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What Is The Best U.S. State To Move To If You Want To Insulate Yourself From The Coming Economic Meltdown?

Today, millions of American families are considering a move to another part of the country because of the growing economic problems that the United States is experiencing.  In the past, most Americans would normally just ride recessions out and would be able to safely assume that things would get back to “normal” sooner or later.  But for many Americans, this time just feels different.  Unemployment has never stayed this high for this long since the Great Depression.  Thousands of our factories and millions of our jobs have been shipped overseas, and many of our formerly great cities (such as Detroit) have been turned into deindustrialized wastelands.  The federal government and most state governments are essentially bankrupt and continue to get into more debt at an accelerating pace.  Meanwhile, Helicopter Ben Bernanke and his cohorts at the Federal Reserve have fired up the printing presses in a desperate attempt to revive the U.S. economy.  Many believe that by flooding the financial system with paper money that they are setting in motion a series of events which will eventually lead to the death of the dollar.  With so much wrong with our economy, is it any wonder why more Americans are deeply concerned about the state of the economy today than at any other time since World War II?

As the economy continues to crumble and as millions of Americans find it nearly impossible to find a good job, many of them have been wondering if things are any better in other parts of the country.  And without a doubt, some areas of the U.S. are complete and total disaster zones at this point.  For example, so many houses have been abandoned in Detroit that the mayor has proposed bulldozing one-fourth of the city.  In Las Vegas, it was estimated that approximately 65 percent of all homes with a mortgage were “underwater” at the height of the housing crash.  The number of people unemployed in the state of California is approximately equal to the populations of Nevada, New Hampshire and Vermont combined.

Unfortunately, there is every indication that the U.S. economy is going to get even worse.

So if the economy does collapse, where should people go?  What would be the best U.S. state to move to?

Well, in choosing a place to live, the following are some of the factors that you will want to consider….

#1 You Need To Make Money

Unless you are independently wealthy or you work for yourself, you are going to have to find a way to make money.  For most people, that means getting a job.  Unfortunately, jobs are only going to become harder and harder to get in the years ahead.  In fact, right now there are not a lot of areas in the U.S. where jobs are plentiful.  It has been said that there is some work up in Montana and in the Dakotas because of all the oil that has been found there, but other than that there are not a whole lot of bright spots out there.  Many Americans are trying to become independent and build their own businesses, but that is not always an easy thing to do either.

#2 Lower Housing Prices And A Lower Standard Of Living

Many Americans are packing up and moving from states that have a very high cost of living (such as New York or California) and are moving to areas where housing is cheaper and where it doesn’t take as much money to live.  After all, why pay half a million for a house when you can get the same house for $200,000 in another part of the country?  Many people are discovering that a lifestyle with fewer bills and a smaller monthly budget can be extremely liberating.

#3 Food And Water Independence

More Americans than ever are becoming concerned about food and water independence.  After all, if the U.S. economy does totally collapse someday, how will we all feed our families?  100 years ago, most Americans grew at least some of their own food.  Today, very few Americans do that.  Fortunately, a growing number of Americans have started to grow “survival gardens” and/or have started to store up emergency food supplies.  If the inflationary policies of the Federal Reserve do end up totally trashing the U.S. dollar, the food that you and your family have stored up will end up being a great investment.  In addition, in 2010 many Americans are looking for a place where it is possible to grow food and where water is plentiful when picking out a new area to move to.  Owning a fertile piece of land is going to be a great asset to have in the years to come.

#4 Community And Crime

If the U.S. economy does collapse, rioting and gang violence will turn many American cities into war zones.  Just remember what happened to New Orleans after Hurricane Katrina hit.  That is a Sunday picnic compared to what could happen if the U.S. economy falls apart.  Many Americans can see what is coming and they are moving out of the big cities.  But wherever you move to, you will not be alone.  So do your research ahead of time.  Are you moving to an area where the people are friendly and helpful?  Will you have family and close friends in the region?  It is always good to have a support system around you – especially when times get hard.

#5 During Hard Times Weather Makes A Difference

During good times it is fairly easy to live just about anywhere, but if the economy falls apart the elements will become a bigger factor.  For example, if you plan to totally rely on the power company, do you really want to live some place where it gets down to 20 or 30 below on a regular basis?  What is your backup plan if basic services shut down for an extended period of time?  How will you provide power and heat for your family?  In addition, do you want to move some place incredibly hot if you can’t always count on having air conditioning?  The truth is that weather can make a huge difference in your lifestyle.  The desert or the mountains may sound appealing now, but when you are trying to grow food they may not seem so great then.

These are just a few of the things to take into account when choosing a new place to live.  There are certainly many others to think about as well.

But all of us should be starting to think about these things.  Now is the time to prepare – not later.  When the U.S. economy does collapse, millions of American families will be scrambling to come up with a plan, but by then it will be too late.

Unfortunately, we are already starting to see signs of inflation.  The price of gas has risen 6 cents a gallon over the past week, and a recent CNBC report detailed some of the shocking price increases that we have been seeing for agricultural commodities….

The Standard & Poor’s GSCI agricultural commodities index is up 25 percent for the year and 16 percent in the last quarter alone. Among the big gainers: cotton (90 percent for the year), coffee (45 percent) and Kansas wheat (31 percent). Sugar’s price has zoomed 26 percent in the fourth quarter, while corn, which is used to make so many other products, is up 20 percent for the year.

So what are some of the states that many Americans are choosing to move to?

Well, in no particular order, the following are some of the states that Americans have been moving to in an attempt to insulate themselves from the coming economic problems.  Please feel free to debate the pros and cons of these states (or make additional suggestions) in the comments section following the article….

*Montana

*Idaho

*North Dakota

*South Dakota

*Wyoming

*Colorado

*Nebraska

*Kansas

*Alaska

*Oklahoma

*Arkansas

*Missouri

*Tennessee

*Kentucky

*West Virginia

*Maine

*Washington

*Oregon

*Vermont

*New Hampshire

*Virginia (the mountains)

*North Carolina

So what do you think about this list?  Which state do you think is best for those Americans who are seeking to insulate themselves from the coming economic meltdown?

20 “Triggers” That Can Set Off the “Global Debt Time-Bomb,” Trigger Massive Class Wars, Create a New “Great Depression” … and Wipe Out Your 401(k)!

by Paul B Farrell, JD, PhD
Share | Print | 11/15/2010

Retire? You can fuggetaboutit if the new “Global Debt Time-Bomb” is detonated by any one of 20 “Made-in-America” trigger-mechanisms. Yes, 20. And yes, any one can destroy your retirement, because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st Century, igniting the “Great Depression II” that Bush, Bernanke,Paulson and now Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas, and bailouts.

Wow, what an epic Hollywood blockbuster this will make: You know the drama, can’t miss the warnings. The financial press is flooding us with plot lines … a Forbes cover story focuses on a “Global Debt Bomb: How It Could Wreck Your Life” … Last year leaders at the World Economic Forum on Swiss Mt. Davos fear another global meltdown will trigger mass rebellions … The Economist calls the plot a “Global Asset Bubble,” with cheap money fast driving up asset prices, a new trigger for the ticking debt time-bomb. Plus, Bloomberg-BusinessWeek is adding jet fuel to the ticking time-bomb in: “After the Stimulus Binge, a Debt Hangover: Trillions of dollars have been spent keeping the global economy afloat. But now fears about the Great Recession are giving way to worries about something else: The Great Reckoning” when massive debts come due. Then the debt bomb explodes “and the results won’t be pretty for investors or elected officials.”

You’ll find the trigger mechanism deep in your brain, your irrational behavior and your DNA. You’ll also find it in historical cycles: For example, in This Time It’s Different: Eight Centuries of Financial Folly by economists Reinhart and Rogoff we discover: The “90% ratio of government debt to GDP is a tipping point in economic growth.” For 800 years “you increase it over and beyond a high threshold, and boom!” Well guess what? “The U.S. government-debt-to-GDP ratio is 84%.” Soon, Ka-Booom! Depression. Kiss your retirement goodbye.

