for capital preservation has led to a willingness among those with capital to accept paying for the privilege of keeping it in ‘safe havens’. Note that perception of safety and actual safety are not equivalent. States at the peak of a bubble may appear to be at low risk, but in fact the opposite is true. At the peak of a bubble, there is nowhere to go but down, as Iceland and Ireland discovered in phase one of the financial crisis, and many others will discover as we move into phase two. For now, however, the perception of low risk is sufficient for a flight to safety into negative interest rate environments.

This situation serves a number of short term purposes for the states involved. Negative rates help to control destabilizing financial inflows at times when fear is increasingly driving large amounts of money across borders. A primary objective has been to reduce upward pressure on currencies outside the eurozone. The Swiss, Danish and Swedish currencies have all been experiencing currency appreciation, hence a desire to use negative interest rates to protect their exchange rate, and therefore the price of their exports, by encouraging foreigners to keep their money elsewhere. The Danish central bank’s sole mandate is to control the value of the currency against the euro. For a time, Switzerland pegged their currency directly to the euro, but found the cost of doing so to be prohibitive. For them, negative rates are a less costly attempt to weaken the currency without the need to defend a formal peg. In a world of competitive, beggar-thy-neighbour currency devaluations, negative interest rates are seen as a means to achieve or maintain an export advantage, and evidence of the growing currency war.

Negative rates are also intended to discourage saving and encourage both spending and investment. If savers must pay a penalty, spending or investment should, in theory, become more attractive propositions. The intention is to lead to more money actively circulating in the economy. Increasing the velocity of money in circulation should, in turn, provide price support in an environment where prices are flat to falling. (Mainstream commentators would describe this as as an attempt to increase ‘inflation’, by which they mean price increases, to the common target of 2%, but here at The Automatic Earth, we define inflation and deflation as an increase or decrease, respectively, in the money supply, not as an increase or decrease in prices.) The goal would be to stave off a scenario of falling prices where buyers would have an incentive to defer spending as they wait for lower prices in the future, starving the economy of circulating currency in the meantime. Expectations of falling prices create further downward price pressure, leading into a vicious circle of deepening economic depression. Preventing such expectations from taking hold in the first place is a major priority for central authorities.

Negative rates in the historical record are symptomatic of times of crisis when conventional policies have failed, and as such are rare. Their use is a measure of desperation:

First, a policy rate likely would be set to a negative value only when economic conditions are so weak that the central bank has previously reduced its policy rate to zero. Identifying creditworthy borrowers during such periods is unusually challenging. How strongly should banks during such a period be encouraged to expand lending?

However strongly banks are ‘encouraged’ to lend, willing borrowers and lenders are set to become‘endangered species’:

The goal of such rates is to force banks to lend their excess reserves. The assumption is that such lending will boost aggregate demand and help struggling economies recover. Using the same central bank logic as in 2008, the solution to a debt problem is to add on more debt. Yet, there is an old adage: you can bring a horse to water but you cannot make him drink! With the world economy sinking into recession, few banks have credit-worthy customers and many banks are having difficulties collecting on existing loans.
Italy’s non-performing loans have gone from about 5 percent in 2010 to over 15 percent today. The shale oil bust has left many US banks with over a trillion dollars of highly risky energy loans on their books. The very low interest rate environment in Japan and the EU has done little to spur demand in an environment full of malinvestments and growing government constraints.

Doing more of the same simply elevates the already enormous risk that a new financial crisis is right around the corner:

Banks rely on rates to make returns. As the former Bank of England rate-setter Charlie Bean has written in a recent paper for The Economic Journal, pension funds will struggle to make adequate returns, while fund managers will borrow a lot more to make profits. Mr Bean says: “All of this makes a leveraged ‘search for yield’ of the sort that marked the prelude to the crisis more likely.” This is not comforting but it is highly plausible: barely a decade on from the crash, we may be about to repeat it. This comes from tasking central bankers with keeping the world economy growing, even while governments have cut spending.

