Archive for June 10th, 2012

Why Austerity?

June 10, 2012

AUSTERITY IS PLUTOCRACY’S BEST FRIEND.

We are in a giant ecological crisis, the collapse of the biosphere. That’s new. We are also in the midst of the silent coup of global plutocracy. That’s nothing new, plutocracy has ravaged many a civilization.

Collapse and plutocracy are entangled, they always have been. The economic crisis is only an appendage of a catastrophe of antediluvian proportions.

Krugman pointed out in Reagan Was A Keynesian, that, by the fourth year of Ronald Reagan’s presidency, because the economy had faltered, total government spending was augmented 130% more than in the comparable period under Obama. Thus confirming that Obama is to the very far right of Reagan (especially considering that the economy is now in a grave depression, the Greater Depression, not just a Federal reserve engineered recession, as it was under Reagan!)

President Ronald Reagan caused in part, through his military built-up, a built-up in high tech. That was highly profitable, in the end. The ecological and energy crises can be solved by such a technological built-up. They can only be solved by such a much greater built-up. Such a built-up would then prove very profitable. For all of humanity, yet again.

Austerity is the enemy of technology. Superior technology asks for a measure of irrational exhuberance, as does, even more, its fertile ground, new science. Indeed, if we knew how it worked already, it would not really be new.

So why all the austerity now? Why undermining what can save the biosphere, and us?

Because austerity advantages the plutocrats, in the coup they are conducting, silently.

Such a phenomenon, a coup by the richest, under other guises, happened several times in Roman history: the situation was dire, and the plutocrats in control of the Senate tried their best, including sometimes mass assassinations, to reduce spending. In the end, austerity reigned, and reigned so much that plutocracy killed Rome.

Why is austerity favorable to plutocrats? Because, when one has it all, as plutocrats do, the best way to keep it, is to make sure that the others get ever more impotent. And when one has it all there is to be had, one can only get more, if one makes sure that others get less.

***

Here are a few elaborations on the preceding, justifying the aphorisms above:

AUSTERITY IS THE ENEMY OF TECHNOLOGY:

Time and time again, Roman inventors, under the empire, presented drastic inventions, which could have changed the flow of history. They were squashed. Because plutocracy has no interest to change the flow of history, or even to have one. (As imperial Rome did not progress technologically, but the barbarians and the ecological difficulties did, irresistibly. The plutocrats heading the Roman state, cornered, became weirder and weirder, calling ever more to the fascist instinct to enforce a fanatic war against imaginary enemies, while, naturally, ignoring the real ones, namely themselves.)

***

THE BIOSPHERE IS APPROACHING A TIPPING POINT:

An article in 07 June 2012 issue of Nature considers that the entire planetary biosphere may be close to a “tipping point”. Indeed. The two essential observations are that;

a) the biosphere has undergone dramatic “phase shifts” in the past, and

b) that the present stresses on the biosphere are the greatest in at least twenty million years.

In a phase shift, typically the gas content (more or less CO2 or oxygen, O2), or the temperature change abruptly, and for many million years. Such events seem to be associated with ultra-massive volcanic events (core volcanism, for want of a better expression: Dekkan, Siberian Traps), or possible asteroid impacts (Yucatan, Chesapeake Bay, Siberia events).

The article concludes:”It is also necessary to address root causes of how humans are forcing biological changes.” “Root causes” have to be addressed. If they are not, the problems fester. Rome did not address the “root cause” of its problem, so the Roman empire went through a succession of catastrophic tipping points. See below.

***

THE GIANT COUP BY THE LORDS OF FINANCE: has been made possible by its stealthy character. The flies have not seen the spider web in which they are englued.

The civilization sized coup of the Lords of Finance, has been in the making for at least half a millennium, ever since bankers financed Francois I and Charles V, so that they could ostensibly make war against each other (circa 1520 CE). At least, so it looked, officially. War is a reason that gives plutocracy meaning.

Well financed war between France and Spain, for 150 years or so, allowed oligarchies of the splendid, on both sides, to have an excuse to make said war. War was a distraction, that diverted the People from revolution. The exploits of the knight Bayard may still mesmerize the naïve, but when men of war turned their traditional expertise to religious wars, it was distinctly less funny.

The silent coup, has thus unfolded over five centuries. It has consisted of several phases and elements:

a) LEVERAGING THE WAY MONEY IS CREATED PRIVATELY. Money mostly created by credit lines made possible by the fractional reserve system (privately managed, but set-up by the public government).

The fractional reserve system is highly technical and non linear. It allows private individuals, the bankers, to create 99% of the money. The complexity of the fractional reserve system hides it from democratic scrutiny. However, president Jackson, a great, extremely brutal and macho general and duelist, understood enough of fractional reserve and bankers to prevent its establishment in the USA in connivance with the state. Jackson called that his proudest achievement. On his deathbed.

Jackson’s  hostility to the Rothschild was amply justified by fact and theory. The Rothschilds (Red Shield in its original German) were feeding both sides of the so called Napoleonic Wars. Napoleon certainly did not start them: the Rothschild were out there financing wars, even before Napoleon was born. Maybe the Napoleonic wars should be called the Rothschild wars.

Alluding to the fractional reserve system, the Rothschilds had been crowing about their control of nations:

Mayer Amschel Rothschild: Give me control of a nation’s money and I care not who makes the laws.” 

(In other declarations, Rothschild boasted that he “issued” the nations’ money.)

Tellingly the theoreticians of class struggles of the Eighteenth and Nineteenth Centuries missed out that angle entirely. Marx vaguely complained about the banks’ “monopoly”. He forgot to say that it was monopoly in money creation. That private individuals could monopolize money creation would have floored the leaders of countless polities in passed millennia. Leaders, in the past, knew that striking coinage, that is, in practice, Fiat Money, was the prerogative of the state. That state monopoly was backed-up by military force.

