New Dark Ages or New Aeon?

Sorry for the large number of political posts coming in the wake of this election, but I figure the mood is right to discuss it while we are so hungry for hope. I think all this stuff is VERY relevant to our future because it's going to effect everyone on the planet. Incubating positive and sustainable futures is going to require heroic work by all of us if we want to see it come to pass. It will be to our advantage to see where political forces are moving to best prepare us for the challenges and opportunities that lie ahead.

You may have heard Bin Ladin's latest video communiqué, where he's stated his true intention of bankrupting the United States. Bruce Sterling posted an interesting piece, but the most enligntened analysis I've ever read of Al Qaeda is here.

What I find ironic is that before Bin laden, America already beat him to the punch! America is already bankrupt, but our economy is being artifically propped up by other nations, especially Japan. With Bush having taken turned the countries biggest surplus into the biggest deficit has been nothing but a final blow into the belly of the beast. Bush and Bin Laden can fight for credit for bankrupting the country if that's what they want to do. Who cares, the job is done already. It shoud also be noted that bankrupting the government has long been on the agenda of extreme right fiscal conservatives such as Grover Norquist, who is one of Bush's main economic advisors and has stated repeatedly that is precisely what he intends to do. And if you've been following the news, the Bush Administration recently asked for the debt ceiling to be raised a couple more trillion dollars! What a joke.

All of this of course is completely insane, yet people are getting all upset because supposedly our children and grandchildren will have to pay it off. Sorry, but that is just nonsense. You can't bleed blood from a turnip either. It's time for a serious reality check. America's debt is now so huge that it will never be paid off! And what do debtors do who can't pay off their debts? They declare bankruptcy. The only reason America hasn't done it yet, is that all sorts of foreign investors have kept it from happening, especially Japan. But bankruptcy is now inevitable and will likely occur on Bush's watch, now that he is president again for the next 4 years.

So what then does this really mean for the American Empire and in turn the rest of the world?

Several months ago Future Hi Editor and good friend Flemming Funch posted this interesting analysis, which I've quoted below in it's entirety.

How, then, does a nation deal with debts that so greatly outrun its ability to pay? There are basically only five strategies. All are unappealing. Most are calamitous.

The most difficult strategy is, not surprisingly, the honest one: raise taxes and pay your bills. This is what King George III did following the Seven Years War with France in 1763. England had quadrupled its national debt in fighting the War and needed money to pay it off. It turned to the richest people in the realm, the Colonists, and began taxing paper, glass, paint, lead, and, of course, tea. The result, as we know, was the American Revolution.

It was the same strategy-raising taxes on the rich-that Louis XVI attempted in 1789. The French national debt had grown 10 fold under the pharoic opulence of Louis's grandfather, Louis XIV. Louis called the nobility and the clergy together and told them they would have to ante up. They, after all, had been exempted from taxes by Louis XIV in order to buy their complicity in his autocratic reign. Indignant, they refused to pay, precipitating the French Revolution, the most explosive upheaval to established government in the last thousand years.

A second strategy to deal with excessive debts is simply to print money. This is what Weimar Germany did to address the crushing debt imposed by the vengeful Treaty of Versailles. Before it was over the government had inflated the money supply by over a trillion times, leading some to comment that it was a waste of ink to put it onto paper worth so much less than the ink itself. The German middle class, whose assets were held at fixed amounts in government pensions, was destroyed. The collapse gave direct rise to Adolph Hitler.

A third strategy for dealing with onerous national debt is to sell off national assets. This is one of the first strategies the IMF imposes on third world countries that have gotten behind in their payments to western banks. Government-run industries, from telecommunications to water systems, are "privatized" and the country's natural resources are sold off to the highest foreign bidder. This is what Great Britain was forced to do in the aftermath or World War II.

Two world wars in only 30 years had ravaged the British economy and the pound sterling. Facing collapse at home (and revolution abroad), the government surrendered almost all of its colonies, from India and Pakistan to Nigeria, South Africa, Zambia and Zimbabwe. These had been among the greatest wealth-producing properties of modern times, the ones that had made the British Empire what it was. Their loss left Britain a second-rate power with only misty memories of its once imperial greatness.

A fourth strategy for dealing with excessive debt is to repudiate it. This was used for centuries in the early days of the modern world and was revived two years ago by Argentina which brazenly refused to pay some $110 billion in debts it had accumulated over prior decades. More ominously, it was this strategy that was used by the Bolsheviks after they took power in the Russian Revolution.

The new communist government refused to be bound by the debts of the overthrown Romanovs. But the French had loaned heavily to the Russian government for decades before World War I and now were left in a lurch. A cascading series of defaults from one bank to another caused a liquidity crisis on the continent, ultimately setting off the Great Depression.

Finally, there is plunder. When a nation's debt load becomes so huge it cannot plausibly reassure creditors regarding repayment, it must seek some source of wealth, any source, to keep the borrowed money flowing. This, naked predation, is what kept the Roman Empire alive for the last two hundred years of its existence. It is the strategy adopted by the Spanish Empire-silver and gold from America-and which eventually destroyed the vitality of its own merchant and civil servant classes.

Which, then, of the five above strategies will the U.S. adopt to deal with its exploding debt problem?

The author concludes, quite reasonably, I think, that Bush's answer will be a combination of solutions 3, 4 and 5. Sell off big chunks of assets to private interests, negate the responsibility for covering future social security, and go and plunder resources in other countries. Not pretty, but one might possibly keep it going for a while before anybody notices.

I think the world is starting to notice. Question now is what is the world going to do about it?

My thinking is that if America goes bankrupt so will most of the world. Large companies like Halliburton, which have acted as parasites of taxpayers’ money will go down the tubes with it. I can see two possible futures emerging from this. The first is Bin Laden's dream of seeing the entire modern world come crashing down into a new dark ages. The other is seeing all the worlds’ people, empowered by sustainable technologies and global communications, w building a better society out of the ashes of the old. It reminds me of the decline and fall of the Roman Empire. When it fell, it was the start of a 1000-year dark age. Can this time be any different? I think so. One very important thing separates us from those 1600 years ago. Today we have technology that is speeding up like crazy. Nanotechnology is right around the corner; perhaps just in time to pick up when everything else comes crashing down.

For half of my life I've heard many people say it's going to get worse before it gets better. Perhaps it will take a disaster of "apocalyptic" magnitude for humanity to self-correct. In my opinion the current system is broken beyond repair. Now with the fundamentalist on both sides declaring jihad, this broken system can't maintain itself much longer. Something is going to give, and when it does I expect the whole house of cards to come falling down with it. Lets just hope that there will be enough progressive and enlightened people in the aftermath to lead us out of the darkness into a new more enlightened golden dawn.

Some parting thoughts via DRT News:

The Optimism of Uncertainty

There is a tendency to think that what we see in the present moment will continue. We forget how often we have been astonished by the sudden crumbling of institutions, by extraordinary changes in people's thoughts, by unexpected eruptions of rebellion against tyrannies, by the quick collapse of systems of power that seemed invincible.

What leaps out from the history of the past hundred years is its utter unpredictability.

Posted by paul at November 4, 2004 10:16 PM | TrackBack