Experiences with Negative Interest Rates

The existing low interest rate environment has already caused asset price bubbles to inflate further, placing assets such as real estate ever more beyond the reach of ordinary people at the same time as hampering those same people attempting to build sufficient savings for a deposit. Negative interest rates provide an increased incentive for this to continue. In locations where the rates are already negative, the asset bubble effect has worsened. For instance, in Denmark negative interest rates have added considerable impetus to the housing bubble in Copenhagen, resulting in an ever larger pool over over-leveraged property owners exposed to the risks of a property price collapse and debt default:

Where do you invest your money when rates are below zero? The Danish experience says equities and the property market. The benchmark index of Denmark’s 20 most-traded stocks has soared more than 100 percent since the second quarter of 2012, which is just before the central bank resorted to negative rates. That’s more than twice the stock-price gains of the Stoxx Europe 600 and Dow Jones Industrial Average over the period. Danish house prices have jumped so much that Danske Bank A/S, Denmark’s biggest lender, says Copenhagen is fast becoming Scandinavia’s riskiest property market.

Considering that risky property markets are the norm in Scandinavia, Copenhagen represents an extreme situation:

“Property prices in Copenhagen have risen 40–60 percent since the middle of 2012, when the central bank first resorted to negative interest rates to defend the krone’s peg to the euro.”

This should come as no surprise: recall that there are documented cases where Danish borrowers are paid to take on debt and buy houses “In Denmark You Are Now Paid To Take Out A Mortgage”, so between rewarding debtors and punishing savers, this outcome is hardly shocking. Yet it is the negative rates that have made this unprecedented surge in home prices feel relatively benign on broader price levels, since the source of housing funds is not savings but cash, usually cash belonging to the bank.

 

The Swedish property market is similarly reaching for the sky. Like Japan at the peak of it’s bubble in the late 1980s, Sweden has intergenerational mortgages, with an average term of 140 years! Recent regulatory attempts to rein in the ballooning debt by reducing the maximum term to a ‘mere’ 105 years have been met with protest:

Swedish banks were quoted in the local press as opposing the move. “It isn’t good for the finances of households as it will make mortgages more expensive and the terms not as good. And it isn’t good for financial stability,” the head of Swedish Bankers’ Association was reported to say.

Apart from stimulating further leverage in an already over-leveraged market, negative interest rates do not appear to be stimulating actual economic activity:

If negative rates don’t spur growth — Danish inflation since 2012 has been negligible and GDP growth anemic — what are they good for?….Danish businesses have barely increased their investments, adding less than 6 percent in the 12 quarters since Denmark’s policy rate turned negative for the first time. At a growth rate of 5 percent over the period, private consumption has been similarly muted. Why is that? Simply put, a weak economy makes interest rates a less powerful tool than central bankers would like.

“If you’re very busy worrying about the economy and your job, you don’t care very much what the exact rate is on your car loan,” says Torsten Slok, Deutsche Bank’s chief international economist in New York.

Fueling inequality and profligacy while punishing responsible behaviour is politically unpopular, and the consequences, when they eventually manifest, will be even more so. Unfortunately, at the peak of a bubble, it is only continued financial irresponsibility that can keep a credit expansion going and therefore keep the financial system from abruptly crashing. The only things keeping the system ‘running on fumes’ as it currently is, are financial sleight-of-hand, disingenuous bribery and outright fraud. The price to pay is that the systemic risks continue to grow, and with it the scale of the impacts that can be expected when the risk is eventually realised. Politicians desperately wish to avoid those consequences occurring in their term of office, hence they postpone the inevitable at any cost for as long as physically possible.

The Zero Lower Bound and the Problem of Physical Cash

Central bankers attempting to stimulate the circulation of money in the economy through the use of negative interest rates have a number of problems. For starters, setting a low official rate does not necessarily mean that low rates will prevail in the economy, particularly in times of crisis:

The experience of the global financial crisis taught us that the type of shocks which can drive policy interest rates to the lower bound are also shocks which produce severe impairments to the monetary policy transmission mechanism. Suppose, for example, that the interbank market freezes and prevents a smooth transmission of the policy interest rate throughout the banking sector and financial markets at large. In this case, any cut in the policy rate may be almost completely ineffective in terms of influencing the macroeconomy and prices.

