>Entropy Gets No Respect

>by John Michael Greer

The Archdruid Report (August 26 2009)

Druid perspectives on nature, culture, and the future of industrial society

The relation between modern industrial society and the scientific ideas that supposedly guide it is more complex than a casual glance will necessarily reveal. The ideology a society believes that it embraces and the assumptions about the world that actually underlie its actions and institutions are not uncommonly at odds with one another. It often takes the most strenuous sort of willed inattention to fail to notice the gap, but efforts toward that end can count on the support of public opinion as well as the more tangible backing provided by economic interests.

Consider the clash between the Christian and liberal values allegedly embraced by the great powers of nineteenth century Europe and the ruthless political and economic exploitation imposed by these same powers on the subject peoples of their huge colonial empires. The result was a rush to find some justification for European empires other than the obvious one, which was simply that Europeans wanted the wealth and power they could get by exploiting the rest of the planet. As Stephen Jay Gould chronicled in his engaging The Mismeasure of Man (1981), generations of scientists thus spent their careers trying to argue that the “white race”, that imaginary and variously defined beast, was biologically superior to the other “races” on the planet.

These efforts fell afoul of a minor detail of anthropology. It so happens that people of European descent fall toward the middle range of a great many biological indices; people of African descent tend toward one end of most of these indices, and people of East Asian descent tend toward the other. Thus it proved impossible to argue, say, that Britons were superior to Africans without providing evidence that Chinese were superior to Britons, and claims that Britons were superior to Chinese ended up just as effectively proving that Africans were superior to Britons. Still, these efforts continued right up into the first half of the twentieth century, because the alternative was to admit that European domination of the planet was a straightforward act of piracy backed by nothing more edifying than a temporary advantage in military technology.

The industrial nations of the early 21st century are in a very similar predicament – or, more precisely, in two very similar predicaments. On the one hand, the relationship between the industrial nations and their Third World client states is very little more equitable than that between the British, say, and the quarter or so of the Earth’s land surface that was occupied by British troops and exploited by British economic interests in the nineteenth century. Claims of racial superiority having fallen out of fashion, the industrial nations nowadays justify their position by claiming that their political and economic institutions are superior, and the rest of the world’s nations can share exactly the same lifestyles of abundance if they only adopt these.

Today’s industrial societies treat this claim as a self-evident truth. Of course the colonial powers of the nineteenth century treated the claim of European racial superiority as a self-evident truth, too, and the two claims are equally bogus. The abundance enjoyed by the world’s industrial nations just now, after all, is the result of the fact that those same industrial nations use the great majority of the world’s fossil fuel production. Given that the current industrial nations have burnt around half the planet’s fossil fuel resources themselves, leaving the remaining half to fuel themselves and the rest of the world in the future, dangling the carrot of industrial prosperity in the faces of Third World countries at this point in the historical process is dishonest at best.

Of course it does seem to be true that representative governments and corporate-capitalist economies are more efficient than the competition at turning abundant fossil fuels into suburban lifestyles. This does not make representative governments and corporate-capitalist economies the cause of the prosperity of today’s industrial nations, any more than the skin color of people from Europe was the cause of Europe’s ascendancy during its age of empire. Still, just as the unmentionable realities behind European imperialism made it inevitable that there would be attempts to justify it via bad science, the equally awkward realities behind the ascendancy of today’s industrial powers provide the push behind well-meaning attempts to package the industrial world’s institutions for export to the Third World.

The same sort of logic, on an even deeper level, governs the relationship between the nations of the modern industrial world and the foundation of those nations’ present prosperity – the Earth’s fossil fuel reserves themselves. The hard reality is that the minority of us who happened to have been born in a few powerful countries squandered half a billion years of stored photosynthesis to give ourselves a brief period of spectacular economic abundance, and by doing so, foreclosed the chance that anybody else would enjoy that same abundance in the future. Fossil fuels are not renewable resources in any time frame accessible to our species. Every barrel and ton and cubic foot of fossil fuel we use now is subtracted from the total available to our descendants; despite an orgy of handwaving, no other resource can provide anything approaching the glut of cheap abundant energy on which our lifestyles of relative privilege depend.

Yet this point of view is at least as unmentionable in polite society just now as were the gritty realities of European colonialism in its time, or the equally gritty facts underlying the ascendancy of the world’s industrial nations over the Third World today. The strenuous efforts to find a racial basis for European supremacy a century ago, and the equally vigorous efforts to hold up contemporary Western institutions as the key to prosperity and peace in the Third World today, thus have precise equivalents in the enthusiasm with which every imaginable alternative energy resource gets treated by government officials and media pundits throughout the industrial world.

None of these resources can actually provide the cheap abundant energy needed to maintain the kind of society we have today. I know that this is a controversial statement just now. Still, it’s worth noting that every alternative energy resource that’s actually been brought into production has turned out, at best, to provide a modest increment to existing energy supplies, and that only if you don’t keep track of the energy subsidy the new resource gets from fossil fuels. Of course technologies that haven’t been put into production look more promising, and the further they are from implementation, the more impressive they look; hype, often geared to the very practical goal of selling shares in IPOs, is at least as abundant in the energy field as anywhere else.

And this, dear reader, is where the gap between our society’s official respect for science and its real attitudes toward the world shows up with remarkable clarity.

Once again, the role of the B-movie heavy in this drama is played by the second law of thermodynamics, better known as the law of entropy. As mentioned in a previous post, this is the gold standard of physics, the law you can’t break without, as Sir Arthur Eddington put it, collapsing in deepest humiliation. Everybody in the industrial world with the least smattering of a scientific education knows about it, or at least was introduced to it, and yet next to nobody wants to talk about how it affects the emerging energy crisis of our time.

