To understand the reasons why
our financial system, our economy and our present policies are unsustainable,
we need to come to grips with two simple truths. First, the economy and
government are an interconnected system. As such the party attempting to
steer it does not have controlling power over it. The second fact is that
"faster, better, cheaper" always wins, replacing the inefficient
and unsustainable. This is the reality within which the system operates.
The present foundation of the
system, and our economy, is Financialization. This is not by design but
rather by Darwinian evolution. It has unfortunately, become the basic engine
of consumer growth through its' leveraging of collateral into debt and
phantom assets, such as derivatives and bubble valuations. The limiting fact
to this system is that ever-rising debt and leverage is unsustainable, once
household assets and incomes stop rising.
Uncontrolled financialization
& unsound money, without historic exception, consistently leads to:
1.
Malinvestment in
the Private sector - In the private sector cheap money will naturally flow
into high-risk, low-return investments. This leads to "McMansions
in the Middle of Nowhere"
2.
Crony Capitalism in
the Public sector - In the public sector, crony capitalism secures low
risk, high-return investments. This leads to "Bridges to Nowhere."
The system in its present form
has become too complex, fragile and insufficiently robust, that it is
realistically unsustainable and un-governable. The unsustainable will
collapse and be replaced by an arrangement that is sustainable. Creative
destruction and "faster, better, cheaper" is the only sustainable
system; the alternative is to cling to failed models until the system
collapses.
"Any intelligent fool
can make things bigger and more complex... It takes a touch of genius and a
lot of courage to move in the opposite direction." (Albert Einstein)
Additionally, our economy and
state are unsustainable for converging and disruptive systemic reasons, that
go beyond the financial:
1.
Demographics--our
aging populace and the impossible entitlements promises made
2.
Decline of Paid
Work--automation and the Web are destroying more jobs than they create
3.
Diminishing Returns
of Centralization--the more power the State grabs, the more broken the system
becomes
4.
EROEI (energy
returned on energy invested): energy may be abundant but expensive
5.
Healthcare in
Crisis--our health declines as we spend 2X more per capita than our
competitors
6.
The End of
Consumerist Growth--if debt and income aren't growing, neither can
consumption
7.
Globalization--the
genii cannot be put back in the bottle
What We Can Do about It
"There is nothing more
difficult to take in hand, more perilous to conduct, or more uncertain in its
success, than to take the lead in the introduction of a new order of things.
For the reformer has enemies in all those who profit by the old order, and
only lukewarm defenders in all those who would profit by the new order, this
lukewarmness arising partly from fear of their adversaries... and partly from
the incredulity of mankind, who do not truly believe in anything new until
they have had actual experience of it." ~ Machiavelli, 1532
The better choice is to embrace
technological and social innovations and "faster, better,
cheaper.", since it eventually wins, regardless of our preferences.
This means GLOBALLY accepting
and INNOVATIVELY moving RAPIDLY towards a DATA System:
D- Decentralized
A- Adaptive
T- Transparent
A- Accountable
We don't get to choose, it is
the natural order!
Hear Charles Hugh Smith
explains this in his own words.
23 Minutes, 15 Slides