This is exactly what we saw in 2008, when interbank lending seized up due to the collapse of confidence in the banking sector. We have not seen this happen again yet, but it inevitably will as crisis conditions resume, and when it does it will illustrate vividly the limits of central bank power to control financial parameters. At that point, interest rates are very likely to spike in practice, with banks not trusting each other to repay even very short term loans, since they know what toxic debt is on their own books and rationally assume their potential counterparties are no better. Widening credit spreads would also lead to much higher rates on any debt perceived to be risky, which, increasingly, would be all debt with the exception of government bonds in the jurisdictions perceived to be safest. Low rates on high grade debt would not translate into low rates economy-wide. Given the extent of private debt, and the consequent vulnerability to higher interest rates across the developed world, an interest rate spike following the NIRP period would be financially devastating.

The major issue with negative rates in the shorter term is the ability to escape from the banking system into physical cash. Instead of causing people to spend, a penalty on holding savings in a banks creates an incentive for them to withdraw their funds and hold cash under their own control, thereby avoiding both the penalty and the increasing risk associated with the banking system:

Western banking systems are highly illiquid, meaning that they have very low cash equivalents as a percentage of customer deposits….Solvency in many Western banking systems is also highly questionable, with many loaded up on the debts of their bankrupt governments. Banks also play clever accounting games to hide the true nature of their capital inadequacy. We live in a world where questionably solvent, highly illiquid banks are backed by under capitalized insurance funds like the FDIC, which in turn are backed by insolvent governments and borderline insolvent central banks. This is hardly a risk-free proposition. Yet your reward for taking the risk of holding your money in a precarious banking system is a rate of return that is substantially lower than the official rate of inflation.

In other words, negative rates encourage an arbitrage situation favouring cash. In an environment of few good investment opportunities, increasing recognition of risk and a rising level of fear, a desire for large scale cash withdrawal is highly plausible:

From a portfolio choice perspective, cash is, under normal circumstances, a strictly dominated asset, because it is subject to the same inflation risk as bonds but, in contrast to bonds, it yields zero return. It has also long been known that this relationship would be reversed if the return on bonds were negative. In that case, an investor would be certain of earning a profit by borrowing at negative rates and investing the proceedings in cash. Ignoring storage and transportation costs, there is therefore a zero lower bound (ZLB) on nominal interest rates.

Zero is the lower bound for nominal interest rates if one would want to avoid creating such an incentive structure, but in a contractionary environment, zero is not low enough to make borrowing and lending attractive. This is because, while the nominal rate might be zero, the real rate (the nominal rate minus negative inflation) can remain high, or perhaps very high, depending on how contractionary the financial landscape becomes. As Keynes observed, attempting to stimulate demand for money by lowering interest rates amounts to ‘pushing on a piece of string‘. Central authorities find themselves caught in the liquidity trap, where monetary policy ceases to be effective:

Many big economies are now experiencing ‘deflation’, where prices are falling. In the euro zone, for instance, the main interest rate is at 0.05% but the “real” (or adjusted for inflation) interest rate is considerably higher, at 0.65%, because euro-area inflation has dropped into negative territory at -0.6%. If deflation gets worse then real interest rates will rise even more, choking off recovery rather than giving it a lift.

If nominal rates are sufficiently negative to compensate for the contractionary environment, real rates could, in theory, be low enough to stimulate the velocity of money, but the more negative the nominal rate, the greater the incentive to withdraw physical cash. Hoarded cash would reduce, instead of increase, the velocity of money. In practice, lowering rates can be moderately reflationary, provided there remains sufficient economic optimism for people to see the move in a positive light. However, sending rates into negative territory at a time pessimism is dominant can easily be interpreted as a sign of desperation, and therefore as confirmation of a negative outlook. Under such circumstances, the incentives to regard the banking system as risky, to withdraw physical cash and to hoard it for a rainy day increase substantially. Not only does the money supply fail to grow, as new loans are not made, but the velocity of money falls as money is hoarded, thereby aggravating a deflationary spiral:

A decline in the velocity of money increases deflationary pressure. Each dollar (or yen or euro) generates less and less economic activity, so policymakers must pump more money into the system to generate growth. As consumers watch prices decline, they defer purchases, reducing consumption and slowing growth. Deflation also lifts real interest rates, which drives currency values higher. In today’s mercantilist, beggar-thy-neighbour world of global trade, a strong currency is a headwind to exports. Obviously, this is not the desired outcome of policymakers. But as central banks grasp for new, stimulative tools, they end up pushing on an ever-lengthening piece of string.

