Rise Of The Psychopaths

One of the most troubling developments of this new century, is the increasing level of authoritarianism in supposedly democratic states. The Nanny-State encroaches on peoples' lives more every passing year. Police become more 'militarised'. Secret Police organisations grow where once the very idea would have been repulsive. (I define secret police as authorities that function largely above the Law, like the Gestapo.) In countries that claim to be 'democratic', a person can be surveiled and searched without probable cause, arrested without warrant, held beyond the statutory limits without being charged with any crime and denied the remedy of Habeas Corpus. Such actions would have been unthinkable, fifty years ago.

So, what's moving society in this direction? Why do people in democracies continue to vote for leaders who erode personal liberties and economic freedoms?

I think this gradual slide into Orwellian authoritarianism is the symptom of a profound underlying weakness in the democratic process; When the opportunity to rise to power is opened to all, certain personality types will do so.

Psychopaths.

Key Symptoms of Psychopathy

    * glib and superficial

    * grandiose sense of self-worth

    * lack of remorse or guilt

    * lack of empathy

    * deceitful and manipulative

    * shallow emotions

    * impulsive

    * poor behavioral control

    * need for stimulation/prone to boredom

    * lack of responsibility

    * early behavioral problems

    * adult antisocial behavior

That's an uncomfortably accurate description of many rich, famous and powerful public figures today. Power over others is, to a psychopath, like catnip to a feline. The psychopathic personality is literally unable to give up trying to get appointed (or elected) to that big office. Eventually, any system that allows anyone to rise to whatever level they can achieve will come to be dominated by this personality type.

Then, society goes into a self-destructive terminal phase.

This, I think, may be the 'Achilles-Heel' of democracy. Hereditary monarchy may not be 'democratic' but as a mode of governance it has stood the test of time, providing political stability for millenia.

Feet Of Clay

Every civilisation has had (I can't use 'enjoyed') organised religion. Since civilisations evolve, it would be fair to say that, as in biological organisms, unnecessary functions and appendages would eventually atrophe and disappear. This implies that religion serves some purpose necessary for civilisation to function.

I think the real function of organised religion is to legitimise the existence of the ruling elite and justify their actions.

Unsurprisingly, Industrial civilisation has its own religion. It has a diety to be worshipped, a founding prophet and a collection of saints, a priesthood (of which some of the aforementioned saints were once members), a number of (sometimes antagonistic) sects, elaborate private rituals,  and of course places of worship for the laity. It even has a name;

Economics.

The diety of course, is money. Money has a number of aliases - Dollar, Euro, Yen, Pound, Franc and so on.  Most agree the founding prophet to be Adam Smith and the saints are those economists who added something signifigant to the canon Law - people like John Maynard Keynes. The priesthood are of course, the current crop of economists who are members of different sects that go by names like 'Chicago School', 'Keynesians', and so-on. The priesthood protects it's 'inside' knowledge of the religion with its own special language and shrouds its activities in elaborate ritual (economic theory and calculations) from which it 'reveals' its 'wisdom' to the laity. And finally, there are the places of worship. The shopping malls.

It's impossible for any group to wield authority over any population unless a majority of those people consent to be ruled. This is true even in the most opressive dictatorship. Consent is forthcoming when the majority believe that the authority of the ruling group is legitimate. Legitimacy can take many forms but since the primary goal of the ruling group, is to extract tribute from the population, it makes (economic) sense for them to use the most 'cost effective' methods to ensure compliance. (The most feathers, for the least hissing, as the saying goes.)

At the beginning of the modern Indistrial era, the new ruling class saw clearly, the need for something that would legitimise their rule and traditional religion no longer fitted this emerging socio-economic model, based as it was on the ideas of individualism, material progress and the 'scientific method'.

Economics legitimises and justifies all Industrial ruling systems, from Capitalism to Communism. When the authorities' legitimacy rests on the credibility of the enabling religion, that religion had better 'produce the goods'. Because, as their credibility washes away, so does the legitimacy of the ruling elite they support. When John Maynard Keynes wrote his General Theory, the world was a very different place than it is today. His theory may have described the (economic) universe correctly in 1936 and the decisions made by politicians based on it could and did produce the results the theory predicted. That was then, this is now. Keynes' theory doesn't accommodate Peak (anything). One has only to look at the financial mess that continued application of the policies indicated by Keynes' theory have caused, particularly in the U.S. and Europe, to see that 'mainstream' economics is proving to have feet of clay.

Calls to adopt a new economic theory, one that takes today's realities into account, abound. But no authority seems to be taking heed. 'Theory' has solidified into 'dogma'. Every day that authorities continue to enact policy based on this discredited model, they piss away a little more of their legitimacy. Society breaks down when a significant minority no longer see the rulers' authority as legitimate. Society collapses when that minority, becomes a majority. The Soviet Union failed as much from loss of legitimacy as from military defeat or economic collapse. The same goes for the wave of 'regime changes' sweeping across the Middle East and North Africa.