Who knows? Forbes? Bloomberg/BusinessWeek? The Economist? Davos-World Economic Forum? True, they’re all looking at the same plotline for a Hollywood blockbuster about the “Global Debt Time-Bomb.” But the financial press navigates in a fog. There’s not just one, but many triggers, all linked in a lethal network, we’ve reported on it for years. Any one could easily trip this debt-bomb, set off a chain reaction of unintended consequences, ignite the 21st Century’s third meltdown, spread the coming “Great Depression II,” the new Black Plague. You tell us: What triggers this firestorm?

Poll: 20 economic “WMDs” triggering ticking “Global Debt Time-Bomb”

1.   Federal Budget Deficit Bomb
The Bush/Cheney wars pushed America deep into a debt hole. Federal debt limit was just raised almost 100% with Obama’s 2010 budget, to $14.3 trillion vs $7.8 trillion in 2005. The Congressional Budget Office predicts future deficits around 4% through 2020. Get it? America’s debt at “84% of GDP” will soon pass that toxic 90% trigger point.

2.   U.S. Foreign Trade Bomb
Monthly deficits actually dropped from $50 billion per month to roughly $35 billion. But the total continues climbing as $400 billion is added each year. Foreigners now own $2.5 trillion of America, with China holding over $1.3 trillion in Treasury debt.

3.   Weakening US Dollar as Foreign Reserve Currency
Fear China and other currencies will replace dollar as main foreign reserves. The dollar’s fallen: From the $120 range at the Clinton-to-Bush handoff to a $70-$90 range.

4.  “Cheap Money” Bomb: Credit Ratings Down, Rates Up
Economists at S&P, Fitch and Moody’s were totally co-conspirators of Fat Cat Bankers, misleading investors before meltdown: Soon, debt up, ratings down, interest rates soar.

5.  Global Real Estate Bomb
Dubai Tower, new “world’s tallest building” is empty. BusinessWeek warns that China’s housing collapse could be worse than America’s. Plus the U.S. commercial real estate bubble is now $1.7 trillion, a “ticking time-bomb” bloating 25% of bank balance sheets.

6.   Peak Oil & the Population Bomb
China and India each need 500 new cities. UN estimates world population exploding 50% from 6-to-9 billion by 2050: Three billion more humans demanding more automobiles, exhausting more resources to feed their version of the gas-guzzling “America Dream.

7.  Social Security Bomb
We have no choice, eventually we must either cut benefits or raise taxes. Politicians hate both, so they’ll do nothing. Delays worsen solutions. Without action, by 2035 Social Security and Medicare benefits will eat up the entire federal budget other than defense.

8.  Medicare: a Nuclear Bomb
Going broke faster than Social Security. Prescription drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.

9.  Healthcare Insurance Bomb
Burden increasingly shifted to employees. Costs rising faster than inflation. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.

10.  State & Local Gov’t Budget Bombs
Deficits of $110 billion in 2010, $178 billion in 2011on top of more that $450 billion in underfunded state and municipal employee pension funds.

11.  Underfunded Corporate Pensions Bomb
From $60 billion surplus in 2007 to $409 billion deficit in 2009. And a whopping 92% of the pension plans of companies are now under-funded. Defaults guaranteed by taxpayers.

12.  Consumer Debt Bomb
Americans are still living beyond our means. Even with a downturn, consumer debt rose from about $2.3 to $2.5 trillion. Fat Cat Bankers love it, yes, love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.

13.  Personal Savings Bomb
Before 2008 meltdown savings rate dropped from about 10% in the early 1980s to below zero, now increasing, slowing retail recovery. Today, government’s the big “unsaver.”

14.  War and Military Defense Deficits
Costs of Iraq and Afghanistan wars costs $200+ billion annually, $3 trillion minimum, with massive long-term costs for veteran medical care, equipment renewal, recruitment.

15.  Homeland Insecurity Deficits
Security at airports, seaports, borders, vulnerable chemical plants alls increase budgets.

16.  Fed/Treasury Bailout Bombs
Tax credits, loans, cash and purchase of toxic assets from Wall Street banks estimated at $23.7 trillion as new debt was shifted from too-big-to-fail “Fat-Cat” banks to taxpayers.

17. Insatiable Washington Lobbyists Bombs
Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending. Democracy and voters are now irrelevant in America’s new “corporate-socialism.”

18.  Shadow Banking: The Derivatives “WMD” Bomb
Wall Street wants no regulation of this $670 trillion, hi-risk, out-of-control, gambling casino that’s highly leveraged versus the $50 trillion total GDP of all nations. We forget that derivatives akmost destroyed global economies in 2008-09, finally will by 2012.

19.  Dysfunctional Two-Party Political Bomb
Polarized partisanship increasing: Every day both parties show zero interest cooperating for the public good. Instead they fight viciously, resisting everything and anything proposed by opponents. Only goal: Score political points; make the other side look bad.

20.  The Coming “Populous Rebellion” Bombs
Nobody trusts anyone in authority. For good reason. So immediate gratification, short-term betting, and a lack of long term perspective wins for individual investors, consumers and taxpayers as well as Washington, Wall Street and Corporate America CEOs. Today: “Doing what’s right for the common good and country” is just empty political rhetoric.

Forbes. The Economist. Davos-World Economic Forum. Bloomberg-BusinessWeek. All one voice, one loud, lonely chorus echoing that famous Beatles tune: “Head in a cloud … The fool on the hill, sees the sun going down … a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make … And the eyes in his head, see the world spinning ‘round …ooh, round and round and round.”

A decade ago, on March 20, 2000 as Nasdaq and the DJIA peaked I wrote a column: “Next crash? Sorry, you won’t hear it coming.” But nobody wanted the party to end. What followed? A 30-month recession and an $8 trillion market cap loss. We reported on warnings again many times starting in 2004. Till Wall Street triggered another meltdown in 2007. You know what happened. Same today. Nobody listens. Lessons not learned. Warning: A third great meltdown is coming. But nobody listens to the “fools on the hill.”

Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor “Fat Cat Bankers” from inside their mega-bonus-bubble. Nor politicians from inside the “beltway bubble.” Why? The optimist’s brain filters out “bad” news. They “know” their dreams of prosperity will come true. Then, when they finally do see that the proverbial “light at the end of the tunnel is an oncoming train,” it’s always too late.

I will say it again, gently: A new meltdown coming. The “Great Depression II” is coming, soon. And yet, I know your mental filters are working overtime, blocking warnings of a bomb. I can even hear you calling me “the fool on the hill who sees the sun going down, the world spinning round” … sees us kissing our retirement goodbye.

Does the Justice System Actually Dispense Justice … Or Does It Just Serve the Powers-That-Be, Like the Other Branches of Government?


 

In 2000, Supreme Court Justice Ruth Ginsburg did something unprecedented. In her dissenting opinion in the Bush v. Gore case (which threw the election to Bush), Ginsburg ended her opinion with the words “I dissent”.

Believe it or not, this is a big deal. The standard etiquette for a judge – especially a supreme court justice – writing a dissenting opinion is to end with the phrase, “I respectfully dissent”. By leaving out the word “respectfully”, Ginsburg dropped normal judicial etiquette to protest an unconstitutional decision, more or less quietly declaring that a coup had occurred.

Supreme court justice Antonin Scalia said that he doesn’t care what the legislature intended when it passes a law. This is contrary to hundreds of years of American law, as legislative intent is supposed to be examined whenever legislation is ambiguous, or does not appear to directly or adequately address a particular issue, or when there appears to have been a legislative drafting error.

Scalia also went duck-hunting with Dick Cheney, even though the judicial and executive branches are supposed to keep their distance as part of the separation of powers.

Scalia and fellow high court justice Clarence Thomas also went to a secretive Koch brothers political event, where high-level republican political operatives planned out their plan of attack.

Supreme court justice Samuel Alito is also fundraising for republicans, which appears to conflict with the Code of Conduct for United States Judges. (I’m not picking on Republicans, as I think both parties currently serve the powers-that-be. These were just the most readily available examples of political shenanigans by supreme court justices).

And there are many judicial decisions which have sided with the powers-that-be at the expense of the little guy.