However, president Roosevelt was not fooled: he “welcomed the hatred of money changers“.

(“Money changers” was the old derogatory term for financiers used during the Middle Ages’ great age of independent republics and cities: Roosevelt knew history.)

b) THE METASTATIC RISE OF FINANCIAL DERIVATIVES under Clinton and complete deregulation of finance (London’s “Big Bang, etc.) Derivatives were initially a way to insure farmers (say rice farmers in Japan 16C, or corn growers in Illinois 19C). They have their place as a form of insurance for commercial operators. But a distinction ought to be drawn between those and speculators. Moreover, when there is no insurance connected to the bets (as has been the case with CDS), then one obtains A CASINO INSURED BY THE PUBLIC, ALBEIT OWNED  BY SHARKS. Thus a welfare system for plutocrats set-up by the public.

c) MAKING THE STATE SERF TO PLUTOCRACY: The French law of 1973 passed by Rothschild banker Pompidou forbade the state to create money. Instead the state had to ask the richest men for money, and they were free to make as much money as they wanted from this begging. It was generalized to all of Europe by dim witted or treacherous socialists (Delors and his crew).

d) THE BANKERS STOLE THE ECONOMY, GIVE THEM MORE: The crisis of 2008 (Subprime, etc.) was “solved” by throwing trillions of public money (“monetary base”) to (private) banks. The bankers had lost that money, to themselves, and their friends.

That “solution” made private financiers more powerful than ever. The same is done in Europe, with the same result. The 100 billion euros “rescue’ for Spain is more of the same. Breaking up Europe would make the financiers even more powerful, that is why they are trying their best to do so.

***

SUSTAINABLE ENERGY IS UNSUSTAINABLE WITHOUT STORAGE:

Only very much higher technology will solve the present crisis. Sustainable energy, in particular could work, with storage systems… That we do not have: the best are dams, but dams cannot go in every backyard. (Dams allow to recover 80% to 90% of the energy, by working turbines in reverse to bring the water up, when there is excess energy; the method was inaugurated to serve nuclear plants, which never stop producing, night and day, month after month…) -Denmark better start building dams, to stop depending upon coal (as it does now). In the case of Denmark, a flat country, that means elevated lagoons.

More advanced storage are possible. Fuel cells have high efficiency (but they have proven finicky, expensive, and even dangerous). On the island of Corsica a private-public partnership with the local university, is building fuel cell systems connected to the grid.

***

ROMAN PRECEDENTS:

Roman history is very instructive, and deserves much better, to be so instructed, than the parody of it taught right and left (last example: the May 2012 book “Why Nations Fail“).

Rome knew several plutocratic and debt crises. The first one, the rise of plutocracy, put an end to the republic; the next one was solved radically by Tiberius, by massive public refinancing; the following one set the roots for the collapse of the Principate, and even the empire: the plutocrats refused to pay enough taxes to keep the barbarians off the gates… Already under Marcus Aurelius! It got only worse and worse in the following three centuries, or until Roman armies were replaced by Frankish armies… Which were paid by Frankish taxes… Or nationalizations.

The present crisis is a combination of the three Roman financial, economic and social crises.

Europe, always more inventive, has found still another crisis to add to the mix.

***

EUROPE, OR WHEN THE STATE ENTRUSTS THE COUNTERFEITERS WITH CREATING MONEY:

Europe has entrusted the plutocrats with money creation. In ancient Rome, as in any state worth this title, it’s the state that created money. It is still like that in the USA, Japan, China, Britain, Mongolia, or Argentina. But not in Europe’s European Monetary Union.

Part of the problem of Late Third Century Rome was that, precisely because the plutocrats refused to pay taxes, and they had the means to refuse, the Roman empire ran out of money. Diocletian corrected that with an economic command and control system that worked obviously very well, and was sustainable…

Until the Vandals cut the food line between Africa and Rome in the Fifth Century: there had not been enough money to pay a sufficient army, or navy to stop 10,000 or so Vandal warriors!

Thus command and control in the economic realm, had not fixed the fundamental problem, the disconnection of the plutocrats, and the resources they commanded, from the rest of society. The plutocrats could afford (private) armies, precisely because the state could not afford the PUBLIC army. Plutocrats did not care that cities needed walls to protect themselves; they had their own armies to defend themselves.

Present day Europe has hyper linked to that condition of the Later Roman Empire, at warp speed.

***

HOW ROME FELL, SHORT VERSION:

Plutocracy makes stupid, and stupidity was the proximal reason for the fall of Rome. Rome swung from general to general, as a gibbon from branch to branch, and finally the fiercest of them all, Constantine, allied himself with the army of the Christians, a state within the state, resulting in the establishment of full blown theocracy.

Plutocracy, plus theocracy, makes for a doubly stupid leadership, hence really stupidly conducted wars, and the consequence was the successful invasion of the Roman empire by the Goths. In comparison with the Franks, who were deeply romanized, the Goths were savages. It took 130 years for the Franks to beat the Goths, and re-establish a military successful Roman state (the Imperium Francorum, which took officially the title of Imperium Romanum, “Roman empire” only in 800 CE, when both the Pope and the Roman imperial state in Constantinople agreed).

When Rome fell, that means, when the giant Roman socio-economy collapsed, most of the population could not get to food, nor even drinkable water. Most people died. We are even more vulnerable now.

The mushrooms of plutocracy, such as austerity, can appear beautiful, but they are most venenous…

***

Patrice Ayme


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