 

Japan has been in the economic doldrums, with pessimism dominant, for over 25 years, and the population has become highly sceptical of stimulation measures intended to lead to recovery. The negative interest rates introduced there (described as ‘economic kamikaze’) have had a very different effect than in Scandinavia, which is still more or less at the peak of its bubble and therefore much more optimistic. Unfortunately, lowering interest rates in times of collective pessimism has a poor record of acting to increase spending and stimulate the economy, as Japan has discovered since their bubble burst in 1989:

For about a quarter of a century the Japanese have proved to be fanatical savers, and no matter how low the Bank of Japan cuts rates, they simply cannot be persuaded to spend their money, or even invest it in the stock market. They fear losing their jobs; they fear a further fall in shares or property values; they have no confidence in the investment opportunities in front of them. So pathological has this psychology grown that they would rather see the value of their savings fall than spend the cash. That draining of confidence after the collapse of the 1980s “bubble” economy has depressed Japanese growth for decades.

Fear is a very sharp driver of behaviour — easily capable of over-riding incentives designed to promote spending and investment:

When people are fearful they tend to save; and when they become especially fearful then they save even more, even if the returns on their savings are extremely low. Much the same goes for businesses, and there are increasing reports of them “hoarding” their profits rather than reinvesting them in their business, such is the great “uncertainty” around the world economy. Brexit obviously only added to the fears and misgivings about the future.

Deflation is so difficult to overcome precisely because of its strong psychological component. When the balance of collective psychology tips from optimism, hope and greed to pessimism and fear, everything is perceived differently. Measures intended to restore confidence end up being interpreted as desperation, and therefore get little or no traction. As such initiatives fail, their failure becomes conformation of a negative bias, which increases the power of that bias, causing more stimulus initiatives to fail. The resulting positive feedback loop creates and maintains a vicious circle, both economically and socially:

There is a strong argument that when rates go negative it squeezes the speed at which money circulates through the economy, commonly referred to by economists as the velocity of money. We are already seeing this happen in Japan where citizens are clamouring for ¥10,000 bills (and home safes to store them in). People are taking their money out of the banking system to stuff it under their metaphorical mattresses. This may sound extreme, but whether paper money is stashed in home safes or moved into transaction substitutes or other stores of value like gold, the point is it’s not circulating in the economy. The empirical data support this view — the velocity of money has declined precipitously as policymakers have moved aggressively to reduce rates.

Physical cash under one’s own control is increasingly seen as one of the primary escape routes for ordinary people fearing the resumption of the 2008 liquidity crunch, and its popularity as a store of value is increasing steadily, with demand for cash rising more rapidly than GDP in a wide range of countries:

While cash’s use is in continual decline, claims that it is set to disappear entirely may be premature, according to the Bank of England….The Bank estimates that 21pc to 27pc of everyday transactions last year were in cash, down from between 34pc and 45pc at the turn of the millennium. Yet simultaneously the demand for banknotes has risen faster than the total amount of spending in the economy, a trend that has only become more pronounced since the mid-1990s. The same phenomenon has been seen internationally, in the US, eurozone, Australia and Canada….

….The prevalence of hoarding has also firmed up the demand for physical money. Hoarders are those who “choose to save their money in a safety deposit box, or under the mattress, or even buried in the garden, rather than placing it in a bank account”, the Bank said. At a time when savings rates have not turned negative, and deposits are guaranteed by the government, this kind of activity seems to defy economic theory. “For such action to be considered as rational, those that are hoarding cash must be gaining a non-financial benefit,” the Bank said. And that benefit must exceed the returns and security offered by putting that hoarded cash in a bank deposit account. A Bank survey conducted last year found that 18pc of people said they hoarded cash largely “to provide comfort against potential emergencies”.