The Supreme Court’s ruling in Citizens United means that – under the guise of “free speech” – big corporations and wealthy individuals can basically buy politicians as well as judges. Similarly, the Florida Court of Appeals agreed with an assertion by FOX News that there is no rule against distorting or falsifying the news in the United States. And political candidates are largely free to lie during their campaigns. See this and this.

(Indeed, according to Thom Hartmann and Jim Hightower, the whole concept of “corporations as people” – which is the opposite of what the Founding Fathers intended – was based on a clerical mistake in the summary of a court opinion, which was then seized on by corporate lawyers and their allies on the bench).

And “rocket docket” judges are trampling on homeowners’ legal rights:

 

And see this, this this, this, this, this, this, this and this.

And as I pointed out last December, the American system of justice is in real trouble:

The New York Times is providing important coverage of the U.S. Supreme Court’s May 18, 2009 decision in the case known as Ashcroft v. Iqbal:

The lower courts have certainly understood the significance of the decision, Ashcroft v. Iqbal, which makes it much easier for judges to dismiss civil lawsuits right after they are filed. They have cited it more than 500 times in just the last two months.

“Iqbal is the most significant Supreme Court decision in a decade for day-to-day litigation in the federal courts,” said Thomas C. Goldstein, an appellate lawyer with Akin Gump Strauss Hauer & Feld in Washington.

Why is Iqbal such an important case?

As the Times notes:

For more than half a century, it has been clear that all a plaintiff had to do to start a lawsuit was to file what the rules call “a short and plain statement of the claim” in a document called a complaint. Having filed such a bare-bones complaint, plaintiffs were entitled to force defendants to open their files and submit to questioning under oath.

This approach, particularly when coupled with the American requirement that each side pay its own lawyers no matter who wins, gave plaintiffs settlement leverage. Just by filing a lawsuit, a plaintiff could subject a defendant to great cost and inconvenience in the pre-trial fact-finding process called discovery…

Information about wrongdoing is often secret. Plaintiffs claiming they were the victims of employment discrimination, a defective product, an antitrust conspiracy or a policy of harsh treatment in detention may not know exactly who harmed them and how before filing suit. But plaintiffs can learn valuable information during discovery.

The Iqbal decision now requires plaintiffs to come forward with concrete facts at the outset, and it instructs lower court judges to dismiss lawsuits that strike them as implausible.

“Determining whether a complaint states a plausible claim for relief,” Justice Anthony M. Kennedy wrote for the five-justice majority, “requires the reviewing court to draw on its judicial experience and common sense.”

Note those words: Plausible. Common sense.

So what is the real world effect of the Supreme Court’s decision?

The Times provides some hints:

“It obviously licenses highly subjective judgments,” said Stephen B. Burbank, an authority on civil procedure at the University of Pennsylvania Law School. “This is a blank check for federal judges to get rid of cases they disfavor.”

Courts applying Iqbal have been busy. A federal judge in Connecticut dismissed a disability discrimination suit this month, saying that Iqbal required her to treat the plaintiff’s assertions as implausible. A few days later, the federal appeals court in New York dismissed a breach of contract and securities fraud suit after concluding that its account of the defendants’ asserted wrongdoing was too speculative.

Indeed, the Plaintiff in Iqbal himself, was a Pakistani Muslim working and living in Long Island, who claims he was arrested 2 months after 9/11 and then beaten and tortured. But the court didn’t want to hear about it:

Justice Kennedy said Mr. Iqbal’s suit against two officials had not cleared the plausibility bar. All Mr. Iqbal’s complaint plausibly suggested, Justice Kennedy wrote, “is that the nation’s top law enforcement officers, in the aftermath of a devastating terrorist attack, sought to keep suspected terrorists in the most secure conditions available.”

In other words, the Court found the allegation that an innocent person was tortured as “implausible”. It has become apparent to everyone, however, that many innocent people were tortured.

The Iqbal decision is – literally – an assault by the Supreme Court on the American system of justice. For it prevents plaintiffs from having their day in court if either:

  1. The judge doesn’t want to hear the case; or
  2. The defendant has hidden the evidence of wrongdoing, so that the plaintiff cannot provide the details of defendant’s wrongdoing without the use of the formal discovery process which only starts once litigation has commenced

People may ask “the Supreme Court interprets and enforces the American justice system, so how can it gut that system?

Well, Congress members and the President are supposed to represent the interests of the American people. Have they always done so?

Judges – like people in the White House and Congress – are human beings with political and personal viewpoints. Some stick to the case precedent while others – no matter how high and mighty – abandon it for political or personal reasons. That is the dirty little secret that those who work inside the justice system know.

In rendering the Iqbal decision, the Supreme Court abandoned some of the fundamental principals of justice, leaving a system which only pays lip service to that word.

Several Supreme Court justices dissented with the majority’s opinion in Iqbal. As Raw Story writes:

Departing Justice David H. Souter sided with the minority in this case, expressing dismay in his dissent and suggesting the decision could “upend,” said the Times, the federal civil litigation system. He argued that complaints should be accepted “no matter how skeptical the court may be,” so long as the accusations are not “sufficiently fantastic to defy reality as we know it.”“[Claims] about little green men, or the plaintiff’s recent trip to Pluto, or experiences in time travel,” he said, should be the bar for disqualification.

Justice Ruth Bader Ginsburg agreed, suggesting the court had “messed up the federal rules” for civil suits.

Now, Chris Floyd and Yves Smith point out another worrisome Supreme Court decision: 

If the president or one of his subordinates declares someone to be an “enemy combatant” (the 21st century version of “enemy of the state”) he is denied any protection of the law. So any trouble-maker (which means anyone) can be whisked away, incarcerated, tortured, “disappeared,” you name it. Floyd’s commentary:

After hearing passionate arguments from the Obama Administration, the Supreme Court acquiesced to the president’s fervent request and, in a one-line ruling, let stand a lower court decision that declared torture an ordinary, expected consequence of military detention, while introducing a shocking new precedent for all future courts to follow: anyone who is arbitrarily declared a “suspected enemy combatant” by the president or his designated minions is no longer a “person.” They will simply cease to exist as a legal entity. They will have no inherent rights, no human rights, no legal standing whatsoever — save whatever modicum of process the government arbitrarily deigns to grant them from time to time, with its ever-shifting tribunals and show trials.

It is hard to overstate the significance of this horrid decision. The fact that the Supreme Court authorized this land grab says we no longer have an independent judiciary, that the Supreme Court itself is gutting the protections supposedly provided by the legal system. Per Floyd:

In fact, our most august defenders of the Constitution did not have to exert themselves in the slightest to eviscerate not merely 220 years of Constitutional jurisprudence but also centuries of agonizing effort to lift civilization a few inches out of the blood-soaked mire that is our common human legacy. They just had to write a single sentence.

Now Floyd saw this mainly as an issue of the treatment of enemy combatants and Obama hypocrisy about torture, which is bad enough:

The Constitution is clear: no person can be held without due process; no person can be subjected to cruel and unusual punishment. And the U.S. law on torture of any kind is crystal clear: it is forbidden, categorically, even in time of “national emergency.” And the instigation of torture is, under U.S. law, a capital crime. No person can be tortured, at any time, for any reason, and there are no immunities whatsoever for torture offered anywhere in the law.

And yet this is what Barack Obama — who, we are told incessantly, is a super-brilliant Constitutional lawyer — has been arguing in case after case since becoming president: Torturers are immune from prosecution; those who ordered torture are immune from prosecution….let’s be absolutely clear: Barack Obama has taken the freely chosen, public, formal stand — in court — that there is nothing wrong with any of these activities.

Yves here. The implications are FAR worse. Anyone can be stripped, with NO RECOURSE, of all their legal rights on a Presidential say so. Readers in the US no longer have any security under the law.

Roman citizens enjoyed a right to a trial, a right of appeal, and could not be tortured, whipped, or executed except if found guilty of treason, and anyone charged with treason could demand a trial in Rome. We have regressed more than 2000 years with this appalling ruling.

Is America still a nation of laws? Or is it a nation in which judges get to throw out cases soon after filing because the plaintiffs claims go against the judge’s belief system or world view and the President can decide that someone is entitled to no legal protection whatsoever?

