Interview on Voice America Business Matters with Jay Taylor

Jay and I discuss how the USA is following in the footsteps of the USSR, how financial collapse is progressing, how the various stages of collapse relate and what's in my new book. You can listen to it here or download the mp3 here.

In this week's episode of the radio program, Ellen Hodgson Brown and Dmitry Orlov discuss the continuing collapse of western society thanks to the parasitic behavior of our banking establishment.

With outright confiscation of depositor money in Cyprus, parasitic elite is no longer robbing us in the night through the hidden tax of inflation but now robs people through outright confiscation of deposits. How long yet before Robert Prechter's next “dark age” arrives? Orlov gives us an idea of which of the five Stages of Collapse the U.S. is now in, as he compares our demise to that of the former Soviet Union's collapse.

The Untrustworthy and the Trustful

Aaron Jasinski

[This is an excerpt from The Five Stages of Collapse which seems quite topical given the new banking rules being set down in Europe and the US, according to which your bank deposits will no longer be guaranteed. With the precedent being set in Cyprus, bank deposits are being turned into unsecured loans, and when the bank folds you might get some bank stock, which you may or may not be able to sell, or you might get nothing at all. Now that large cash transactions and stockpiles are illegal, bank deposits liable to evaporate without notice, and gold likely to be re-regulated and re-confiscated before too long, what's your plan for opposing financial tyranny? I believe that before you can hatch any such plan, you must first decide: Who do you trust?]

Within a modern, highly financialized economy, most interactions are impersonal, based on purchase and sale within a market system. If you are the loser in any one transaction, it is your fault, because you chose to deal with people you had no particular reason to trust, and therefore it is your mistake. If the swindle is not illegal, you have no legal recourse. You can, of course, complain to a few friends, perhaps even blog or tweet about it, but then, in a market economy, more of a stigma attaches to being swindled than to swindling, and most people are reticent when it comes to telling the whole world that they let someone take advantage of them.

Bangs and Whimpers

Anatol Knotek

[Update: The Five Stages of Collapse has finally been sent to the printer. May delivery is now guaranteed. Please place your order below.]

Quite a few people wrote to me over the past week asking about all the noise coming out of Cyprus. If you haven't heard, there is a financial collapse that is unfolding there: banks are closed and people can't get at their money. The Cypriot banks are insolvent. This is no surprise: all banks everywhere are insolvent, and would fail immediately were the various types of ongoing bailouts to suddenly stop. These bailouts include an ever-longer list of annoying financial jargon—liquidity injections, quantitative easing, toxic-asset-purchasing by central banks, accounting tricks such as “mark-to-fantasy,” which allows them to make bogus claims as to the value of their assets, yadda-yadda. The point is, the financial system failed in 2008, and stayed that way. The faulty formula behind all modern finance is debt raised to the power of time, and only works when there is exponential growth in economic activity and energy. Energy's exponential growth stopped in 2005 due to resource depletion; three years later finance collapsed. Permanently. Since then we have been witnessing a global game of “extend and pretend,” which cannot be played indefinitely. If something can't go on forever, it doesn't.

Open Thread

The book is going to press next Monday and, having edited it and proofread it and fact-checked it relentlessly for weeks now, I am in no mood to churn out another weekly essay. There are 30 thousand of you out there! Can't some of you write something interesting yourselves, for once? Just this once? Thank you!

The proliferation of defunct states

[Another excerpt from The Five Stages of Collapse.]

The triumph of the nation-state was made possible by the triumph of industry over artisanal production, especially in the area of weaponry. Industrialization gave the larger nations the means to produce vast quantities of war matériel, in turn giving them the impetus to homogenize and standardize the population by imposing a single language and educational system in order to be able to field a unified fighting force. The transformation was profound: at the time of the French Revolution only 10-12 percent of the French population could be said to speak French; in Italy the number of people who could be said to speak Italian was even lower. It allowed a handful of European nation-states to conquer the entire planet, before suffering the successive paroxysms of the two world wars. As they retreated, they did their best to carve up the planet into patches that, they hoped, would emerge as nation-states in their own right.

