Posts categorized "Economic"

Making debt illegal (Podcast Episode)

In my first video podcast, I discuss the question recently posed to me about saving humanity from self-destruction.  Read this blog entry for a more detailed analysis.

View the podcast here or download the audio version on iTunes, Feedburner, or wherever you usually get podcasts.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

Saving the world

I was asked to write a chapter for a new book on saving humanity from self-destruction.  Specifically, the book's author asked me to address the following topics:

1. What is wrong with the world today?

2. What can be done to prevent the self-destruction of humanity?

Sometimes the simplest questions can catch you off-guard.  I stepped away from my computer and felt myself getting a bit frustrated.  I've been talking a lot about the Silent Crash, the disruptive change happening in our lives, and what it all means to us as individuals...but I haven't said much about what can be done to prevent the large-scale self-destruction of humanity.  

I like that the question is phrased as "what can be done" because I want to believe that this isn't just one more naive, futile attempt to ask "what can we do".  There is an important distinction here, because we cannot truly do anything to prevent the self-destruction of humanity.  We are not in control.  We are not the ruling elite who have designed and who manage the functioning of the systems that are destroying the world.  Therefore, we are not going to be given the power to do anything on a large enough scale, as individuals, to change the world in any drastic way.  It doesn't matter how good our ideas are or how well-meaning we may be.

Yet the question is still staring at me.  I am just one tiny, insignificant part of the we.  Would it not be my moral duty to provide an answer if I have one?  Would it not be selfish and lazy if I were to decline to address such a topic because it is based on what appears to be an impossible premise?  How do I even begin to present my analysis, my solutions, if I have no power to influence the ruling elite anyway?  In doing so, would I not be banging my head against the wall in an empty room where nobody even notices?

After several days of thought, I realized that it is my duty to try to answer this question, yes, but also to do so in a realistic way.  So let's start with the first question:

1. What is wrong with the world today?

This is a simple, high-level question that deserves a high-level answer.  Humans are animals on planet Earth.  By any measure, any "right" way of living that will ensure our survival must be compatible with the laws of nature that govern planet Earth.  We know that planet Earth contains a biosphere in which life can exist.  Within this biosphere, the principles of evolution govern everything that life is and what life does.  Evolution describes all behaviors and changes within all of life's ecosystems and systems.  It is such a simple concept, really.  Whether we are talking about an ecosystem in the jungle, an economic system, an industry, our agricultural system, or anything else that life does...I believe it is all part of the same thing.  Evolution, as a concept, illuminates so much more than just the way that species change over time (the part that scientists tend to focus on).  

In nature, species often die out.  This happens when an ecosystem breaks down.  Perhaps a predator eats too much of its prey (causing the prey to first go extinct, and then next the predators well because there's nothing to eat).  Sometimes the entire ecosystem vanishes (species vanish when humans slash and burn the jungle, for example).  So the question about what can be done to prevent the self-destruction of humanity is a question about nature and of evolution.  Because it is a question of evolution, we must return to the idea of systems.  

Which systems (man-made or otherwise) risk threatening the survival of human beings on Earth?  How do our man-made systems undermine or destroy the natural eco-systems we depend upon for survival?  It is difficult to know where to begin, but here's a short list:

  • Our entire lifestyle is built on a system that depends upon a massive amount of power (some non-renewable fuels, some nuclear, all destructive and devastating).
  • Our economic systems are only concerned with economic growth...even if at the expense of the destruction of nature and life.
  • Our monetary system incentivizes us to do terrible things we would otherwise not do because we have been made slaves to money
  • Our religious institutions teach us that man has dominion over the Earth
  • Our way of mass-producing food damages the soil and uses up non-renewable resources unnecessarily (both threatening our ability to continue producing food at the current volume)
  • The world's militaries, together with corporations selling to them, have built weapons that could easily destroy humanity
  • The legal system puts property above all else and provides corporations with the mandate that their only concern is profitability.  The real-world result is oftentimes as catastrophic as an oil-spill that can destroy an entire ecosystem.
  • Bankers provide debt that fuels and accelerates all of the systems described above.  Hold-on to that thought for now because I will return to it.

These are only some of the fundamental problems with the world today.  These are the systems that threaten the ecosystem and threaten the survival of humanity.  These are the systems that justify and legitimize our tendency to do ridiculous, harmful, destructive things in such a rational, cool manner.

We could get into a conversation about who created these systems and why, but that's beyond the scope of this topic.  The more important question concerns those who have the actual power to actually change or improve these destructive systems.  The question that matters is this: what exactly do the ruling elite stand to lose or gain if these systems are changed?