You know that Congress and the White House are acting like lapdogs to the powers-that-be. The question is whether the judiciary is really that different.

Indeed, professor John Hasnas argues that Americans are allowing themselves to be subjected to tyranny because they naively believe that the justice system is following the rule of law:

I believe that, much as Orwell suggested, it is the public’s ability to engage in this type of doublethink, to be aware that the law is inherently political in character and yet believe it to be an objective embodiment of justice, that accounts for the amazing degree to which the federal government is able to exert its control over a supposedly free people. I would argue that this ability to maintain the belief that the law is a body of consistent, politically neutral rules that can be objectively applied by judges in the face of overwhelming evidence to the contrary, goes a long way toward explaining citizens’ acquiescence in the steady erosion of their fundamental freedoms.

***

As a myth … the concept of the rule of law is both powerful and dangerous. Its power derives from its great emotive appeal. The rule of law suggests an absence of arbitrariness, an absence of the worst abuses of tyranny. The image presented by the slogan “America is a government of laws and not people” is one of fair and impartial rule rather than subjugation to human whim. This is an image that can command both the allegiance and affection of the citizenry.

***

The belief that there is [an impartial rule of law in America] serves to maintain public support for society’s power structure ….

Senate Bill S 510 Food Safety Modernization Act vote imminent: Would outlaw gardening and saving seeds

Mike Adams
Natural News
Nov 16, 2010

Senate Bill 510, the Food Safety Modernization Act, has been called “the most dangerous bill in the history of the United States of America.” It would grant the U.S. government new authority over the public’s right to grow, trade and transport any foods. This would give Big brother the power to regulate the tomato plants in your backyard. It would grant them the power to arrest and imprison people selling cucumbers at farmer’s markets. It would criminalize the transporting of organic produce if you don’t comply with the authoritarian rules of the federal government.

“It will become the most offensive authority against the cultivation, trade and consumption of food and agricultural products of one’s choice. It will be unconstitutional and contrary to natural law or, if you like, the will of God.” – Dr. Shiv Chopra, Canada Health whistleblower (http://shivchopra.com/?page_id=2)

This tyrannical law puts all food production (yes, even food produced in your own garden) under the authority of the Department of Homeland Security. Yep — the very same people running the TSA and its naked body scanner / passenger groping programs.

This law would also give the U.S. government the power to arrest any backyard food producer as a felon (a “smuggler”) for merely growing lettuce and selling it at a local farmer’s market.

It also sells out U.S. sovereignty over our own food supply by ceding to the authority of both the World Trade Organization (WTO) and Codex Alimentarius.

It would criminalize seed saving (http://foodfreedom.wordpress.com/20…), turning backyard gardeners who save heirloom seeds into common criminals. This is obviously designed to give corporations like Monsanto a monopoly over seeds.

It would create an unreasonable paperwork burden that would put small food producers out of business, resulting in more power over the food supply shifting to large multinational corporations.

I encourage you to read more about this dangerous bill at the Food Freedom blog on WordPress: http://foodfreedom.wordpress.com/20…

Watch this excellent video on NaturalNews.TV which explains S.510 in more detail:
http://naturalnews.tv/v.asp?v=9209B…


Take action now or lose your right to grow your own food

Sign this petition at Citizens for Health:
http://www.citizens.org/?page_id=2312

Do it today! This is really important.

In addition, the Cornucopia Institute recently sent out an urgent call-to-action email containing the following information: (http://www.cornucopia.org/2010/11/a…)

How to protest Senate Bill 510

1) Go to Congress.org and type in your zip code in the box in the upper right hand corner.

2) Click on your Senator’s name, and then on the contact tab for their phone number. You can also call the Capitol Switchboard and ask to be directly connected to your Senator’s office: 202-224-3121.

3) Once connected ask to speak to the legislative staff person responsible for agriculture. If they are unavailable leave a voice mail message. Be sure to include your name and phone number.

Give them this message in support of the “Tester Amendment” which would exempt small farms from S.510:

“I am a constituent of Senator___________. I ask that he/she support the Tester Amendment to the food safety bill. The Tester Amendment will exempt the safest, small, owner-operator farms and food facilities and farmers who direct market their products to consumers, stores or restaurants. Food safety legislation should not create inappropriate and costly regulatory barriers to family farms and the growing healthy food movement in the drive to crack down on corporate bad actors. Please support the Tester Amendment and market opportunities for small and mid-sized family farms, and small food processing facilities.”

You may also wish to explain that you oppose the Food Safety Modernization Act in its entirety, and it is a destructive, freedom-crushing law that will destroy the future of food in America.

Remember, America has already lost control over its money supply to the Federal Reserve (nearly a hundred years ago). America has lost its health due to the medical industry and its profit-from-sickness agenda. Now we may lose our right to grow our own food and save our own seeds if Senate Bill 510 passes.

This is a dangerous, tyrannical law that would thrust the American people into an age of darkness and malnutrition. It would criminalize many of the very people growing our food and turn food production into yet another corporate monopoly.

Please take the time right now to contact your U.S. Senator and voice your strong opposition to this bill.

The end of growth


Richard Heinberg

This article is an excerpt from Richard’s new book which has the working title ‘The End of Growth’ and is set for publication in July 2011. Given the urgency and fragility of the global economic crisis, we will be serializing the rough content as Richard writes it. Additionally, Richard will be offering ‘live peeks’ at the events and information that inform his writing process through Facebook and Twitter accounts created expressly for this publication.

Introduction: The New Normal

The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.

The “growth” we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it.

The economic crisis that began in 2007-2008 was both foreseeable and inevitable, and it marks a permanent, fundamental break from past decades – a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. There are now fundamental barriers to ongoing economic expansion, and the world is colliding with those barriers.

This is not to say the U.S. or the world as a whole will never see another quarter or year of growth relative to the previous quarter or year. However, when the bumps are averaged out, the general trend-line of the economy (measured in terms of production and consumption of real goods) will be level or downward rather than upward from now on.

Nor will it be impossible for any region, nation, or business to continue growing for a while. Some will. In the final analysis, however, this growth will have been achieved at the expense of other regions, nations, or businesses. From now on, only relative growth is possible: the global economy is playing a zero-sum game, with an ever-shrinking pot to be divided among the winners.

Why Is Growth Ending?

Many financial pundits point to profound problems internal to the economy – including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble – as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.

Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:

  • The depletion of important resources including fossil fuels and minerals;
  • The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels) – leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
  • Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs – and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.

Despite the tendency of financial commentators to focus only on the last of these factors, it is possible to point to literally thousands of events in recent years that illustrate how all three are interacting, and are hitting home with ever more force.

Consider just one: the Deepwater Horizon oil catastrophe of 2010 in the U.S. Gulf of Mexico.

The fact that BP was drilling for oil in deep water in the Gulf of Mexico illustrates a global trend: while the world is not in danger of running out of oil anytime soon, there is very little new oil to be found in onshore areas where drilling is cheap. Those areas have already been explored and their rich pools of hydrocarbons are being depleted. According to the International Energy Agency, by 2020 almost 40 percent of world oil production will come from deepwater regions. So even though it’s hard, dangerous, and expensive to operate a drilling rig in a mile or two of ocean water, that’s what the oil industry must do if it is to continue supplying its product. That means more expensive oil.

Obviously, the environmental costs of the Deepwater Horizon blowout and spill were ruinous. Neither the U.S. nor the oil industry can afford another accident of that magnitude. So, in 2010 the Obama administration instituted a deepwater drilling moratorium in the Gulf of Mexico while preparing new drilling regulations. Other nations began revising their own deepwater oil exploration guidelines. These will no doubt make future blowout disasters less likely, but they add to the cost of doing business and therefore to the already high cost of oil.

The Deepwater Horizon incident also illustrates to some degree the knock-on effects of depletion and environmental damage upon financial institutions. Insurance companies have been forced to raise premiums on deepwater drilling operations, and impacts to regional fisheries have hit the Gulf Coast economy hard. While economic costs to the Gulf region were partly made up for by payments from BP, those payments forced the company to reorganize and resulted in lower stock values and returns to investors. BP’s financial woes in turn impacted British pension funds that were invested in the company.