The crucial implication of the law of entropy, for our purposes, is that it’s not energy as such, but a difference in energy potential, that allows work to be done. Imagine two smooth round boulders of equal weight, one of them sitting on a flat plateau and the other sitting on the slope of a steep hill. If the two are at the same distance from the center of the Earth, gravitation gives them exactly the same amount of potential energy. Still, if you give the one on the plateau a push, you aren’t likely to do anything but strain your muscles, while if you give an equal push to the one on the slope, you may send it rolling down the hill, squashing everything in its path.

The difference is that every part of the plateau has the same energy potential due to gravity, while every part of the slope does not have the same potential, and the boulder rolling down the slope can cash in some of the difference in potential to keep itself moving. The greater the difference in potential, the greater the payoff in terms of energy released. Notice, though, what happens when the boulder on the slope finally lurches to a stop at the bottom of the valley below: it stops, and another push won’t get it going again. It still has a lot of potential energy in that position – it has, in theory, 4500 miles to fall until it reaches the center of the earth – but there’s nowhere it can go to release any of that energy. Without a difference in potential, how much energy you’ve got is a meaningless statistic. (This is, incidentally, why the quest for zero point energy is an exercise in absurdity; by definition, zero point energy is at the lowest possible potential state, and therefore cannot be made to do any work at all.)

The same rule applies to every energy resource: there has to be a difference in potential that allows energy to be released, and the bigger the difference, the bigger the benefit. With petroleum, the difference is in chemical energy. Those long chains of carbon and hydrogen atoms have a lot of energy to release when they come apart and combine with highly reactive oxygen instead; the short chains that form natural gas have less, and the carbon in coal has less still, though it’s still a lot by the standards of other energy sources. All the extraordinary things our species has done with fossil fuels over the last three hundred years are functions, in effect, of the difference in chemical potential energy between a barrel of oil and a cloud of smoke.

Why are these reflections as welcome in the collective conversation of our time as a slug in a fresh green salad? Because they point up the profoundly shortsighted nature of the decisions that made the world in which all of us now live. The immense potential energy locked up in fossil fuels was put there by millions of years of photosynthesis. It’s as though, to return to our metaphor, living things down through the ages rolled boulders uphill and perched them high above the valley floor. After a half billion years or so, our species came along, and figured out how to roll those boulders downhill. As long as there are still plenty of boulders in place, we can continue using them, but when the rate at which we want to send boulders rolling downhill outstrips the boulder supply, it’s a waste of breath to insist that we can get the same results by bouncing pebbles across the valley floor.

This is basically what the more enthusiastic proponents of alternative energy are saying. By the time sunlight gets to us, after traversing 93 million miles of empty space, it’s simply not that concentrated an energy source; that’s why it took the Earth’s photosynthetic organisms so many millions of years to build up the energy reserves we now squander so freely. Wind and hydroelectric power are both secondhand sunlight, the product of natural cycles driven by the sun; the same is true of every kind of biofuel, of course. Nuclear energy is the one nonsolar energy resource we’ve got, but it has severe problems and limitations of its own, not least the fact that the fossil fuel inputs needed to build, run, and decommission a nuclear reactor are so vast that there’s a real question whether nuclear power is a net energy source at all. (Of course the further a nuclear technology is from actual implementation, the better it looks, and the ones that are still vaporware look best of all.)

Does this mean alternative energy is a waste of time? Of course not. Modest as the energy outputs from alternative sources are, they’re what we’ll have to work with when the fossil fuel is gone. What it means, rather, is that the particular kind of civilization we’ve built in the last three centuries will not survive the end of cheap abundant fossil fuels. A society that is used to getting things done by rolling huge boulders down steep slopes is going to have to learn to make do on the much less lavish results of bouncing pebbles across the flat.

The problem here is that very few people want to deal with that reality. The great majority will make themselves believe in zero point energy and evil space lizards and any other absurdity you care to name, rather than gulp and take a deep breath and admit that the prosperity we’ve enjoyed for the last three centuries was bought at our grandchildren’s expense. I sometimes suspect that one of the reasons so many people like to imagine an apocalyptic end to the industrial age is that sudden extinction is easier to contemplate than the experience of slowly waking up to the full extent of our own collective stupidity.

And that, dear reader, is why entropy has become the Rodney Dangerfield of the contemporary energy debate. It may be the gold standard of physics, but in the collective conversation about our future, it don’t get no respect.


I’m pleased to report that both the new projects mentioned in last week’s post are moving ahead. Readers who are following “Star’s Reach”, my online blog-novel about the world after peak oil, will want to know that a new episode has been posted at http://starsreach.blogspot.com.

The Cultural Conservers Foundation is also moving forward. Those interested in participating in a more focused discussion of the subject are invited to join me on a newly founded email list, cultural_conservers@yahoogroups.com. The list is moderated, and the same rules apply there as here – no spam, no flaming, no trolls, et cetera. The fast way to join is to send an email to cultural_conservers-subscribe@yahoogroups.com, with “subscribe” as the subject line.

The process of starting a nonprofit also takes a certain amount of cash; I’m putting my own money into it, but would welcome help with the startup costs. A PayPal account for the Foundation under the address culturalconservers@verizon.net has been set up to handle donations for the foundation. If you haven’t used PayPal before, and are minded to make a donation, the website at www.paypal.com will walk you through the process in a very user-friendly fashion. Many thanks in advance for your help!


John Michael Greer has been active in the alternative spirituality movement for more than 25 years, and is the author of a dozen books, including The Druidry Handbook (2006) and The Long Descent (2008). He lives in Ashland, Oregon.