Indeed, any discussion concerned with changing the world has to start by considering how to sell the idea to the ruling elite -- those few who have the power to truly change or improve the systems that govern our lives.  Nothing I, as an individual, can do or say will have any real impact.  The only chance I have would be doing something or saying something that might persuade the ruling elite to somehow behave differently.  We need to persuade them that their power, influence, and lifestyle would improve by implementing our idea.  Whatever change I'm suggesting cannot be a threat to them.  Therefore, I cannot demand through protest (they will easily ignore it), I cannot vote for change (the most destructive systems are governed outside of the charade we call democracy these days), and so even if I could write something so brilliant that it persuaded 1 billion people, the idea would have absolutely no impact if it did not pursued the ruling elite.

So we need an idea that 1) helps prevent destructive behavior in the real world, and 2) convinces the ruling elite that it will improve their lives as well.  

To be intellectually fair, I should also mention that there is only one other way to change the world: through violent revolution.  An angry and violent mob, if large enough and out-of-control enough, could smash everything and kill everyone responsible for the systems undermining our ability to survive as a species.  The problem with this, and the reason this doesn't seem to happen, is that taking part in such a movement would threaten our individual survival.  We might die in the battle.  Even if we did succeed, even if we did destroy all the destructive systems, we might be left standing in a chaotic world where we end up dying from starvation and lawlessness.

This brings up another interesting point: in nature, individual survival always trumps that of the species.  So, to convince anyone of anything, you have to convince them that their life will be better than it is today.  Nature has designed all of its creatures primarily to look after their own survival and self-interests.  Just as the ruling elite will not give up everything they hold dear, neither will any of us.  So, to put it into evolutionary terms, we are an over-populated species competing for an ever-shrinking supply of food.  We will continue to become faster, stronger, and better at catching our prey regardless of the long-term consequences our actions might have our species.  Indeed, we're just an over-populated species.  We get bigger and bigger, consume more and more, until one day we all might just consume everything that supports our ability to survive at all.  

But what caused us to get to this state and what can be done to prevent the self-destruction of humanity?  I already provided a very high-level answer (that we should pursued those in power to change).  But this is probably quite useless without a specific idea or example.  Now I'll get to that.  

The goal, unlike what some environmentalists would have us believe, isn't for man to have "zero-impact".  The Earth can certainly handle a lot of impact.  Just look at what we've done to it and how beautiful it still is!  We all have a right to exist, to eat, to burn some wood, and to make a mess now and then.  The natural environment can certainly absorb this, just as it has throughout the centuries.  So what exactly has accelerated our economic activity to the point that is completely destructive and out-of-control?  My answer is this: easy access to credit or, in a word, debt.

Debt allows us to conduct economic activity right away -- without having to first earn the right to do so by saving money.  How much of our economic activity in the past decades has been fueled by debt?  How many expenditures would not have occurred without debt?  Debt fuels shopping sprees, construction of houses, purchasing of cars, vacations, etc., etc.  Not everything we do is fueled by debt, some of us do spend the money we earn.  But a huge percentage of economic activity is made possible through easy access to credit.  How many plastic toys made in China would not have been sold if not for credit cards?  Go even further; how much of the destruction our government causes is funded by debt?

How would the world change if all governments would agree to make all debt illegal?  "Impossible!", you might say, "there's no way to get all the world's governments to agree on anything."  Really?  What about slavery?  Where exactly is slavery legal?  And how exactly is debt different from slavery?

Debt is, indeed, a form of slavery.  Under slavery, the slave-holder provides food and shelter and, in return, the slave is forced to work for free.  Similarly, in debt, the banker provides the loan for food and shelter and the debtor works to pay the banker's interest.  The difference between debt and slavery is only a matter of degree.  It is only a legalistic distinction.  

So the elimination of debt would slow our economic activity enough that, perhaps, we might get it back to the level that the Earth can support.  But, to my previous point, any idea to prevent the destruction of humanity is not practical or realistic unless it persuades the ruling elite that it is in their own best interest.  See, the beauty of this idea is that, right now, debt is the number one problem threatening the global economic status quo.  Consumer debt is undermining consumer spending, national debt is making it impossible for governments to provide basic services, and the issuance of bad loans are making it impossible for many banks to avoid bankruptcy.  For the past decade, and especially since 2007, the answer has always been to solve debt problems by adding more debt.  But this cycle cannot go on forever because new loans cannot be repaid.  Many economic foresters believe that what we will be left with is a painful, 10-year cycle of deleveraging.  At the end of this process, without fundamental change, so many lives will be destroyed and we'll still only be left with the same conditions that led to these problems to begin with.  To make debt illegal would solve the problem immediately and for good.