This is just one event – admittedly a spectacular one. If it were an isolated problem, the economy could recover and move on. But we are, and will be, seeing a cavalcade of environmental and economic disasters, not obviously related to one another, that will stymie economic growth in more and more ways. These will include but are not limited to:

  • Climate change leading to regional droughts, floods, and even famines;
  • Shortages of water and energy; and
  • Waves of bank failures, company bankruptcies, and house foreclosures.

Each will be typically treated as a special case, a problem to be solved so that we can get “back to normal.” But in the final analysis, they are all related, in that they are consequences of growing human population striving for higher per-capita consumption of limited resources (including non-renewable, climate-altering fossil fuels), all on a finite and fragile planet.

Meanwhile, the unwinding of decades of buildup in debt has created the conditions for a once-in-a-century financial crash – which is unfolding around us, and which on its own has the potential to generate substantial political unrest and human misery.

The result: we are seeing a perfect storm of converging crises that together represent a watershed moment in the history of our species. We are witnesses to, and participants in, the transition from decades of economic growth to decades of economic contraction.

Why Is Growth So Important?

During the last couple of centuries, growth became virtually the sole index of economic well-being. When an economy grew, jobs appeared and investments yielded high returns. When the economy stopped growing temporarily, as it did during the Great Depression, financial bloodletting ensued.

Throughout this period, world population increased – from fewer than two billion humans on planet Earth in 1900 to nearly seven billion today; we are adding about 70 million new “consumers” each year. That makes further growth even more crucial: if the economy stagnates, there will be fewer goods and services per capita to go around.

We have relied on economic growth for the “development” of the world’s poorest economies; without growth, we must seriously entertain the possibility that hundreds of millions – perhaps billions – of people will never achieve even a rudimentary version of the consumer lifestyle enjoyed by people in the world’s industrialized nations.

Finally, we have created monetary and financial systems that require growth. As long as the economy is growing, that means more money and credit are available, expectations are high, people buy more goods, businesses take out more loans, and interest on existing loans can easily be repaid. But if more new money isn’t entering the system, the interest on existing loans cannot be paid; as a result, defaults snowball, jobs are lost, incomes fall, and consumer spending contracts – which leads businesses to take out fewer loans, causing still less new money to enter the economy. This is a self-reinforcing destructive feedback loop that is very difficult to stop once it gets going.

In other words, the economy has no “stable” or “neutral” setting: there is only growth or contraction. And “contraction” is just a nicer name for Depression – a long period of cascading job losses, foreclosures, defaults, and bankruptcies.

We have become so accustomed to growth that it’s hard to remember that it is actually is a fairly recent phenomenon.

During the past few millennia, as empires rose and fell, local economies advanced and retreated – but world economic activity expanded only slowly, and with periodic reversals. However, with the fossil fuel revolution of the past two centuries, we have seen growth at a speed and scale unprecedented in all of human history. We harnessed the energies of coal, oil, and natural gas to build and operate cars, trucks, highways, airports, airplanes, and electric grids – all the essential features of modern industrial society. Through the one-time-only process of extracting and burning hundreds of millions of years’ worth of chemically stored sunlight, we built what appeared (for a brief, shining moment) to be a perpetual-growth machine. We learned to take what was in fact an extraordinary situation for granted. It became normal.

But as the era of cheap, abundant fossil fuels comes to an end, our assumptions about continued expansion are being be shaken to their core.

The end of growth is a very big deal indeed. It means the end of an era, and of our current ways of organizing economies, politics, and daily life. Without growth, we will have to virtually reinvent human life on Earth.

It is essential that we recognize and understand the significance of this historic moment: if we have in fact reached the end of the era of fossil-fueled economic expansion, then efforts by policy makers to continue pursuing elusive growth really amount to a flight from reality. World leaders, if they are deluded about our actual situation, are likely to delay putting in place the support services that can make life in a non-growing economy survivable, and they will almost certainly fail to make needed, fundamental changes to monetary, financial, food, and transport systems.

As a result, what could have been a painful but endurable process of adaptation could become history’s greatest tragedy. We can survive the end of growth, but only if we recognize it for what it is and act accordingly.

But Isn’t Growth Normal?

Economies are systems, and as such they (to a certain extent at least) follow rules analogous to those that govern biological systems. Plants and animals tend to grow quickly when they are young, but then they reach a more or less stable mature size. In organisms, growth rates are largely controlled by genes, but also by availability of food.

In economies, growth seems tied to economic planning, and also to the availability of resources – chiefly energy resources (“food” for the industrial system), as well as credit (“oxygen” for the economy).

During the 19th and 20th centuries, expanding access to cheap and abundant fossil fuels enabled rapid economic expansion; economic planners began to take this situation for granted. Financial systems internalized the expectation of growth as a promise of returns on investments.

But just as organisms cease growing, economies must do so too. Even if planners (society’s equivalent of regulatory DNA) dictate more growth, at some point increasing amounts of “food” and “oxygen” may cease to be available. It is also possible for industrial wastes to accumulate to the point that the biological systems that underpin economic activity (such as forests, crops, and human bodies) are smothered and poisoned.

But many economists don’t see things this way. That’s probably because current economic theories were formulated during the anomalous historical period of sustained growth that is now ending. Economists are merely generalizing from their experience: they can point to decades of steady growth in the recent past, and they simply project that experience into the future. Moreover, they have ways to explain why modern market economies are immune to the kinds of limits that constrain natural systems: the two main ones have to do with substitution and efficiency.

If a useful resource becomes scarce, its price will rise, and this creates an incentive for users of the resource to find a substitute. For example, if oil gets expensive enough, energy companies might start making liquid fuels from coal. Or they might develop other energy sources undreamed of today. Many economists theorize that this process of substitution can go on forever. It’s part of the magic of the free market.

Increasing efficiency means doing more with less. In the U.S., the number of inflation-adjusted dollars generated in the economy for every unit of energy consumed has increased steadily over recent decades (the amount of energy, in British Thermal Units, required to produce a dollar of GDP dropped from close to 20,000 BTU per dollar in 1949 to 8,500 BTU in 2008). Part of this increasing efficiency has come about as a result of the outsourcing of manufacturing to other nations – which burn the coal, oil, or natural gas to make our goods (if we were making our own running shoes and LCD TVs, we’d be burning that energy domestically). Economists also point to another, related form of efficiency that has less to do with energy (in a direct way, at least): the process of identifying the cheapest sources of materials, and the places where workers will be most productive and work for the lowest wages. As we increase efficiency, we use less – of energy, resources, labor, or money – to do more. That enables more growth.

Finding substitutes for depleting resources and upping efficiency are undeniably effective adaptive strategies of market economies. Nevertheless, the question remains as to how long these strategies can continue to work in the real world – which is governed less by economic theories than by the laws of physics. In the real world, some things don’t have substitutes, or the substitutes are too expensive, or don’t work as well, or can’t be produced fast enough. And efficiency follows a law of diminishing returns: the first gains in efficiency are usually cheap, but every further incremental gain tends to cost more, until further gains become prohibitively expensive.

In the end, we can’t outsource more than 100 percent of manufacturing, we can’t transport goods with zero energy, and we can’t enlist the efforts of workers and count on their buying our products while paying them nothing.

Unlike most economists, most physical scientists recognize that growth within any functioning, bounded system has to stop sometime.

The Simple Math of Compounded Growth

In principle, the argument for an eventual end to growth is a slam-dunk. If any quantity grows steadily by a certain fixed percentage per year, this implies that it will double in size every so-many years; the higher the percentage growth rate, the quicker the doubling. A rough method of figuring doubling times is known as the rule of 70: dividing the percentage growth rate into 70 gives the approximate time required for the initial quantity to double. If a quantity is growing at 1 percent per year, it will double in 70 years; at 2 percent per year growth, it will double in 35 years; at 5 percent growth, it will double in only 14 years, and so on. If you want to be more precise, you can use the Y^x button on a scientific calculator, but the rule of 70 works fine for most purposes.