Bill Totten http://www.ashisuto.co.jp/english/index.html

>The US Economy: Designed to Fail

>by Richard C Cook

Dandelion Salad

richardccook.com (February 26 2009)

We Hold These Truths (2007) by Richard C. Cook

President Barack Obama showed a great deal of gumption in standing before Congress last night delivering his first speech to the joint assembly. All the trappings of power were on display as members of the House and Senate, the Supreme Court, the Joint Chiefs, the Cabinet, and the VIP guests hugged and waved at each other, radiant in their tailored attire only two nights after the Hollywood stars put on their own show on Oscar night.

Too bad neither the president, nor Vice President Joe Biden and Speaker of the House Nancy Pelosi applauding on the podium behind him, nor the jubilant Democrats with their solid majorities, nor the grumpy Republicans slouching in the minority across the aisle, know what they are doing as economic extinction stares the United States of America in the face.

Yes, it’s that bad. The day after the speech the Dow-Jones dropped to 7,271, almost fifty percent off its October 2007 high, with no bottom in sight. According to the Washington Post, the Big Three automakers are now facing a “bottom-up” collapse of their component supply lines if their vast network of suppliers doesn’t receive new federal loans within a week. Worldwide the situation is just as bad. The UN’s International Labour Organization reports:

“What began as a crisis in finance markets has rapidly become a global jobs crisis. Unemployment is rising. The number of working poor is increasing. Businesses are going under.”

President Obama’s speech was long on resolve but short on substance. He assured the nation:

“We will rebuild, we will recover, and the United States of America will emerge stronger than before”.

But accomplishing this depends entirely on one thing: more federal deficit spending to serve as the economic engine in an economy where bank lending has dried up because businesses and consumers can no longer repay their loans.

Unfortunately, the deficit is approaching the breaking point.

During fiscal year 2009 the US Treasury is on-track to pay over $500 billion just in interest payments to finance the already-existing debt. New debt this year will likely exceed a trillion dollars. The total debt burden on the economy as a whole could reach $70 trillion by 2010, with annual interest payments for individuals, households, businesses, and all levels of government likely to reach $3 trillion out of a $14 trillion GDP that is now in sharp decline.

Financing the deficit continues to depend on whether China will still purchase Treasury bonds. This is why Secretary of State Hillary Clinton said frankly during last week’s trip to China: “We are relying on the Chinese government to continue to buy our debt”.

But at least President Obama is trying. He knows the economy can only recover if growth is rekindled. So he is focusing on the creation of jobs that translate into real worker income. But can he reverse a generation of job outsourcing and income stagnation? I don’t know of anyone who believes he can. Will the Republican nostrum of tax and spending cuts do anything? You jest. Not when unemployment is approaching Great Depression levels.

But neither President Obama, nor his Democratic supporters or Republican antagonists, should feel badly about what is happening. This is because the system they have been given to work with was designed to fail. The US was saddled long ago with a debt-based monetary system, whereby the only way money can be introduced into circulation is through bank lending. It was the system that was instituted in 1913 when Congress gave away its constitutional power over money creation to the private banking industry by passing the Federal Reserve Act.

It was then that the catastrophe we are now facing became inevitable. It took nearly a century to get here but it finally happened. We should have known it was coming when Federal Reserve-created bubbles replaced economic growth from our disappearing heavy industry, starting with the recession of 1979-83. We could have seen it coming when the dot.com bubble collapsed in 2000-2001, and Fed Chairman Alan Greenspan worked with the George W Bush administration to substitute the housing bubble for a real recovery.

The day of reckoning is here. So don’t worry, Mr President. It’s not your fault. When the collapse takes place the international bankers who will take over might even let you keep your job.

Richard C Cook is a former US federal government analyst. His book on monetary reform, We Hold These Truths: The Hope of Monetary Reform, is now available at www.amazon.com. He is also the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age (2008). He can be contacted through his website at www.richardccook.com.

Also see The Cook Plan (video): http://dandelionsalad.wordpress.com/2009/02/08/the-cook-plan-video/

(c) 2009 by Richard C. Cook


Bill Totten http://www.ashisuto.co.jp/english/index.html

>Global starvation imminent as US faces crop failure

>by Marc Davis

culturechange.org (August 23 2009)

Editor’s commentary: The above headline and first sentences of a recent report from CommodityOnline.com grab one’s attention: “The world faces ‘mass starvation’ following North America’s next major crop failure. And it could even happen before year’s end.”

World leaders and the corporate media don’t appreciate the role of petroleum in food production and distribution. On top of that typical error in the report, several other contradictions make for a jaw-dropping reading experience. Such as, meet the meat-caused grain strain by growing more grain. How? more fertilizer.

One would think it’s easier for top authorities to warn of petroleum dependency than to predict famine based on climate change and farming-sector failures from the financial meltdown that began last autumn. No.

An indication of how petroleum is separated from agriculture in the minds of top commodity analysts, such as Don Coxe of the Coxe Commodity Strategy Fund: “the next food crisis – when it comes – will be a bigger shock than $150 oil” [June 2009, from story below]. Coxe was General Counsel for the Canadian Federation of Agriculture, but one has to wonder what he ever learned about petroleum. His interview is the basis of the featured story below.

The article is still an eye-opener for many who have ignored ecology: “In recent years, North America has been blessed with ideal weather conditions for crop cultivation, leading to bumper harvests, Coxe says. But he believes that climate change will soon lead to a trend towards shorter dry cycles, beginning maybe as early as this fall, which will exacerbate a supply-demand squeeze. ‘We’ve been incredibly lucky with the weather up to this point … In fact, the major inflation of the 1970s was driven more by food than by oil’.”

But Coxe shows he is no Lester Brown: “Sadly, this scenario could have been avoided had successive North America’s governments not weakened the farming industry with too much political interference, he suggests” – as if the solution is to continue to try to produce more and more food for more and more people, when resource constraints intensify. Don’t expect a reporter or editor to look into this big picture, for what profit is there for the media corporations’ main constituency of fellow corporations?