It should also be said that, regardless of whether or not debt is made illegal, the economic depression ahead will be good for the environment and good for the the long-term viability of human life on Earth.  Even if conditions were to worsen to the point that a very large percentage of humans died, this would also go a long way toward preventing the self-destruction of humanity as a whole.  Yet none of us want our species to be saved through catastrophe.  All of us, ruling elite or otherwise, want a life worth living...a life of happiness, comfort, and plenty.  Oh, and ideally, we would prefer not to destroy the world in the process if at all possible.

So here's my answer: world leaders should erase all debt overnight and make any future debt illegal.  If you have a mortgage on a home, the debt is gone and you get to keep the house.  Of course the value of your home will plummet because, going forward, homes will only be bought with cash that has actually been saved.  But that's fine, because at least you own it and don't owe anybody anything.  You can start spending your paycheck instead of giving it to the bank.  If you have a credit card, the debt is gone but you can no longer use it.  If you have a car-payment, you get to keep the car but owe nothing.  Your lifestyle improves short-term, which should give you enough time to understand the new economic paradigm and adjust to the new reality: if you want something, save money and then buy it.

What about those who do not own a home, who paid for their car with cash, and who don't have any debt?  Your benefit (aside from helping to save humanity) is that everything will get cheaper.  The cash you've saved will go further.  What would house prices be if houses could only be bought with  cash?  What about car prices?  If you've saved some money, you're in very good shape and will enjoy this new future.  You will no longer be competing with all those debtors for goods and services.

What about the bankers?  Why should they lose out on all the payments coming to them on loans they made?  This is probably the most important question.  I'm not sure I can answer this.  Perhaps many of them may not mind so much either because the debts they own to other institutions have become a huge threat to their survival.  Didn't we just bail them out?  So I'm assuming they had some debts that they couldn't pay?  Banks do have a lot of cash.  They'd get to keep it.  Moving forward, they could continue to provide financial services like deposit accounts, debit cards, etc...but no loans.

The elite bankers are, however, the ruling elite.  Their world is confusing, murky, and invisible to us.  I don't know for sure how the banking elite would feel about this idea.  Probably not great, since it ruins their whole business model.  But if this economic crisis gets bad enough, might they consider supporting the idea that debt is illegal?  Perhaps some of them would.  I don't know.  The bankers are the slave-holders in this scenario.  Slave-holders typically don't like freeing slaves.  But the times are changing and somebody may be forced to change.  Are there enough other ruling elite we could reach with this idea, or are the people in charge all bankers?

Those in government would breath a huge sigh of relief on the day debt was made illegal and wiped-0ut.  National debts would be gone.  Everybody defaults at once.  China is screwed, but what are they going to do if the whole world has made this decision?  From that moment on, all government services would  have to be paid for with money actually collected through taxes.  The decision about whether or not to raise or lower taxes would be based on something tangible -- based in reality.  Also, future tax-payers would no longer be forced to pay for the spending of previous generations.  We could start building again (hopefully the right kinds of systems this time) and never get into this mess again.

So much of the systematic destruction of our world today is funded by debt.  Bankers issue as many loans as they can in order to control our behavior and extract natural resources from countries (if you can't pay us we'll simply demand that you sell your iron, gold, or oil so that you can).  All of this debt has led to wide-spread, systematic behavior that is starting to threaten the survival of the human species.  Debt certainly isn't the only problem.  It maybe isn't even the core of the problem.  But making debt illegal would probably solve the problem in a simple, elegant way that produces minimum pain.  

Today, we work in jobs selling plastic devices made in sweatshops in order to pay for the mortgage on a house that costs 10x more than it would if not for the widespread practice of using mortgages to buy homes.  We buy cars on credit to transport ourselves to that job and pay for gas and lunch on credit cards.  This very example shows widespread, unnecessary destruction at each step and yet, in the end, most people taking part in this lifestyle never even seem to get ahead.  They stay locked in this cycle.  For what?  These days, even the ruling elite don't know what to do to avoid the impending crash and 10-year deleveraging cycle.  I know this sounds radical.  But this could be a real answer.

What would making debt illegal do for jobs?  Obviously decreased economic activity might lead to a decrease in jobs.  But, since government debt would be wiped-out, there's be a lot more tax money left to spend on social programs to help the poor.  If we are going to survive as a species, then full-employment and never-ending economic growth cannot be our measure of success.  We have to get real.  What about a Hybrid Economy that provides the economic freedom of Capitalism (without the debt and without all the destruction) and the social safety net of Socialism (without all the restrictions on freedom and red-tape)?  More on this in future posts.

With the enactment of one simple idea -- making all debt illegal -- we can enter a new, post-debt era and begin building a future in which we are happier, healthier, and more free.  Most importantly, this new future would cause far less destruction to planet Earth.  We can begin living within our means, both as individuals and as a species, and can do so without being asked to make any impossible sacrifices.  The bankers, who have been driving off a cliff, are starting to lose all control.  It is time for the competing elites to consider a new idea.  I wonder how we can reach any of them.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

The silent crash

Once upon a time, there was the Industrial Revolution, the Great Depression, the Velvet Revolution, and many other events so important and disruptive that they each were given their own, unique names in history.  Now there is what I will call the Silent Crash.  