A protest still acknowledges the legitimacy of authority. A riot, on the other hand. . . 

And so, it begins.

The U.S. has run up debts that are unrepayable under any circumstances. An unravelling was (and is) inevitable. And complimenting the U.S debt, is the soverign debt crisis in Europe. The collapse of one will bring down the other. With the loss of its two largest markets, Chinas' industrial machine will come to a grinding halt and that doesn't bode well for Australia. Our economy is based almost exclusively on exporting commodities, so as soon as the demand for minerals ceases, all that'll be left is farm produce. Problem is, industrial farming methods exhausted our poor soils decades ago so Australian primary producers are dependent on imported fertilisers, herbicides and pesticides (not to mention fuel, lubricants and seed) to maintain yields. And it all has to be financed.

The retail sector is already suffering as people sense, instinctively, the need to conserve money for essentials, like fuel, electricity and rent. Have you noticed that luxuries are getting cheaper while necessities are getting more expensive? That's a classic deflationary spiral. My call is that official interest rates will fall initially, as the RBA tries to stimulate a slowing economy, then they'll rise as sources of credit dry up in the major financial centres - New York, London and Tokyo. Then as lending dries up, the economy will slow to a crawl and we'll be in a deep deflationary recession.

It's essential to understand how the powers that be managed to get it so wrong and lead the world into financial disaster, if we want to spare our descendants from a similar fate.

At the root of it all, lies a fundamentally dishonest money system. Debt-based money is arguably, the greatest swindle of all time. On one hand, money is an artifact and on the other, it's an idea, an agreement between people. But the idea and the agreement is far more important than the artifact.

I don't think a sophisticated society is possible without money. Some may argue that the economy of Medieval Europe functioned largely without it and it is true that a typical peasant of that time handled money rarely, if ever in their lifetime. But the market she participated in, offered only the slimest inventory of goods and services - a subsistence economy.

Money, like language, writing, folklore, tradition, is a common - something that belongs to all and none at the same time. The highest function of money is to facilitate the exchange of wealth (commerce) between individuals. But the money systems of the industrialised world have been privatised. Those who enjoy the exclusive privilege of issuing the world's money (by and large, private, for-profit corporations) extract an invisible, continuous tribute from everyone who is forced (by governments) to use 'their' money. It's called interest and inflation. Privatisation is all about privatising benefits to those doing the 'enclosing' but this usually means socialising the costs.

A debt-based money system mandates a growth-based economy. If the size of the economy can't grow in step with the (interest-driven) growth of the money supply, the latter will hyperinflate and crash. This, by the way, is the fate of every debt-based money system in history. As long as the economy (of real, tangible, physical goods and services) can grow, the curency maintains it's relationship to the total quantity of 'stuff' and you have price stability. But, the physical world is finite. There are only so many things that people can consume. Hence, the relentless drive of marketing and advertising, the proliferation of 'planned obsolescence', fashions and fads. In such a system, everything that can be, must be 'monetised'.

But at some point, the Market will reach 'saturation'. Everything tangible that can be monetised, has been. But the money supply has to keep growing so the financial sector now starts investing in itself. 'Interest' is a 'something-for-nothing' concept and because it takes almost no energy or raw materials to create ledger entries, all restraints cease. This wouldn't be a problem except for that small, inconvenient fact that money measures real, tangible wealth. A Dollar spun out of a derivative trade (in which nothing physical or tangible is produced) is indistinguishable from a Dollar earned by producing a bag of Potatoes (something tangible and valuable).

But since it takes almost no time, energy or raw materials to create ledger entries, the number of Dollars the derivative trader can generate, far exceeds the number of Dollars the Potato farmer can earn, because she has to deduct the time, energy and raw-material costs from the Dollars she earns. The derivative trader will always have more dollars than the Potato farmer and hence can outbid them for the physical goods and services on offer. In their own rational self-interest, investors will gravitate to the sector of the economy that offers the highest returns. But under this system, the production of real, tangible wealth is strangled.

No one (in their right mind) will lend money unless there is a plausible promise that it will be repaid, preferably with interest. Peak Oil signals the end of growth in the physical economy. This means that a lender might get a Dollar back from a borrower but thanks to inflation, that dollar returned will not buy as much 'stuff' as it did when she lent it. So the lender must charge interest at a rate higher than inflation if she is to extract value from the transaction.

So, debt-based money drives the so-called 'business cycle' of boom and bust. Unless the excessive debt is permitted to clear through the mechanism of deflation / recession /depression, the system will hyperinflate and collapse. All the economic 'bubbles' of the last fifteen years, were attempts by economists and governments, to avoid this 'correction'. I can only assume that no politician wanted to preside over a depression on their 'watch'.