The report below does broach the topic of overpopulation – “the onset of a global population explosion in emerging economies” – but not in North America. To give some more credit, Don Coxe is acknowledging the high demand on grain from meat consumption. Yet, he wants to “ramp-up crop production. Especially crops like corn and soybeans, which are the best forms of livestock feed for producing animal protein.” How? Though a “long-overdue doubling of fertilizer applications”.

Coxe does stand out from his class that never points out that large-scale agriculture is unsustainable from the standpoint of losing top soil. He mentioned “a greater societal emphasis on preserving and nurturing the world’s arable land”. Regardless, Coxe’s expertise is lauded for one reason: money talks – he is credited with managing the best-performing mutual fund in the US, Harris Investment Management, as recently as 2005. That’s not a job that requires you pay attention to dwindling aquifers, for example. — Jan Lundberg

Global starvation imminent as US faces crop failure

by Marc Davis

commodityonline.com (June 19 2009)

The world faces “mass starvation” following North America’s next major crop failure. And it could even happen before year’s end. So says Chicago-based Don Coxe, who is one of the world’s leading experts on agricultural commodities, so much so that Canada’s renowned BMO Financial Group named the fund after him.

Climate change will cause shorter crop growing seasons and the world’s under-developed farming sector is ill-prepared to make up for the shortfall, Coxe says. He has been following the farming industry for many years and benefits from more than 35 years of institutional investment experience in Canada and the US. This includes managing the best-performing mutual fund in the US, Harris Investment Management, as recently as 2005.

In particular, an imminent crop failure in North America will have particularly dire consequences for major overseas markets that are highly reliant on US crop imports, Coxe cautions. Sadly, this scenario could have been avoided had successive North America’s governments not weakened the farming industry with too much political interference, he suggests.

“We’ve got a situation where there has been no incentive to allocate significant new capital to agriculture or to develop new technologies to dramatically expand crop output. We’ve got complacency”, he told BNW News Wire. “So for those reasons I believe the next food crisis – when it comes – will be a bigger shock than $150 oil.”

As the key strategist for the Coxe Commodity Strategy Fund (TSX: COX.UN), he has an astute understanding of the mounting challenges that the farming industry has contended with in recent years. Prior to entering the investment business, he served as General Manager for the Ontario Federation of Agriculture and General Counsel for the Canadian Federation of Agriculture.

He notes that farmers, not just in North America, but the world over are still reeling from the global economic meltdown and have consequently curtailed their output. Thus, the inauspicious prospect of a drop in global food production this year – the first annual dip in living memory – means that farmers will not be able to keep pace with current grain demand.

“And when we have the first serious crop failure, which will happen, we will then have a full-blown food crisis, which we will not be able to get out of because we will still be struggling to catch up (as a result of diminished crop yields)”, he says.

Furthermore, the prospect of a near-term global food crisis has been exacerbated by a surge in demand for high-quality protein (meat) in emerging super-economies such as China and India, Coxe says. This means that burgeoning global demand for crop staples is already beginning to outstrip supply.

“During this decade, the annual increase in hectares of global cultivated farmland has been roughly 1.5 per cent, at a time global demand for grains and soybeans has been growing at double that rate”, he says. “We will be dealing with mass starvation with the first serious crop failure. It could happen as early as this fall if for instance we have a killing freeze in Iowa in August.”

In recent years, North America has been blessed with ideal weather conditions for crop cultivation, leading to bumper harvests, Coxe says. But he believes that climate change will soon lead to a trend towards shorter dry cycles, beginning maybe as early as this fall, which will exacerbate a supply-demand squeeze.

“We’ve been incredibly lucky with the weather up to this point. But if you cut the growing cycle by four weeks, that will dramatically reduce yields”, he warns. “People assume that the good times will last forever. There’s a sense that food has always been readily available and that it will always be there.”

Yet, we only need to look as far a back as the mid 1970s to an era when food staples suddenly became far less plentiful due to poor crop yields resulting from adverse weather, he says.

“There were major food surpluses going into that era. Yet, they were gone so fast”, he adds. “In fact, the major inflation of the 1970s was driven more by food than by oil”.

If society is to avoid a far worse situation than the food crisis of the 1970s, especially with the onset of a global population explosion in emerging economies, then the world has to dramatically ramp-up crop production. Especially crops like corn and soybeans, which are the best forms of livestock feed for producing animal protein, he adds.

Hence, the world can no longer settle for anything less than optimal crop yields, which requires exponential growth in fertilizer applications, he says. Yet, the under-application of such crucial nutrients, particularly indispensable potash-based fertilizers, has been a pronounced problem for decades in the world’s most populous nations such as China, India and Malaysia.

Without the long-overdue doubling of fertilizer applications, as well as a greater societal emphasis on preserving and nurturing the world’s arable land, the next global food shortage promises to be both pronounced and prolonged. And that could topple governments and destabilize the world’s political order, Coxe further warns.

An ominous omen of humanity’s first great challenge of the new millennium came just last year. This was when a short-lived spike in the price of food staples led to widespread hunger and ensuing political unrest in some emerging economies, including food riots.