Here’s a real-world example: Over the past two centuries, human population has grown at rates ranging from less than one percent to more than two percent per year. In 1800, world population stood at about one billion; by 1930 it had doubled to two billion. Only 30 years later (in 1960) it had doubled again to four billion; currently we are on track to achieve a third doubling, to eight billion humans, around 2025. No one seriously expects human population to continue growing for centuries into the future. But imagine if it did – at just 1.3 percent per year (its growth rate in the year 2000). By the year 2780 there would be 148 trillion humans on Earth – one person for each square meter of land on the planet’s surface.

It won’t happen, of course.

In nature, growth always slams up against non-negotiable constraints sooner or later. If a species finds that its food source has expanded, its numbers will increase to take advantage of those surplus calories – but then its food source will become depleted as more mouths consume it, and its predators will likewise become more numerous (more tasty meals for them!). Population “blooms” (or periods of rapid growth) are always followed by crashes and die-offs. Always.

Here’s another real-world example. In recent years China’s economy has been growing at eight percent or more per year; that means it is more than doubling in size every ten years. Indeed, China consumes more than twice as much coal as it did a decade ago – the same with iron ore and oil. The nation now has four times as many highways as it did, and almost five times as many cars. How long can this go on? How many more doublings can occur before China has used up its key resources – or has simply decided that enough is enough and has stopped growing? The question is hard to answer with a specific date, but it must be asked.

This discussion has very real implications, because the economy is not just an abstract concept; it is what determines whether we live in luxury or poverty, whether we eat or starve. If economic growth ends, everyone will be impacted, and it will take society years to adapt to this new condition. Therefore it is important to know whether that moment is close at hand or distant in time.

The End of Growth Should Come as No Surprise

The idea that growth will stall out at some point this century is hardly new. In 1972, a book titled Limits to Growth made headlines and went on to become the best-selling environmental book of all time.

That book, which reported on the first attempts to use computers to model the likely interactions between trends in resources, consumption, and population, was also the first major scientific study to question the assumption that economic growth can and will continue more or less uninterrupted into the foreseeable future.

The idea was heretical at the time – and still is. The notion that growth cannot and will not continue beyond a certain point proved profoundly upsetting in some quarters, and soon Limits to Growth was prominently “debunked” by pro-growth business interests. In reality, this “debunking” merely amounted to taking a few numbers in the book completely out of context, citing them as “predictions” (which they explicitly were not), and then claiming that these predictions had failed. The ruse was quickly exposed, but rebuttals often don’t gain nearly as much publicity as accusations, and so today millions of people mistakenly believe that the book was long ago discredited. In fact, the original Limits to Growth scenarios have held up quite well. (A recent study by Australian Commonwealth Scientific and Industrial Research Organization (CSIRO) concluded, “[Our] analysis shows that 30 years of historical data compares favorably with key features of [the Limits to Growth] business-as-usual scenario…”).

The authors fed in data for world population growth, consumption trends, and the abundance of various important resources, ran their computer program, and concluded that the end of growth would probably arrive between 2010 and 2050. Industrial output and food production would then fall, leading to a decline in population.

The Limits to Growth scenario study has been re-run repeatedly in the years since the original publication, using more sophisticated software and updated input data. The results have been similar each time. (See Limits to Growth: The 30-Year Update.)

The Peak Oil Scenario

As mentioned, this book will argue that growth is over because of a convergence of three factors – resource depletion, environmental impacts, and systemic financial and monetary failures. However, a single factor may be playing a key role in bringing the age of expansion to a close. That factor is oil.

Petroleum has a pivotal place in the modern world – in transportation, agriculture, and the chemicals and materials industries. The Industrial Revolution was really the Fossil Fuel Revolution, and the entire phenomenon of continuous economic growth – including the development of the financial institutions that facilitate growth, such as fractional reserve banking – is ultimately based on ever-increasing supplies of cheap energy. Growth requires more manufacturing, more trade, and more transport, and those all in turn require more energy. This means that if energy supplies can’t expand and energy therefore becomes significantly more expensive, economic growth will falter and financial systems built on expectations of perpetual growth will fail.

As early as 1998, petroleum geologists Colin Campbell and Jean Laherrère were discussing a Peak Oil impact scenario that went like this. Sometime around the year 2010, they theorized, stagnant or falling oil supplies would lead to soaring and more volatile petroleum prices, which would precipitate a global economic crash. This rapid economic contraction would in turn lead to sharply curtailed energy demand, so oil prices would then fall; but as soon as the economy regained strength, demand for oil would recover, prices would again soar, and as a result of that the economy would relapse. This cycle would continue, with each recovery phase being shorter and weaker, and each crash deeper and harder, until the economy was in ruins. Financial systems based on the assumption of continued growth would implode, causing more social havoc than the oil price spikes would themselves generate.

Meanwhile, volatile oil prices would frustrate investments in energy alternatives: one year, oil would be so expensive that almost any other energy source would look cheap by comparison; the next year, the price of oil would have fallen far enough that energy users would be flocking back to it, with investments in other energy sources looking foolish. But low oil prices would discourage exploration for more petroleum, leading to even worse fuel shortages later on. Investment capital would be in short supply in any case because the banks would be insolvent due to the crash, and governments would be broke due to declining tax revenues. Meanwhile, international competition for dwindling oil supplies might lead to wars between petroleum importing nations, between importers and exporters, and between rival factions within exporting nations.

In the years following Campbell and Laherrère’s initial publication, many pundits claimed that new technologies for crude oil extraction would increase the amount of oil that can be obtained from each well drilled, and that enormous reserves of alternative hydrocarbon resources (principally tar sands and oil shale) would be developed to seamlessly replace conventional oil, thus delaying the inevitable peak for decades. There were also those who said that Peak Oil wouldn’t be much of a problem even if it happened soon, because the market would find other energy sources or transport options as quickly as needed – whether electric cars, hydrogen, or liquid fuel made from coal.

In succeeding years, events appeared to be supporting the Peak Oil thesis and undercutting the views of the oil optimists. Oil prices trended steeply upward – and for entirely foreseeable reasons: discoveries of new oilfields were continuing to dwindle, with most new fields being much more difficult and expensive to develop than ones found in previous years. More oil-producing countries were seeing their extraction rates peaking and beginning to decline despite efforts to maintain production growth using high-tech, expensive secondary and tertiary extraction methods like the injection of water, nitrogen, or CO2 to force more oil out of the ground. Production decline rates in the world’s old, super-giant oilfields, which are responsible for the lion’s share of the global petroleum supply, were accelerating. Production of liquid fuels from tar sands was expanding only slowly, while the development of oil shale remained a hollow promise for the distant future.

From Scary Theory to Scarier Reality

Then in 2008, the Peak Oil scenario became all too real. Global oil production had been stagnant since 2005 and petroleum prices had been soaring upward. In July 2008, the per-barrel price shot up nearly to $150 – half again higher (in inflation-adjusted terms) than the price spikes of the 1970s that had triggered the worst recession since World War II. By summer 2008, the auto industry, the trucking industry, international shipping, agriculture, and the airlines were all reeling.

But what happened next riveted the world’s attention to such a degree that the oil price spike was all but forgotten: in September 2008, the global financial system nearly collapsed. The reasons for this sudden, gripping crisis apparently had to do with housing bubbles, lack of proper regulation of the banking industry, and the over-use of bizarre financial products that almost nobody understood. However, the oil price spike had played a critical (if largely overlooked) role in initiating the economic meltdown (see Temporary Recession or the End of Growth?).

In the immediate aftermath of that global financial near-death experience, both the Peak Oil impact scenario proposed a decade earlier and the Limits to Growth standard-run scenario of 1972 seemed to be confirmed with uncanny and frightening accuracy. Global trade was falling. The world’s largest auto companies were on life support. The U.S. airline industry had shrunk by almost a quarter. Food riots were erupting in poor nations around the world. Lingering wars in Iraq (the nation with the world’s second-largest crude oil reserves) and Afghanistan (the site of disputed oil and gas pipeline projects) continued to bleed the coffers of the world’s foremost oil-importing nation.