This would suggest that a minimum of £3bn is hoarded in the UK, or around £345 a person. A government survey conducted in 2012 suggested that the total number might be higher, at £5bn….

…..But Bank staff believe that its survey results understate the extent of hoarding, as “the sensitivity of the subject” most likely affects the truthfulness of hoarders. “Based on anecdotal evidence, a small number of people are thought to hoard large values of cash.” The Bank said: “As an illustrative example, if one in every thousand adults in the United Kingdom were to hoard as much as £100,000, this would account for around £5bn — nearly 10pc of notes in circulation.” While there may be newer and more convenient methods of payment available, this strong preference for cash as a safety net means that it is likely to endure, unless steps are taken to discourage its use.

Part 2 is here





The Lie We Live

25 03 2015

This great video questions our freedom, the education system, corporations, money, the American capitalist system, the US government, world collapse, the environment, climate change, genetically modified food, and our treatment of animals….

“They gave us money, and in exchange we gave them the Earth”

Enjoy, and share widely……..





Julian Cribb replies

30 10 2014

Dr Julian Cribb

If you haven’t read it yet or viewed the video, I recently posted an item about Dr Julian Cribb’s recent (October 2013) presentation to the Wheatbelt NRM Annual General Meeting.  It’s difficult when running a blog such as this to give someone you don’t know the right of reply, but this time Julian has taken the time to leave a reply, and as a mark of respect to him and in fairness to all opinions, I’ve decided to post it here as a proper article rather than see it lost in the thousands of comments which pepper this site.  I’m glad Julian has done this, and I fully understand his point about the difficulty of solving the world’s problem in a 30 minute talk; I haven’t managed it myself yet either!

Anyhow, some of you frequent readers might like to enter into a conversation with Julian, if he so desires here…. I personally cannot see how Julian’s assertion that ” it is going to take another 100 years or so to get the population (smoothly) back to 4-5 billion” can ever happen…  this particular subject is one I’m passionate about, so let’s hear it from you…

I also thought I had given Julian some credit for thinking about the issues we face when I wrote “I have come across more and more ‘experts’ who appear to be very well informed on the state of the multifaceted predicaments we face”.  Maybe a bit ambiguous, but…….

Over to Julian.

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I think you are unfair Mike. It’s not possible to solve all the world’s problems in a 30 min talk, especially one that is specifically directed at a farming audience. But give me some credit for thinking about them, at least. As to population, read my book: the women of the world are already solving it – reducing their fertility in all regions globally. However it is going to take another 100 years or so to get the population (smoothly) back to 4-5 billion. The simple reason – that never seems to occur to rich western people who scream about population – is that part of the upward pressure is due to them living longer lives, not just to birth rates. If you want to control it, you are not only going to have to enforce family planning at gunpoint – but also impose euthanasia on the over-50s. See how much popular support you get for that.

Of course I know about the energy cliff and have heard Ian Dunlop speak wisely on the issue, as regards oil especially. But there are innumerable forms of energy available. You may have noticed my observation that the entire world’s transport fuel could be produced from an area of algae farms about a tenth the size of the Pilbara. That’s just one option. So I don’t buy the ” ‘We’ll all be rooned’ said Hanrahan” philosophy. There are viable options, especially for those who don’t simply give up.

If you want to know what I really think, here it is: humanity has the brains and the technical skills to carry us through the population and demand ‘hump’ and into a measured decline to a sustainable number. But we don’t have the governments, the economic structures or the educated society needed to achieve it.

Worst case is the Schnellnhuber scenario, or about 9-10 billion dead and a billion survivors, mainly in north Russia and Canada, by the end of the present century as a result of climate, resource and religious wars, famines, migratory conflict and disease. That’s also pretty much the CSIS worst case scenario too. Both presuppose limited use of nuclear weapons.

Personally I think there will be a few big wake-up calls well before we get to that. Like Bob Rich I think we’ll see a couple of megacities fall over, right on our iPhones. Mass killing, cannibalism, suicide, explosive emigration. If that doesn’t wake people up, then Homo don’t deserve the ‘sapiens’.

So rather than just grumble from your armchair, Hanrahan, lets start hearing some practical solutions.