Marc Davis is Managing Editor, BNW Business News Wire

Original article: http://www.commodityonline.com/news/Global-starvation-imminent-as-US-faces-crop-failure-18791-3-1.html

Further reading:

What about petrochemical pesticides’ sustainability? For the health aspect, see “Debating How Much Weed Killer Is Safe in Your Water Glass” (part of the New York Times‘ Toxic Waters series), by Charles Duhigg (August 22 2009): http://www.nytimes.com/2009/08/23/us/23water.html?th&emc=th

“Catastrophic Fall in 2009 Global Food Production” by Eric deCarbonnel (February 18 2009): http://www.culturechange.org/cms/index.php?option=com_content&task=view&id=328&Itemid=65

This article is published under Title 17 USC. Section 107. See the Fair Use Notice for more information: http://www.culturechange.org/cms/index.php?option=com_content&task=view&id=328&Itemid=65


Bill Totten http://www.ashisuto.co.jp/english/index.html

>The Crisis: Debt and Real Wealth

>by Herman E Daly

bicusa.org (February 25 2009)

In a recent article, former World Bank economist Herman Daly explains that the current financial crisis is not, in fact, a liquidity crisis, but rather “a crisis of overgrowth of financial assets relative to growth of real wealth”.

This article has been posted with the author’s permission.

Can the economy grow fast enough in real terms to redeem the massive increase in debt? In a word, no. As Frederick Soddy (1926 Nobel Laureate chemist and underground economist) pointed out long ago, “you cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest] against the natural law of the spontaneous decrement of wealth [entropy]”. The population of “negative pigs” (debt) can grow without limit since it is merely a number; the population of “positive pigs” (real wealth) faces severe physical constraints. The dawning realization that Soddy’s common sense was right, even though no one publicly admits it, is what underlies the crisis. The problem is not too little liquidity, but too many negative pigs growing too fast relative to the limited number of positive pigs whose growth is constrained by their digestive tracts, their gestation period, and places to put pigpens. Also there are too many two‐legged Wall Street pigs, but that is another matter.

Growth in US real wealth is restrained by increasing scarcity of natural resources, both at the source end (oil depletion), and the sink end (absorptive capacity of the atmosphere for carbon dioxide). Further, spatial displacement of old stuff to make room for new stuff is increasingly costly as the world becomes more full, and increasing inequality of distribution of income prevents most people from buying much of the new stuff – except on credit (more debt). Marginal costs of growth now likely exceed marginal benefits, so that real physical growth makes us poorer, not richer (the cost of feeding and caring for the extra pigs is greater than the extra benefit). To keep up the illusion that growth is making us richer we deferred costs by issuing financial assets almost without limit, conveniently forgetting that these so‐called assets are, for society as a whole, debts to be paid back out of future real growth. That future real growth is very doubtful and consequently claims on it are devalued, regardless of liquidity.

What allowed symbolic financial assets to become so disconnected from underlying real assets? First, there is the fact that we have fiat money, not commodity money. For all its disadvantages, commodity money (gold) was at least tethered to reality by a real cost of production. Second, our fractional reserve banking system allows pyramiding of bank money (demand deposits) on top of the fiat government‐issued currency. Third, buying stocks and “derivatives” on margin allows a further pyramiding of financial assets on top the already multiplied money supply. In addition, credit card debt expands the supply of quasi‐money as do other financial “innovations” that were designed to circumvent the public‐interest regulation of commercial banks and the money supply. I would not advocate a return to commodity money, but would certainly advocate 100% reserve requirements for banks (approached gradually), as well as an end to the practice of buying stocks on the margin. All banks should be financial intermediaries that lend depositors’ money, not engines for creating money out of nothing and lending it at interest. If every dollar invested represented a dollar previously saved we would restore the classical economists’ balance between investment and abstinence. Fewer stupid or crooked investments would be tolerated if abstinence had to precede investment. Of course the growth economists will howl that this would slow the growth of GDP. So be it – growth has become uneconomic at the present margin as we currently measure it.

The agglomerating of mortgages of differing quality into opaque and shuffled bundles should be outlawed. One of the basic assumptions of an efficient market with a meaningful price is a homogeneous product. For example, we have the market and corresponding price for number two corn – not a market and price for miscellaneous randomly aggregated grains. Only people who have no understanding of markets, or who are consciously perpetrating fraud, could have either sold or bought these negative pigs‐in‐a‐poke. Yet the aggregating mathematical wizards of Wall Street did it, and now seem surprised at their inability to correctly price these idiotic “assets”.

And very important in all this is our balance of trade deficit that has allowed us to consume as if we were really growing instead of accumulating debt. So far our surplus trading partners have been willing to lend the dollars they earned back to us by buying treasury bills – more debt “guaranteed” by liens on yet‐to‐exist wealth. Of course they also buy real assets and their future earning capacity. Our brilliant economic gurus meanwhile continue to preach deregulation of both the financial sector and of international commerce (that is, “free trade”). Some of us have for a long time been saying that this behavior was unwise, unsustainable, unpatriotic, and probably criminal. Maybe we were right. The next shoe to drop will be repudiation of unredeemable debt either directly by bankruptcy and confiscation, or indirectly by inflation.


Bill Totten http://www.ashisuto.co.jp/english/index.html

>A Meditation on Our Monetary System

>State of Permanent Siege {1}

by Richard Cook

Dandelion Salad

richardccook.com (April 22 2009)

The level of public ignorance on the topic of the US and world monetary system is astonishing. This is part of the plan, of course, because the monetary elite control not only the financial system but also the news media, the publishing industry, and the educational system. The blueprint for control was put together over a century ago by Cecil Rhodes and his friends, including British financier Nathan Rothschild, as documented by Professor Carroll Quigley.

During the 20th Century the power shifted to the US, with the Rockefellers playing the dominant role as they continue to do today. It is no accident that JP Morgan Chase – the Rockefeller family bank – dominates the US derivatives market; nor that Exxon-Mobil, the Rockefellers’ oil company, is the most profitable corporation in history.

The basic plan was to place all of mankind in a state of permanent mental and emotional siege so that in the end we would trade all our liberties to the controllers in return for protection; even freedom of thought would be traded for physical safety. That plan is well advanced. The sheeple have been prepared for the final shearing.