Meanwhile, the debate about what to do to rein in global climate change exemplified the political inertia that had kept the world on track for calamity since the early ’70s. It had by now become obvious to nearly every person of modest education and intellect that the world has two urgent, incontrovertible reasons to rapidly end its reliance on fossil fuels: the twin threats of climate catastrophe and impending constraints to fuel supplies. Yet at the Copenhagen climate conference in December, 2009, the priorities of the most fuel-dependent nations were clear: carbon emissions should be cut, and fossil fuel dependency reduced, but only if doing so does not threaten economic growth.

The Financial Component of Economic Contraction

If limits on resources and environmental sinks were closing the spigots on growth, the palpable pain that ordinary citizens were directly experiencing seemed to be coming mostly from another direction entirely: loss of jobs and collapsing real estate prices.

As we will see in Chapters 1 and 2, expectations of continuing growth had in the previous decades been translated into enormous amounts of consumer and government debt. Americans were no longer getting rich by inventing new technologies and making consumer goods, but merely by buying and selling houses, or by moving money around from one investment to another, or by charging transaction fees as others did so.

As a new century dawned, the world economy lurched from one bubble to the next: the emerging-Asian-economies bubble, the dot-com bubble, the real estate bubble. Everyone knew that these would eventually burst, as bubbles always do, but “smart” investors aimed to get in early and get out quickly enough to profit big and avoid the ensuing mayhem.

In the manic days of 2002 to 2006, millions of Americans came to rely on soaring real estate values as a source of income, turning their houses into ATMs (to use once more the phrase heard so often then). As long as prices kept going up, homeowners felt justified in borrowing to remodel a kitchen or bathroom, and banks felt fine making new loans. Meanwhile, the wizards of Wall Street were finding ways of slicing and dicing sub-prime mortgages into tasty collateralized debt obligations that could be sold at a premium to investors – with little or no risk! After all, real estate values were destined to just keep going up. God’s not making any more land, went the truism.

Credit and debt expanded in the euphoria of easy money. All this giddy optimism led to a growth of jobs in construction and real estate, masking the underlying ongoing job losses in manufacturing.

A few dour financial pundits used terms like “house of cards,” “tinderbox,” and “stick of dynamite” to describe the situation. All that was needed was a metaphoric breeze or rogue spark to produce a catastrophic outcome. Arguably, the oil price spike of mid-2008 was more than enough to do the trick.

But the housing bubble was itself merely a larger fuse: in reality, the entire economic system had foolishly come to depend on impossible-to-realize expectations of perpetual growth and was set to detonate. Money was tied to credit, and credit was tied to assumptions about growth. Once growth went sour in 2008, the chain reaction of defaults and bankruptcy began; we were in a slow-motion explosion.

The effort of governments since then has been directed toward getting growth started again. But, to very limited degree that this effort temporarily succeeded in late 2009 and early 2010, it merely masked the underlying contradiction at the heart of our entire economic system – the assumption that we can have unending growth in a finite world.

What Comes After Growth?

The realization that we have reached the point where growth cannot continue is undeniably depressing. But once we have passed that psychological hurdle, there is some moderately good news.

Not all economists have fallen for the notion that growth will go on forever. There are schools of economic thought that recognize nature’s limits and, while these schools have been largely marginalized in policy circles, they have developed potentially useful plans that could help society adapt.

The basic factors that will inevitably shape whatever replaces the growth economy are knowable.To survive and thrive for long, societies have to operate within the planet’s budget of sustainably extractable resources. This means that even if we don’t know in detail what a desirable post-growth economy and lifestyle will look like, we know enough to begin working toward them.

We must convince ourselves that life in a non-growing economy can be fulfilling, interesting, and secure. The absence of growth does not necessarily imply a lack of change or improvement. Within a non-growing or equilibrium economy there can still be continuous development of practical skills, artistic expression, and certain kinds of technology. In fact, some historians and social scientists argue that life in an equilibrium economy can be superior to life in a fast-growing economy: while growth creates opportunities for some, it also typically intensifies competition – there are big winners and big losers, and (as in most boom towns) the quality of relations within the community can suffer as a result. Within a non-growing economy it is possible to maximize benefits and reduce factors leading to decay, but doing so will require pursuing appropriate goals: instead of more, we must strive for better; rather than promoting increased economic activity for its own sake, we must emphasize whatever increases quality of life without stoking consumption. One way to do this is to reinvent and redefine growth itself.

The transition to a no-growth economy (or one in which growth is defined in a fundamentally different way) is inevitable, but it will go much better if we plan for it rather than simply watching in dismay as institutions we have come to rely upon fail, and then try to improvise a survival strategy in their absence.

In effect, we have to create a desirable “new normal” that fits the constraints imposed by depleting natural resources. Maintaining the “old normal” is not an option; if we do not find new goals for ourselves and plan our transition from a growth-based economy to a healthy equilibrium economy, we will by default create a much less desirable “new normal” whose emergence we are already beginning to see in the forms of persistent high unemployment, a widening gap between rich and poor, and ever more frequent and worsening financial and environmental crises – all of which translate to profound distress for individuals, families, and communities.

Dr. Bernanke Gets a Phone Call


Gary North

Zhou Xiaochuan is the Governor of the People’s Bank of China. Imagine that the following phone call were to take place.

Zhou: Hello. Dr. Bernanke?

Bernanke: Yes.

Zhou: I wanted to let you know about the decision that our board has taken, after consulting with the Premier and the Politburo’s Standing Committee. We hope you are sitting down.

Bernanke: I get it. A little Oriental humor.

Zhou: You could say that.

Bernanke: What can I do for you?

Zhou: You can abandon your plan to purchase $600 billion of Treasury bonds.

Bernanke: The Federal Open Market Committee voted ten to 1 for this policy. I cannot change it now.

Zhou: We think it is an unwise policy. It will lower the value of the dollar. Americans will then buy fewer goods from China.

Bernanke: That is not how we see it. We think the policy is required to put Americans back to work. They will buy more goods from China and everywhere else when they are once again working.

Zhou: You will increase the supply of dollars, which will lower the dollar’s price internationally. Imported goods will cost Americans more. An increased supply of dollars will mean a lower price for dollars. It’s supply and demand.

Bernanke: That is the old economics. That is the logic of Adam Smith and Milton Friedman and those kooks from Vienna. We are committed to the new economics.

Zhou: Who teaches it? Where?

Bernanke: I taught it for years at Princeton.

Zhou: Where Paul Krugman also teaches?

Bernanke: Yes.

Zhou: We see it differently here. We prefer the older economics.

Bernanke: Adam Smith’s economics?

Zhou: No, even older.

Bernanke: Mercantilism?

Zhou: That is what you call it. We call it the export-driven Asian miracle.

Bernanke: But mercantilist governments wanted to hoard gold. Your nation does not hoard gold. Your bank holds U.S. Treasury debt.

Zhou: That is the purpose of my call.

Bernanke: Gold?

Zhou: No. U.S. Treasury debt.

Bernanke: What about it?

Zhou: There is too much of it.

Bernanke: You sound like Ron Paul.

Zhou: Ah, yes. Congressman Paul. I understand that he is likely to be the next chairman of the Monetary Policy Subcommittee. You and he should have some interesting discussions.

Bernanke: I prefer to talk about Treasury debt.

Zhou: We have determined that an increase of $600 billion in your purchases of Treasury debt will lower the rate of interest on the debt.

Bernanke: That is our thought, too.

Zhou: We hold almost $1 trillion in Treasury debt.

Bernanke: You ought to buy more.

Zhou: We will be losing money on our holdings if rates fall.

Bernanke: You ought to buy more.

Zhou: The value of the dollar will fall. That will lower the value of our holdings.

Bernanke: Nevertheless, you ought to buy more.

Zhou: We have decided to own less.

Bernanke: How much less?

Zhou: $600 billion less.

Bernanke:

Zhou: Dr. Bernanke?

Bernanke:

Zhou: Are you still there?

Bernanke: I am still here.

Zhou: We have decided that every time the Federal Reserve purchases its monthly total of $75 billion, we will sell $75 billion.