Where There's No Government

Mason London

Excerpt from The Five Stages of Collapse

[In italiano: Dove non c'è governo]

Modern societies rely on the government to defend property rights, enforce contracts and regulate commerce. As the economy expands, so do the functions of government, along with its bureaucratic structures, laws, rules and procedures and—what expands fastest of all—its cost. All of these official arrangements show an accretion of complexity over time. Each time a new problem needs to be solved, something is added to the structure, but nothing is ever taken away, because previous arrangements are often grandfathered in, and because simplifying a complex arrangement is always more difficult and expensive than complicating it further. But socioeconomic complexity is never without cost, and once the economy crests and begins to contract, this cost become prohibitive. In the context of a shrinking economy buffeted by waves of escalating crises, an outsized officialdom comes to exhibit ever greater negative economies of scale, while the arduous task of reforming it so as to scale it down and simplify it cannot receive priority due to a lack of resources. In the best case, after a more or less chaotic transitional period, new, simplified and scaled-down official structures do eventually arise.

Monkey Trap Nation

Lukas Brezek

A few weeks ago I flew back to Boston from St. Petersburg. Nine time zones is a lot to fly through in a day, especially when flying west. It all adds up to a single very long day that just won't end. When I had left Boston, I set up the boat to stay above freezing using a minimum amount of electric heat, so I expected to find a cold boat, but not a frozen one, in spite of the freezing cold and the snow, which was coming down quite heavily when I landed. But it turned out that while I was away the shore power cable's connection to its socket aboard the boat started arcing and burned, leaving the boat without power. (I was lucky; the boat could have burned down.) I spent an interesting couple of hours finding tools and supplies by flashlight, then stripping and splicing cables to restore power. As I finally went to sleep that night, wrapped in an electric blanket aboard a slowly defrosting boat, I thought to myself: “What have I done?” Sure, I flew to Boston because that's where my boat is, but there has got to be a better reason than that!

Pray for an Asteroid

On the morning of February 15, 2013, a 500-ton meteor entered the atmosphere somewhere near the Ural mountains, in the vicinity of Chelyabinsk, Russia, an industrial city of over a million. The intensity of the blast was estimated at around 500 kilotons of TNT equivalent, or 30 nuclear bombs of the type the Americans dropped on Nagasaki, Japan. The shock waves from the sonic boom it created blew out numerous windows. Around a thousand people were wounded, mostly with lacerations from flying glass; 40 of them remain hospitalized. The damage is being estimated at over one billion rubles ($33 million USD). Over 24,000 workers and volunteers, coordinated by Russia's Emergency Ministry, went to work on the clean-up. Their specific emphasis was on keeping buildings from freezing (the temperature in Chelyabinsk is around -20ºC). By February 17 much of the damage had been repaired. Schools, hospitals and other pubic buildings had their windows replaced and were reopened. The government is supplying replacement windows to residential buildings.

Book Excerpt: The wrong math

This is an excerpt from The Five Stages of Collapse: Survivors' Toolkit. Please order your copy for shipment in May.

Regular price $18.00 USD Autographed, numbered copy $28.00 USD

NOT THE COVER!

An argument can be made that lending at any rate of interest above 0 percent eventually leads to a deflationary collapse followed by a quick but painful bout of hyperinflation thrown in at the very end. A positive interest rate requires exponential growth, and exponential growth, of anything, anywhere, can only produce one outcome: collapse. This is because it quickly outpaces any sustainable physical process in the universe, outside of a few freak cases such as a sustained nuclear explosion, where the entire universe blows up, taking all of us with it, along with all of our debts.

Book Excerpt: The Problem of Excessive Scale

This is an excerpt from The Five Stages of Collapse: Survivors' Toolkit. Please order your copy for shipment in May.

Regular price $18.00 USD Autographed, numbered copy $28.00 USD

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In his excellent book The Breakdown of Nations the maverick economist Leopold Kohr makes several stunning yet, upon reflection, commonsense observations. He points out that small states have tended to be far more culturally productive than large states, that all states go to war but that big states have disproportionately bigger wars that kill many times more people, and that by far the most stable and advantageous form of political organization is a loose confederation of states, each so small that none can dominate the rest. Kohr arrives at his conclusions by a process of reasoning by homology (viz. analogy) by analyzing many of the problems of modernity as different manifestations of the same underlying problem: the problem of excessive scale.