This crash is silent because the collective will not hear it, will not discuss it, and will not experience it as a group.  We, as a collective, will not know and will not remember on which day it actually occured.  Instead, each of us as individuals will go through our own slow processes until we realize it has already happened.

Just as currency, commodity, real estate, asset, and population bubbles begin to burst...our great fictional bubbles of belief systems and mental models are also bursting...one by one...until we are eventually left with only the truth of our real lives, our inner voices, and the beautiful reality that actually does surround each of us.

Politicians go through the spectacle of elections, yet democracy does not exist.  Corporations run the government to their advantage, yet we defend them with irrelevant free-market ideas from years ago.  Soldiers, full of the best intentions, dedicate their lives to their country...while Corporations, working through the government they control, use them only to loot and plunder the world.   Just as Priests have done for centuries, our "leaders" are desperately trying to prop-up a fictional belief system.  

Some people see through the fiction, but nobody really hears the sound of a crash.   

Meanwhile, we go on eating what they feed us, while this Corporate food is making us sick and miserable.  We go to Corporate doctor to get better, while the cost of health care only makes us even sicker with worry and makes us slaves to jobs that are slowly killing us.  We give the best years of our lives to a company, yet are discarded one unsuspecting Friday morning because we are no longer useful.  We watch this happen to our friends, relatives, and to ourselves.

Still nobody really hears the sound of a crash.  

Comodity prices plunge, but few know or care.  Currencies are destroyed, but only the upper-middle-class cares.  Real estate prices collapse, yet we only blame ourselves and try to cope.  Oil begins to run out, so we complain more loudly about gas prices.  Bankers rob us by looting the treasury, but nobody really understands it or does anything about it.  Billionairres silently sneak out, through the back door, to their safe islands while letting the world we know crumble.  The puppet-masters are too untouchable to pay much attention to.  

Nobody can hear the sound of a crash.  Why?

We can barely hear even the most obvious truths over the sound of all that content, all those iPhone apps, MP3 players, TV Shows, advertisements, Corporate-controlled news and debate, video games, and new promises brought to us each day from the world of Retail and Entertainment.  These industries clammor so loudly for our attention -- so desperately begging and pleading with us to listen -- that the occassional voices of truth just can't seem to find a place to be heard.  We are living in an era that is as fake as the MTV Music Video Awards.  Let's just all shout really fucking loud, bleep out all the cursing, dance like nobody has ever danced before, and laugh whether anything is funny or not.  

This party is getting boring, so let's just turn up the volume so nobody can hear the crash outside.

This is the Silent Crash.  It is the systematic destruction of anything systemic that we used to believe in.  We are each alone in this.  We are each forced to confront our own delusions on our own terms.  Our survival and happiness actually depends upon our ability to see and hear the world around us as it actually is.  

There is a simple truth in all of this: we cannot and must not trust or believe in the man-made institutions and systems that govern our lives.  If given our trust and faith, these systems only exploit us.  Even the ones that benefit us are the same ones that are collapsing or being threatened with austerity measures! 

So what do we do?  We can't avoid interacting with the world around us.  So we must understand that to take part in today's institutions is only to play a game.  We can learn to play the game reasonably well, for our own personal reasons, and with a specific and meaningful goal or purpose.  But let's not forget that it is all a game.  Play the game well and you win some comfort, piece of mind, nutritous food, time to enjoy your life, and so much more.  But none of this flows from faith in the system.  Those with blind faith in the illusion will crash under the weight of their own bad choices...they will go down with the ship!

What exactly can we believe in if the systems, rules, imagery, and institutions around us are either unsustainable or are built on lies?  Actually, there is so much that is real that we can believe in!  We can believe in ourselves.  We can believe in love...real love, not the convenient "how big is your wedding ring" and "how well does your spouse behave" kind of love brought to us by the media.  We can believe in the pursuit of truth...truth at any cost!  We can believe in kindness, empathy, and compassion.  We can believe in doing what's right just because it is right.  We can believe in pleasure...the kind of pleasure found on a beach, or in the backyard listening to the wind blow through the trees, or whatever excites us!  We can believe in freedom!  We can believe that our own inner-voices are, indeed, the voices of truth!  Let the crash be silent so we can hear these voices.

What exactly is there to be afraid of when so much that is corrupt, destructive, and harmful is silently crashing?  When we find the courage to jump ship and live on our own terms...when we live our dreams...when we do this all while playing the games required for our survival...then the future is bright.  