I don't think the collapse of the Euro or the U.S. Dollar will be the end of the world. But it will impact everyone to a greater or lesser degree. Understanding what's happening is the gateway to planning and preparing for uncertain times. It beats standing, like a deer in headlights, while events run you over. I think the stories of people who have lived through periods of economic turmoil may be of value. Check out this essay, by Fernando "FerFAL" Aguirre.

The Root of all Evil?

I disagree. Many perceived evils however, can be attributed to the love of money and the need for it (in a monetised economy) can drive people to do evil. But money itself isn't evil. It just is. Just like a chainsaw or a knife or a car or a firearm, it's not the thing which is evil. It's the intent with which it's used;

"Until you change the way money works, you change nothing." -  Michael C. Ruppert

The way that money works, the rules by which it's created, destroyed and circulated, all dictate how the economy is organised and operates. The fact that money is lent into existence, at interest, is the root-cause driver of inflation and the so-called 'economic growth imperative' - the principal problems facing industrial civilisation. Added to this, is the idea that money serves three functions - medium of exchange, measure of (relative) value and store of wealth. It's this last 'function' that distorts the way money works.

Money serves its highest purpose - enabling the exchange of goods and services in a complex market (one with a sophisticated division of labour) by circulating. The more rapidly it circulates - changes hands - the more 'economic activity' there is and therefore, the more wealth is created. Anything that inhibits this circulation, depresses the level of economic activity. Whether by decree or by some intrinsic property of money itself, if it's used as a store of wealth, people will hoard it and this has the effect of reducing the total amount of money actually circulating. This is why I'm not a fan of using precious metals as money. Doing so is inherently deflationary.

Money is not wealth. It's only a way of measuring wealth. 'Wealth' is what's created when raw materials and energy are combined creatively, to produce uesful things. While a person with a lot of money can be (and is, often) described as being wealthy, what's really being said is that the wealthy person has access to many more goods and services than someone who has little or no money. However, if this person were stranded on a desert island with several suitcases of money, it would be worthess to them, in the absence of somewhere to spend it.

Price doesn't equal value. Here's a neat little experiment you can do, to illustrate this point; If you've bought and sold a house, convert the price you paid into ounces of Gold, at the price Gold was selling for when you purchased the house. Next, convert the price you got into Gold, at the price of Gold was at when you sold the house. You can see relative value when you compare the relationship between things of intrinsic value rather than money. The fact that your house sold for four times what you paid for it, only indicates that the money someone used to buy it from you, was worth a quarter of that which you used to buy it. Inflation is a monetary phenomenon. A Roman senator would have paid around one ounce of Gold for a high-quality toga. You'll pay around one ounce of Gold (equivalent), for an Armani suit, today.

'Peak Oil' is a shorthand way of refering to the raft of economic consequences that occur, when a 'growth-addicted' economy runs into hard ecological and environmental limits.

When money is lent into existence at interest, only the principal is created. In order to repay both the principal and the interest, another loan must be taken and so a 'positive feedback loop' is created. The total amount of money in existence must increase constantly and the only way to prevent such a system from hyperinflating and collapsing, is to continuously increase the total quantity of goods and services available in the economy. The problem is that while it takes almost no energy or rescources to create money (because it's principally nothing more than ledger entries), it does take energy - quite a lot of it - and raw materials to create the corresponding wealth it represents.

You can't have unlimited growth, in a finite environment.

This is the point that Industrial civilisation has now reached. Peak Oil means the end of 'economic growth' as we know it. While I disagree that money is the root of all evil, I do think that money (or more specifically, the way it works) is the 'root-cause' of much of what's wrong with our civilisation. I offer a couple of ideas on how this problem might be addressed;

1. Change the way money is created: While it varies in detail from country to country, the current process in all countries with 'modern' monetary systems basically consists of the Treasury issuing a note or bond for let's say, a million dollars. This note is taken to the Central bank, which credits the Treasury's account with a million dollars and then charges one to three percent interest on that million forever more. I suggest that instead of interest, the central bank charges a one-off fee, which comes out of the balance created. Absent the interest imperative, the money supply doesn't need to grow and can even shrink if needed by the simple expedient of the Treasury buying back its notes from the central bank.

2. Use something else as a 'store of wealth'; This could be as simple a denominating account balances in something other than money, like quantities of a valuable commodity. When you deposit your wages the dollars are converted to a quantity of something (Gold, silver, copper, whatever) and when you make a withdrawl the (current) dollar amount you ask for is converted to a quantity of the commodity your account balance is denominated in, and that amount is deducted while dollars are passed across the counter, to you. This has the effect of insulating savings from inflation, which is as I pointed out, a monetary phenomenon.

A number of excellent essays on money, can be found at Reinventing Money. The link is in the sidebar.