Meanwhile, every attempt at real reform has been strangled in the cradle. Past voices for monetary sanity like those of Congressmen Louis McFadden and Jerry Voorhis were silenced. Starting in the 1970s, functionaries like Kissinger, Brzezinski, and Volcker carried out David Rockefeller’s plan to outsource manufacturing to China and eliminate the US as the world’s greatest industrial democracy, replacing it with a financier oligarchy.

During the 2008 election campaign, Ron Paul called for the end of the Federal Reserve, the bastion of financier control, but no one effectively organized the millions of people who responded to his call or had a viable plan to put in place.

Barack Obama obviously works mainly for the financiers, as did Bill Clinton before him. The job of the Democrats is to keep the sheeple quiet by now and then implementing some “reforms”; the Republicans were a more blatant gang of looters.

With the financial crash of 2008-2009, the noose is tightening everywhere in the world. The International Monetary Fund is announcing, “The current global recession is likely to be ‘unusually long and severe, and the recovery sluggish.'” (BBC News, “IMF Sees Long and Severe Slowdown”, April 16 2009.) In reality, as the IMF knows, it would be possible to put every nation in the world on the road to recovery by allowing them to prime the economic pump through sovereign control of their own monetary systems, with freedom to utilize their own natural resources.

The IMF announcement is in fact the start of a worldwide program of genocide similar to what was done to Russia in the 1990s, with crushing poverty, slashing of incomes, reduction of benefits for the poor and elderly, rising levels of disease and malnutrition, and reduction of life expectancy. We in the West will view the carnage with alarm from our own stripped-down economies but remain docile out of fear the same will be done to us.

Awareness of the hideous evil of the financiers’ plans to destroy the soul of humanity is growing. This is being accomplished through the internet and the work of a number of writers who understand what is at stake. I doubt this channel of expression will be available indefinitely. Already alternative websites are being isolated and marginalized. But the fight must be waged.

The one organization that has a program which is comprehensive and free from outside influence is the American Monetary Institute, which has drafted the American Monetary Act. If the Act is introduced in Congress, it will be imperative for it to be recognized and supported as the one chance to save our nation from the dark night that is threatening. But even progressive writers shrink from taking on the Monetary Power, with many of them putting forth the absurdity that all we need to do is reform the banking system.

The American Monetary Act has been in process since 2003. It may be found on the AMI website at: http://www.monetary.org/amacolorpamphlet.pdf.

AMI will conduct a presentation on the Act on Capitol Hill, April 23 2009, in Room 304 of the Cannon House Office Building. Presentations will take place at 10:00 AM and at 2:00 PM.

At the same time, groups of relatively conscious people can come together on their own to create refuges of sanity until the danger passes over – a period of years, decades, or even generations. And, to look at it from a spiritual perspective, we can hope that the Higher Powers who observe humanity’s destiny refuse to allow our particular experiment in consciousness to be obliterated.

Destruction of human consciousness is the real goal of the financiers and their minions. It is lies above all that do this. The financiers’ power is the biggest lie of all.

Note {1} The phrase “permanent siege” is from Thomas Pynchon’s novel Against the Day (2006). Set at the end of the 19th Century, the novel describes the dynamics and strategy of the future totalitarian regimes of the approaching 20th century – that is, a state of “permanent siege.”

Richard C Cook is a retired federal analyst who writes today on economic, political, and spiritual matters. His books and videos are available through his website at http://www.richardccook.com . He recently released his six-part video series: Credit as a Public Utility: the Solution to the Economic Crisis.

(c) 2009 by Richard C Cook

Also See:

Credit As A Public Utility: The Solution to the Economic Crisis, by Richard C Cook (videos) http://dandelionsalad.wordpress.com/2009/03/26/credit-as-a-public-utility-the-solution-to-the-economic-crisis-by-richard-c-cook-videos/

Obama Economic Program Increases America’s Bondage to Wall Street Billionaires, by Richard C Cook http://dandelionsalad.wordpress.com/2009/03/23/obama-economic-program-increases-americas-bondage-to-wall-street-billionaires-by-richard-c-cook/

The US Economy: Designed to Fail, by Richard C Cook

The Cook Plan (video) http://dandelionsalad.wordpress.com/2009/02/08/the-cook-plan-video/

Bailout for the People: “The Cook Plan” by Richard C Cook http://dandelionsalad.wordpress.com/2009/02/03/bailout-for-the-people-the-cook-plan-by-richard-c-cook-2/

The Economy Sucks and or Collapse 2 http://wordpress.com/tag/the-economy-sucks-and-or-collapse-2/


Bill Totten http://www.ashisuto.co.jp/english/index.html

>Financial Crisis Called Off

>Clusterfuck Nation

by James Howard Kunstler

Comment on current events by the author of
The Long Emergency

www.kunstler.com (August 24 2009)

Whew, what a relief! Everybody from Ben Bernanke and a Who’s Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to – wonder of wonders! – the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund – every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world’s capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe their bullshit. Which I don’t.

All this goes to show is how completely the people in charge of things in the USA have lost their minds. They seem to think this mass exercise in pretend will resurrect the great march to the WalMarts, to the new car showrooms, and the cul-de-sac model houses, reignite another round of furious sprawl-building, salad-shooter importing, and no-doc liar-lending, not to mention the pawning off of innovative, securitized stinking-carp debt paper onto credulous pension funds in foreign lands where due diligence has never been heard of, renew the leveraged buying-out of zippy-looking businesses by smoothies who have no idea how to run them (and no real intention of doing it, anyway), resuscitate the construction of additional strip malls, new office park “capacity” and Big Box “power centers”. restart the trade in granite countertops and home theaters, and pack the turnstiles of Walt Disney world – all this while turning Afghanistan into a neighborhood that Beaver Cleaver would be proud to call home.