The Silent Crash is our opportunity to clarify our minds and listen to our hearts.      

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

What do the billionaires think?

In this Op-Ed in the New York Times, Warren Buffett (whose net worth is around $50 billion) admitted to paying under $7 million in taxes last year (17.4% of his annual income).  This percentage is lower than, as he says, "the other 20 people in his office." 

The entire piece is worth a read and I agree with his analysis.  His message is clear, true, and obvious.  But what I find particularly interesting are the Letters to the Editor that followed (in response to his piece).

Several contributors suggest that he's being insincere because, if he really meant what he's saying, he's free to send in more money to the IRS than he does.  But, of course, that argument kind of misses the point...that obviously billionaires should be forced to pay more taxes....all of them, not just him, alone. 

Another individual argued that this would "stifle economic growth", as though Warren Buffet would stop his business activities because his tax rate went up.  Are theoretical arguments really supposed to trump obvous, observable real-world truths?  Taxing billionaires does not stifle anyone's econimic growth except for their own.  Would Buffett spend or behave any differently if he had to pay 40% of this year's income in taxes?  That's an extra $10 million+ for our government to spend on economic growth.  How is that money better sitting in his accounts?  Come on.

Another contributor suggests, "The American people are no longer getting appropriate value for the dollars that they “invest” in their government."  Indeed, this is a core argument of my book, Love It or Leave It: The End of Government as the Problem.  The problem with this argument being applied in this context is that Warren Buffet is not "the American people", he's a fucking billionaire!  Billionaires absolutely benefit from government because it mostly functions to serve their interests (I cover this in great depth in my book).  But that's beside the point.  How can anybody lump billionaires in as part of "the American people?"  As though we're all on the same team?  Come on.

Another idiot from Florida even went so far as to lecture Warren Buffett (and the rest of us) on Capitalism.  What an embarrassment.

What I find most sickening is this endless conversation about "how the rich feel" or "what the billionaires think" about being taxed more.  The real question is this: how many of "the rest of us" do you have to add up in order to equal the feelings and opinions of one Warren Buffett?  I'm serious.

If you add up the wealth of the poorest Americans (I'm talking about wealth, not income), how many Americans would it take to equal the net wealth of Warren Buffett?  Well, first you'd have to take all of the Americans whose net wealth is negative (they owe more than they have in wealth).  What percentage is that?  25%?  More?  So we're starting with a negative number by adding all of that up.  Now let's take those who actually have net wealth (more assets, cash, and investments than debt).  Let's say that the net wealth of the poorest 25% of these individuals makes up for the total dept of those with negative net wealth.  At this point, we're still at zero.  To get to Warren Buffett's $50 billion in wealth, perhaps would require another 10% of Americans?  These are just estimates, but let's say Warren Buffett's wealth is equal to the combined wealth (minus debt) of 60% of Americans.

So, what are we at....200 million people?  My question is this: are the feelings and opinions of 200 million people worth more than the feelings and opinions of one Warren Buffett? 

Why the hell do we care what the top few hundred billionaires think or feel?  Most of them could give a shit what we think and feel.  We are not on the same team.  Just yesterday, Warren Bufffett announced his multibillion dollar investment in Bank of America.  Think about what Bank of America does.  It gets the rest of us into debt and helps turn us into wage-slaves.   How do the rest of us feel about the Warren Buffetts of the world collecting our interest payments?

Now let me ask this: what fucking idiot would argue for or defend Warren Buffett even when he is conceding the point himself?  Are you a billionaire today?  Are you close to being one?  If you answer "no", then I can bet my life savings that you will never be.  You do not and never will have the power to aquire this size of futune.  Can you become a millionaire?  Of course, but that's not what we're talking about here.  If you think that someday you'll be in the Bill Gates or Warren Buffet club, perhaps your most appropriate short-term investment would be time in a mental institution. 

Let's be honest about what teams we're all on.  Let's be honest about what the billionairres are doing to us, how they are enslaving us personally and nationally to the debt that they issue, and realize that the only way out of this mess is 1) for our side to take more of their their money or 2) to default on our debts (their financial loss, not ours).  Either way, stop thinking about what the billionaires think and feel.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

Fictional times (podcast episode)

Click on the gray box to listen

Abscondo Podcast - 37 - Fictional Times

We have been living in fictional times of denial.  Nothing about this way of life holds up to any serious thought or questioning because our present course is unsustainable.  To cope with our day-to-day lives, we naturally cling to plastic, meaningless forms of entertainment and shallow thinking.  Anything that deviates from the current "normal" is shut out because it fails to prop-up our belief in the fictional world around us.

But our social structures, our economic systems, and our entire way of life has already begun to change in a disruptive way.  In the coming years, what we now think of as normal will come to be recognized as fictional.  Will we watch our lives slip away by clinging to the past, or will we embrace the future?

 

PodcastLogo


Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

The word that few are talking about

The word is future and maybe its time we get real about it.

During more stable times, it is enough that our thinking about the future extends maybe a few months, maybe into the next quarter, or perhaps into the next election cycle.  During these times, we can feel confident simply going to work, attending school, taking on a little debt, maybe saving a little, buying a house, and going shopping when we need something.  During these times, worries pretty much concern questions like, "Can I pay my bills for a few months if I lose my job?" or "What kind of career would make me happy?"  This way of life depends very much on economic and social stability; where well-established rules exist, we learn them, we follow them, and we are rewarded fairly.  This is the world that most of us grew up in and the world that most of us want to believe still exists.  But something very different has already begun and most of us don't see it.

In times of disruptive change, so much of the conventional wisdom we've built our lives upon begins to shift beneath our feet.  The old paradigms die and the new paradigms are either undeveloped or are not yet properly understood.  A clear example of this, in our lifetime, is what happend in Eastern Europe and Russia after the fall of Communism between 1989 - 1991.  Citizens of these regimes grew up understanding quite clearly how their society functioned, which kinds of behaviors were rewarded or punished, which kinds of thoughts were accepted and which were suspect.  Watching this transformation from the outside (in the Western World), most of us failed to perceive how unexpected and difficult this transition must have been for the average person at the time.  In just a few short years, most professions (and the social status associated with them) disappeared or had become irrelevant, the education that a person had earned was widely acknowledged to be worthless, a lifetime of money saved became nearly worth much less, and entire societies became nothing more than a memory or a butt of jokes.

We, in the West, watched this process with so much happiness and optimism.  How wonderful it was that the borders were opened (though few could afford to go anywhere or do much of anything at first), that Western products were flooding into these markets (though very few could afford them for some time to come), and that real freedom was possible (though with free-market capitalism comes ruthless consequences for those who cannot compete).  We easily ignored the fact that many lives -- perfectly happy lives -- were destroyed or thrown into turmoil for years to come (some never recovered).  Of course I'm not arguing that Communism should have continued just as it was; I'm only describing the reality of this drastic change to Democracy and free-market capitalism.  But I use this example because I believe it is directly relevant to what is happening in our world at present.

So come with me back to here-and-now.  The disruptive transition we are starting to witness is being caused by the following trends:

  1. The Debt Bubble (enormous debt that mostly cannot be repaid)
  2. Demographic trends in nearly all prosperous countries (disproportionately aging populations that cannot keep earning and spending as they have been)
  3. Asset bubbles everywhere (except, arguably, gold)
  4. Technological innovation (disrupting the traditional employer / employee model, radically changing social relationships, and making new kinds of revolutionary movements possible)
  5. Extreme economic injustice (2% of the world's population owns 50% of the resources at a time when an economic crisis is coming into focus...a crisis that can very easily be solved by taking some of that money from the rich)

These 5 trends have been happening for some time, but the first clear signs of the new reality ahead started to become apparent with the real estate / stock market / bank crashes of 2007 and 2008.  These crashes came about because the bubbles cannot be maintained forever.  Every bubble eventually has to burst, however hard politicians and businesses decision-makers deny this and try to fight it.  How were US real estate prices supposed to keep going up when wages were not (due to technology and extreme economic injustice)?  How were all the bad loans made by banks ever supposed to be repaid (they couldn't, which is why the banks passed them off to unsuspecting entities to blow-up at some point in the future)?  How can governments continue solving these problems when they are already stretched to near-bankruptcy (too much borrowing and low taxes through good times and no spending capacity left now that we need it)?   

The problems are global and the crash will be (is?) also global.  Here are some more important questions that I think should prove that we are approaching some fundamental, disruptive changes to our world-order:

  • How can consumer spending continue when most of it was done on credit and on rising property values?  Wages have been flat for some time in the US.  Spending was a result of second-mortgages made possible by rising real estate values.  Middle-class wealth (and consumer spending) in Eastern Europe and so many other places was also based on their real estate price bubbles.  So what is the new economic paradigm if it cannot be primarily based on consumer spending?
  • How can there be a middle class with money to spend if unemployment is high, wages are flat, and the wealthy 1-2% control most of the world's wealth?  Who are businesses supposed to sell to?  How can they hire more if they can't increase sales?
  • How can the GDP grow when the population is aging and shrinking?
  • How can low taxes on the rich be maintained when the requirements for elderly pensions are increasing and the cost of healthcare is increasing?
  • Why should employers take on the expenses and burdens of hiring employees when work can so easily and productively be outsourced over the Internet?
  • How can a world-order based on cheap, available oil continue after oil starts to decline?
  • How can debtor nations avoid defaulting on their loans when they are running at an annual budget deficit with a flat or shrinking economy?
  • Why should a population continue to tolerate impossible circumstances if the rules governing society are not just and no realistic ideas are being brought forth to solve the obvious problems we all understand?