By the way – and please pardon the rather sharp digression – but does anybody know if they buried Michael Jackson yet? It’s only been a couple of months. And, if not, is that the stench now wafting across the purple mountains’ majesty from sea-to-shining sea? Isn’t it a little indecent to keep the poor fellow waiting? Or is a really surprising comeback secretly planned, with product tie-ins and all?

America loves the word “recovery” as only a catastrophically sick society can. “In recovery” is the new universal mantra of loser individuals and loser nations. Everybody in the USA is in recovery. Even Michael Jackson (he may have given up on somatic activity but, on the plus side, as the Rotarians love to say, he’s quit using drugs for once and for all, and the magazines have stopped publishing photos of him taken after 1990, when he turned himself into something out of the Hammer Films catalog).

To sum it all up, the US economy is in recovery. Paul Krugman says that we’ll soon realize that Gross Domestic Product (GDP) is growing. He actually said that on the Sunday TV chat circuit. Not to put too fine a point on it, but I would really like to know what you mean by that Paul, you fatuous wanker. Do you mean that the Atlanta homebuilders are going to open up a new suburban frontier down in Twiggs County so that commuters can enjoy driving Chrysler Crossfires a hundred and sixty miles a day to new jobs as flash traders in the Peachtree Plaza? Do you mean that the Home Equity Fairy is going to wade into the sea of foreclosure and save twenty million mortgage holders currently sojourning in the fathomless depths with the anglerfish? Do you mean that all the bales of deliquescing, toxic “assets” hidden in the vaults of Citibank, JP Morgan, Bank of America, et al, (not to mention on the books of every pension fund in the USA, and not a few elsewhere) will magically turn into Little Debbie Snack Cakes on Labor Day weekend? Do you mean that American Express and Master Card are about to declare a Jubilee on accounts in default everywhere? Do you mean that General Motors will produce a car that (a) anyone really wants to buy and (b) that the company can sell at a profit? Are you saying we get a do-over, going back to, say, 1981? Did we win some cosmic lottery that hasn’t been announced yet? What’s growing in this country besides unemployment, bankruptcy, repossession, liquidation, gun ownership, and suicidal despair? In short, are you out of your mind, Paul Krugman?

The key to the current madness, of course, is this expectation, this wish, really, that all the rackets, games, dodges, scams, and workarounds that American banking, business, and government devised over the past thirty years – to cover up the dismal fact that we produce so little of real value­ these days – will just magically return to full throttle, like a machine that has spent a few weeks in the repair shop. This is not going to happen, of course. It is permanently and irredeemably broken – this Rube Goldberg contraption of swindles all based on the idea that it’s possible to get something for nothing. And more to the point, we’re really doing nothing to reconstruct our economy along lines that are consistent with the realities of energy, geopolitics, or resource scarcity. So far, our notions about a “green” economy amount to little more than blowing green smoke up our collective ass. We think we’re going to build “green” skyscrapers! We’re too dumb to see what a contradiction in terms this is. The architects are completely uninterested in the one thing that really is “green” – traditional urban design – and most particularly the walkable neighborhood. That’s just too conventional, not special enough, lacking in star power, not enough of a statement, boring, tedious, so not cutting edge! We blather about high speed rail, but you can’t even get from Cleveland to Cincinnati on a regular train – and what’s more amazing, nobody is really interested in making this happen. All we really care about is finding some miracle method to keep all the cars running.

What we’ve been seeing is nothing more than a massive pump-and-dump operation in the stock markets, most of it executed by programmed robot traders, with the trading nut provided by taxpayers current and future. These shenanigans add up to new risks and fragilities so extreme that the next time a grain of sand catches in the exquisite machinery they will sink the USA as a viable enterprise. We will end up discrediting not just capitalism, but also the idea of capital per se, that is, of deployable acquired wealth. As this occurs, of course, events on-the-ground will give new meaning to the term “reality television”.


My new novel of the post-oil future, World Made By Hand, is available at all booksellers.


Bill Totten http://www.ashisuto.co.jp/english/index.html

>Urgency of the American Monetary Act

>by Richard C Cook

Dandelion Salad

richardccook.com (May 06 2009)

On Thursday, April 23 2009, Stephen Zarlenga, director of the American Monetary Institute (AMI), delivered two briefings on Capitol Hill on the American Monetary Act that AMI drafted and that may be introduced as legislation during the current congressional session. This single measure has the potential of bringing together the tens of millions of people who have realized it’s our bank-run debt-based monetary system that lies at the center of the financial rot that is destroying our republic and its values.

Attending the briefings were congressional staffers and members of the public. Zarlenga was introduced by Congressman Dennis Kucinich (Democrat, Ohio), who has spoken in favor of wholesale reform of the monetary system on the floor of the US House of Representatives. Kucinich is also sponsor of HR 7260, the “Transparency in the Creation of Wealth Act of 2008”. This act would require the Federal Reserve to resume reporting on the quantity of M3 in the economy (mega-money accessible only to large financial institutions), along with several other economic indicators it now keeps to itself, such as total credit market debt and the holding of Federal Reserve notes by foreign interests.

Stephen Zarlenga is author of The Lost Science of Money (American Monetary Institute, 2002), a monumental 736-page book that shows how money has served socially beneficial purposes throughout history only when created by governments as an instrument of law and not as the private preserve of the rich.

Hugh Downs, an unusually well-informed media personality with a strong social conscience, said of The Lost Science of Money, that it “has some stunning historical vistas of the whole concept of media of exchange”. Renowned progressive economist Dr Michael Hudson said, “The history of money is critical to understanding the greatest problem the third millennium will face. Stephen Zarlenga’s Lost Science of Money provides the needed background for seeing the basic structural issues at work.”