Of course there are other similar questions, but I'll stop there for now.  Let's remind ourselves that the USSR collapsed because it wasn't feasible to continue under the prevailing economic model and social structure. Let's also remember that it took a long time.  For how many years and decades, during Communism, did the leaders know that the system could not continue indefinately?  For how long did they project "normalcy" to the population even when eventual failure was all but inevitable?  In the end, the collapse was mostly peaceful because leaders knew they had no real choice.   So they did not fight it.

This is what will happen to our current form of economic world order.  In future posts and on the Abscondo Podcast, I'll begin to describe what I think the next world-order will look like.  More importantly, I'll try to tie this back to what it means in our real lives.  I'm not interested in proving whether the crash will happen.  That's going to happen with or without my analysis. :-)  Instead, I'll be talking about practical solutions now and into that next phase.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

The morality of the London riots

Despite the breathless shock and the pleading rationalizations of TV news anchors, I don't believe that the rioters, looters, and vandals in London over the past week have any  responsibility to explain or to morally justify their actions at all.  These are angry, frustrated people living under a national and global system that, itself, cannot be morally justified...one that is designed to exploit its citizens economically, indiscriminately murder them in wars based on lies, rob them through slick financial instruments, and systematically loot the world of all of its natural resources.  This is a system that is designed and run to destroy lives and destroy the world for the benefit and pleasure of the elite billionaires.  How dare they ask the rest of us to morally justify anything.

When the world is, indeed, run by entirely selfish elite bankers, big oil, big defense, big pharma, etc., and no real democracy exists which would give its citizens the opportunity to instrument any real, fundamental change in the system (at least in the US or UK), when the government itself is clearly corrupt and illegitimate, then any action that involves the looting or destruction of property is probably not unjustifiable at all.

If individuals exist who are willing to risk enormous consequences (prison) to go out there and express this anger and frustration, then so be it.  When you oppress, sometimes people get fed up and fight back.  It is what it is and it should be totally expected.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

The still-coming Great Depresssion

A reader recently posted a comment in response to an old piece I did called The coming Great Depression.  She asked me, since the original post was more than a year old and obviously my predictions have yet to come true, whether I still believe what I originally wrote in the post.

The short answer is "yes", I still think America is headed for an economic crash much greater than anything in our history.  As I should have known upon reading Harry Dent's book, the problem is that the exact timing is always difficult to predict.

I know a little bit about bubbles, firstly by having worked in the software industry in Seattle in the late 1990's.  During the Internet / tech bubble, stock prices went so ridiculously high that it seemed hard to believe.  Investors wanted in because to remain on the sidelines was to miss out on a sure thing...endless exponential growth in stock prices.  Deep down, everyone knew it was a bubble...but, as in any bubble, rational doubts are eventually burried somewhere in that sense of normalcy surrounding you day after day.  After all, how can you be right when everyone around, even the entire press, says you're wrong?  This sort of thing is a battle between, 1) on one hand, your rational mind and inner-voice, and 2) voices and messages from the society around you.

The same thing happened with the real estate bubble.  I remember, back in 2003 and 2004, watching my coworkers buy houses they couldn't really afford with zero money down, even with variable rate interest loans!  I told them that it was foolish...the real estate prices could not keep rising forever.  But the conventional wisdom at the time was that real estate always goes up.  Sure.  Since 2007, prices have been going down.  Real estate prices will decline even further in the coming years.

So now I look at things in 2011.  Now EVERYTHING is in a bubble.  Stocks, real estate, debt, commodities...everything.  The Federal Reserve and the IMF keep printing money and pumping it into the system just as fast as one might pump air into a leaky baloon (See Quantitative Easing).  How long can they keep pumping?  What if the fragile baloon bursts anyway?  And when?  Now my guess is that the crash will start in late Summer, 2011.  But it could happen today.  It could happen next Summer.  I don't know.  But it will happen.  The USSR was bound to collapse, and it eventually did.  The USA (as we know it) is bound to collapse, and it eventually will.

Strangely, I found this highly recommended piece on the front page of Yahoo! Finance this morning.  This author goes even further than I have, than Harry Dent has...even further than Max Keiser has.  It is worth a read.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).

On Wisconsin

Like most of America, I've been intrigued by the events in Wisconsin over the past few weeks.  I actually grew up in small-town Wisconsin, about two hours from Madison.  My parents are working-class, Republican, and Christian.  I am a product of the excellent Public School system of that State.  Most of my teachers were truly decent people who instilled in me a strong sense of justice, fair-mindedness, and a keen understanding of right and wrong.

Wisconsinites are mostly simple, hard-working, honest, and solid people.  One of the highest compliments that one Wisconsinite can pay to another is to say that you are "down-to-Earth".  Well…18 years, two University degrees, two states, and one country later…now I can probably be described as anything but down-to-Earth.  Nonetheless, I'm always welcomed with open arms by my family and friends each time I visit.  

When I watch those hundreds of thousands of protesters out there in Madison, I would be honored to call myself one of them.  I've been thinking a lot lately about the idea of solidarity.  I've been asking myself who I should support here: the Union-busting, budget-controlling, tax-cutting, renegade Republicans in the state (led by their own Governor Scott Walker)?  Or should I support the protesting teachers, public workers, idealistic students, and policemen?  I guess I don't have a direct stake in either side.  That might sound selfish, but what I realized is that this does come down to something very simple: self-interest.

The Republicans and their extremely wealthy, elite funders are interested in destroying the Unions to protect their own self-interests.  They want to be able to pay for more tax cuts for corporations and for the rich.  They want to undermine the current educational system so that they can have better control over the curriculum.  Quite simply, the goal behind this bill is to cut programs that benefit the middle-class so that they can get their hands on even more money (even if it comes from the paychecks of hard-working state employees).  They’ll never have enough because there is no limit to self-interest.  I guess they have every right to look after themselves and to do whatever they wish in order to advance their cause.

At the same time, every single tax-payer, teacher, public employee, police officer, librarian, and anyone else who feels compelled to go out there during the freezing-cold Wisconsin Winter also has every right to look after their own self-interests.  In my view, this isn't necessarily even about what is right or wrong.  After all, it is apparent that arguments concerning right and wrong don't go very far in today's global economy anyway.  We are living in an increasingly brutal world of diminishing resources, environmental destruction, financial scandal, insurmountable debt, and declining economies.  In these next years and decades, we will increasingly be thrown into a battle for resources and survival.  

The wealthy elite, those few thousand people who control an enormous amount of the world's resources...they understand this.  They are using any means necessary, popular or not, honest or not, decent or not, to get everything they want.  They care nothing about everyone else.  There is no goodness or morality in their decisions, in their actions, or in their character.  They do things only because they can.  They are calculative and heartless in their greed and they never will be any different.  They are invisible ghosts in their ivory towers and in their gated communities on some remote island.  Yet their work remains visible to us in everything we do.  After all, they are in control of a system that they have designed and they control. 

Who are these people?  They are the elite bankers, corporate board-members, and the Fortune 500 Executives.  They are supported by an enormous network of politicians who they have purchased (practically the entire national Democratic and Republican Parties).  They also own the media.  They do all of this for one reason: to get more for themselves.  And more for them naturally means less for the rest of us.

So what can the rest of us do to fight for our share?  After all, we are all part of a Capitalist system and are all motivated by our own, selfish interests too, right?  Are we not all trying to give our children a better life, earn a better education for ourselves, buy healthier food, have a little fun, do some traveling, save some money, and live in some degree of health and comfort?  There is a market demand for quality of life and, regardless of whether we are Liberal or Conservative, we should feel no shame in pursuing our own self-interests, right?  The question is, how can we win in the game we are playing in this casino designed by and controlled by the increasingly powerful elite?

We can work hard on the job.  When we please our employers, they tend to give us enough to keep us around.  We can work hard in school.  When we educate ourselves, we become more valuable to a business or government employer.  We can negotiate effectively as individuals when we apply for jobs.  We can start a business that serves others.  We can save more of the money we earn so that we become a bit richer ourselves and less dependent upon the already-rich.  But sometimes this still isn’t enough...not when we are under attack by a relentless elite (like Wisconsin currently is).

The wealthy elite use their power to control the government, the companies we work for, and the media.  But the primary advantage “We the People” have is in our numbers.  There are only a few thousand of them.  But there are millions of us in America and billions others around the world.  If some of us happen to decide that we will not continue to act, as we have been, as peasants…if we decided that it is in our self-interest to go out and fight as a collective…if some of us want to negotiate through the collective power of a Union…if some of us want to take to the streets and fight, then my only response is that this is your natural right.  Your unquestionable right to do this goes beyond morality, ideology, or argument.  The question is not whether or not you should, the question is how far are you willing to go?

Oh, and anyone in our lives, in our media, or in our government that takes the side of the wealthy elite in this struggle is either 1) working for them, or 2) fooled by them.  Pay no attention.  You have a right to live your life just like the billionaires do.  Stand tall and fight like you mean it.

Mark Manney is the founder of “I am” by Infobeing (www.infobeing.com) (mark.manney@infobeing.com).