Since Zarlenga published The Lost Science of Money, the American Monetary Institute has grown, with chapters in Boston, New York, Chicago, Iowa, Seattle, and other locations. He conducts an annual monetary reform conference at Roosevelt University in Chicago and has a busy travel and speaking schedule. He has addressed audiences at the US Treasury Department in Washington, DC, and the British House of Lords in London.

The American Monetary Act may be viewed and downloaded from the AMI website at http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm.

The main thrust of the act is to replace the bank-centered debt-based monetary system with the direct creation of money by the federal government which would spend it into circulation as was done with the Greenbacks of the latter part of the 19th century.

The money would be spent on all types of legislated government requirements but would focus on infrastructure improvements, including education and health care. The act not only would create a new monetary supply denominated in US Treasury notes, but would rebuild our job base which has been outsourced to other nations by the globalist corporations and big financial interests.

The critical role of the Greenbacks in US history has been distorted and downplayed by the establishment interests that control the writing of history textbooks. The Greenbacks originated during the Civil War when the government printed and spent them to meet wartime needs. Contrary to mythology, the Greenbacks were not inflationary. They continued to serve as a key part of the nation’s monetary supply into the early 20th century. As late as 1900 they formed a third of the nation’s circulating currency, with coinage, along with gold and silver certificates, forming another third, and national bank notes the remainder.

Later the value of both the Greenbacks and metallic-based currency were destroyed by the inflation caused by the introduction of Federal Reserve Notes after the approval of the Federal Reserve System by Congress in 1913. From that point on, the creation of money in the US became a monopoly of the private banking system. This led to the Great Depression when the banking system crashed the economy through its deflationary policies.

The nation recovered from the Depression through the New Deal and the adoption of Keynesian economic policies during and after World War Two. But now, in the early years of the 21st Century, the financial system again has collapsed through the gigantic speculative bubbles of the last thirty years. The Bush-Obama bailouts that are costing taxpayers trillions of dollars are benefiting the financial controllers but are not doing anywhere near enough for the producing economy. Even though officials are starting to forecast an economic recovery, there is every indication it will be another “jobless” recovery like the one from 2002 to 2005.

The American Monetary Act would put a stop to the travesties of the bank-controlled monetary system that has wrecked what was once the world’s greatest industrial democracy. In addition to reintroducing the Greenbacks, the act would eliminate fractional reserve banking by requiring banks to borrow money from the US Treasury to bring their cash reserves up to the level of their lending portfolio rather than allowing them to continue to create money “out of thin air”. The banks would no longer be able to create trillions of dollars of credit, backed by nothing, which they use to fuel the speculative equities, hedge fund, and derivative markets.

The act also contains a provision for a citizens’ dividend through direct payment of cash to individuals. While it does not authorize a dividend at the level Stephen Shafarman and I have proposed in our respective books, Peaceful, Positive Revolution (2008) and We Hold These Truths: The Hope of Monetary Reform (2009), it is a major step in the right direction. In what I have called the “Cook Plan” I advocate a dividend of $12,000 a year per capita for adults who apply with the money, once spent, being used to capitalize a new network of community savings banks.

With the 2008-2009 collapse of the financial system, the deep recession we are now suffering through, and the injustice of the government’s bank bailouts currently being administered by Secretary of the Treasury Timothy Geithner, millions of people in the US and around the world have had enough of government policies that enrich the financial oligarchy and destroy the livelihood of everyone else. The world today is headed for a dark age of debt-slavery and ruinous poverty for much of the world’s population, including working people in the US.

The only way a catastrophe can be averted is for mankind to wake up and demand the creation of a new monetary system where money and credit are treated as a public utility. This means that money and credit should serve the needs of the producing economy while assuring a decent living and sufficient income for everyone.

To reach this goal, it is counterproductive for people simply to complain about what is happening or support half-measures like the call to embrace a gold standard. Any attempt to impose a new gold standard would play into the hands of those who control the gold; that is, the bankers. Creating a new gold standard appears to be the objective of movements like “End-the-Fed”.

The key is not whether money is backed by gold or any other commodity but whether it serves the needs of real people, allows the trade and productivity of the nation to move, restores our job base, and supports consumer purchasing power. The American Monetary Act would meet these objectives. With the financial disasters of the last two years, millions of people realize the system is rigged against them. Jobs and savings continue to disappear while debt and the power of the banking millionaires increase. The time for Congress to act is now.


Richard C Cook is a former federal analyst who writes on public policy issues. His book We Hold These Truths: the Hope of Monetary Reform is now available at http://www.tendrilpress.com. His website is http://www.richardccook.com.

Also See:

A Meditation on Our Monetary System: State of Permanent Siege by Richard C Cook http://dandelionsalad.wordpress.com/2009/04/22/a-meditation-on-our-monetary-system-state-of-permanent-siege-by-richard-cook/

Credit As A Public Utility: The Solution to the Economic Crisis by Richard C Cook (videos) http://dandelionsalad.wordpress.com/2009/03/26/credit-as-a-public-utility-the-solution-to-the-economic-crisis-by-richard-c-cook-videos/

Obama Economic Program Increases America’s Bondage to Wall Street Billionaires by Richard C Cook http://dandelionsalad.wordpress.com/2009/03/23/obama-economic-program-increases-americas-bondage-to-wall-street-billionaires-by-richard-c-cook/

The US Economy: Designed to Fail by Richard C Cook

The Cook Plan (video)

Bailout for the People: “The Cook Plan” by Richard C Cook

The Economy Sucks and or Collapse Two


Bill Totten http://www.ashisuto.co.jp/english/index.html