Bernanke: Are you serious?

Zhou: You sound like Nancy Pelosi.

Bernanke: But that would raise interest rates on Treasury debt.

Zhou: That is our conclusion, too. But remember: we own lots of Treasury debt. We could use a better rate of return.

Bernanke: But higher rates might cause a recession in the United States.

Zhou: That is our conclusion, too.

Bernanke: But that will mean fewer imports from China.

Zhou: We think it will mean more bankrupt manufacturing facilities in the United States. Then Americans will come back to our manufacturers.

Bernanke: But this could cause unemployment in China if you are wrong.

Zhou: We are willing to risk that.

Bernanke: That is a big risk on your part.

Zhou: No bigger than the risk on your part by inflating the monetary base by 30%. That could raise prices in the United States.

Bernanke: We don’t think so.

Zhou: Why not?

Bernanke: Because our bankers are so frightened of recession in 2011 that they are not lending. They just turn the money over to the FED.

Zhou: Then you do not expect inflation?

Bernanke: Only a little. Maybe 2% to 3%.

Zhou: You sound like Milton Friedman.

Bernanke: Around here, we say, “Better 2% inflation than 9.6% unemployment.”

Zhou: We think it is better for us not to hold onto Treasury debt that cannot be paid off.

Bernanke: Don’t worry. We owe it to ourselves.

Zhou: On the contrary, you owe it to us.

Bernanke: It’s only a figure of speech.

Zhou: We can figure. We are going to be left holding the bag, as you say. All we have is a pile of IOUs.

Bernanke: They’re as good as gold.

Zhou: Since they pay zero interest, we think gold is better.

Bernanke: It’s only a figure of speech.

Zhou: We can figure. Gold is over $1,350 an ounce. The dollar has been falling. We think the older mercantilism was right. We want to own more gold.

Bernanke: You can’t eat gold!

Zhou: We can’t eat T-bonds, either.

Bernanke: But if you sell dollars, their price will fall.

Zhou: Why?

Bernanke: It’s supply and demand.

Zhou: Gotcha!

Bernanke: You speak English very well.

Zhou: You see, I was educated in your country at UCRA.

Bernanke: Really?

Zhou: Not really. But I love those old Richard Loo World War II movies. He made a great Japanese officer.

Bernanke: But if you sell Treasury debt, that could start a fire sale. Central banks all over the world might start sellingT-bonds.

Zhou: That is a possibility.

Bernanke: But that would make your holdings worth even less.

Zhou: That is true. So, if Japan starts selling, we will dump all of our holdings in one shot. We might as well get out before the rush.

Bernanke: But that could crash the dollar!

Zhou: That is a possibility.

Bernanke: You’re bluffing!

Zhou: That is a possibility.

Bernanke: But this is not the way that central banks operate.

Zhou: How do they operate?

Bernanke: They inflate.

Zhou: Always?

Bernanke: Of course always. That is the only policy tool we have.

Zhou: You could deflate.

Bernanke: Are you serious?

Zhou: You really have Nancy Pelosi down pat.

Bernanke: There is no way we can deflate.

Zhou: What about your exit strategy? That is deflation.

Bernanke: In theory, yes. But we don’t intend to execute it.

Zhou: That is not what you told Congress. You told Congress you have an exit strategy. Several, in fact.

Bernanke: We do have them. We just don’t intend to implement them.

Zhou: Do you think you can fool Congress?

Bernanke: Are you serious? Congress doesn’t know horse apples from apple butter.

Zhou: You mistake Barney Frank for Ron Paul. You will now have to deal with Ron Paul.

Bernanke:

Zhou: Hello.

Bernanke:

Zhou: Are you still there?

Bernanke: Yes, I’m still here.

Zhou: We are not asking you to deflate. We are asking you not to inflate.

Bernanke: But we must inflate.

Zhou: Why?

Bernanke: Because we have 9.6% unemployment.

Zhou: What has that got to do with your decision to inflate?

Bernanke: We must lower interest rates.

Zhou: For Treasury bonds.

Bernanke: Yes.

Zhou: What does that have to do with unemployment?

Bernanke: When mid-term rates are lower, businesses will start new projects and hire people.

Zhou: Mid-maturity T-bond interest rates are the lowest ever since what you call the Great Depression and what we call the old normal.

Bernanke: You can never have low enough T-bond rates.

Zhou: But, as Treasury bond investors, we don’t like low rates. We like high rates. We hold lots of T-bonds. If we get very low rates, we might as well own gold.

Bernanke: But you will like all that increased demand for made-in-China goods when all those unemployed Americans go back to work.

Zhou: But rates are lower than they have been in 80 years. You still have 9.6% unemployment.

Bernanke: But if the 10-year T-bond rate goes from 2.6% to 1%, American businessmen will hire millions of workers.

Zhou: Do you have evidence for this in one of those dozen Federal Reserve bank monthly bulletins? Or maybe in the Federal Reserve Bulletin?

Bernanke: Not really. But it’s the thought that counts.

Zhou: I don’t think we are getting anywhere. So, just to remind you. We will sell enough Treasury debt each month to match any net increase in the amount you buy.

Bernanke: Dollar for dollar?

Zhou: Dollar for dollar. But, I’ll tell you what. Buy them from us, and we’ll give you a discount for volume purchases.

Bernanke: You guys never miss a trick, do you?

Zhou: We’re really not inscrutable. We just offer discounts for volume purchases.

Bernanke: I will discuss this with the FOMC.

Zhou: Do that. Shalom!

Bernanke: That’s my middle name.

Zhou: You Americans have a saying for everything.

Bernanke: No. I mean it. That really is my middle name.

Zhou: If you start buying Treasury debt, you’ll have an honorary middle name over here.

Bernanke: What’s that?

Zhou: Paper Tiger.

The Stench of American Hypocrisy…Eyes Only on Burma


Paul Craig Roberts

Ten years of rule by the Bush and Obama regimes have seen the collapse of the rule of law in the United States. Is the American media covering this ominous and extraordinary story?  No the American media is preoccupied with the rule of law in Burma (Myanmar).

The military regime that rules Burma just released from house arrest the pro-democracy leader, Aung San Suu Kyi. The American media used the occasion of her release to get on Burma’s case for the absence of the rule of law. I’m all for the brave lady, but if truth be known, “freedom and democracy” America needs her far worse than does Burma.

I’m not an expert on Burma, but the way I see it the objection to a military government is that the government is not accountable to law.  Instead, such a regime behaves as it sees fit and issues edicts that advance its agenda.  Burma’s government can be criticized for not having a rule of law, but it cannot be criticized for ignoring its own laws. We might not like what the Burmese government does, but, precisely speaking, it is not behaving illegally.

In contrast, the United States government claims to be a government of laws, not of men, but when the executive branch violates the laws that constrain it, those responsible are not held accountable for their criminal actions.  As accountability is the essence of the rule of law, the absence of accountability means the absence of the rule of law.

The list of criminal actions by presidents Bush and Obama, Vice President Cheney, the CIA, the NSA, the US military, and other branches of the government is long and growing.  For example, both president Bush and vice president Cheney violated US and international laws against torture. Amnesty International and the American Civil Liberties Union responded to Bush’s recent admission that he authorized torture with calls for a criminal investigation of Bush’s crime.

In a letter to Attorney General Eric Holder, the ACLU reminded the US Department of Justice (sic) that “a nation committed to the rule of law cannot simply ignore evidence that its most senior leaders authorized torture.”

Rob Freer of Amnesty International said that Bush’s admission “to authorizing acts which constitute torture under international law” and which constitute “a crime under international law,” puts the US government “under obligation to investigate and to bring those responsible to justice.”

The ACLU and Amnesty International do not want to admit it, but the US government shed its commitment to the rule of law a decade ago when the US launched its naked aggression–war crimes under the Nuremberg standard–against Afghanistan and Iraq on the basis of lies and deception.

The US government’s contempt for the rule of law took another step when President Bush violated the Foreign Intelligence Surveillance Act and had the National Security Agency bypass the FISA court and spy on Americans without warrants. The New York Times is on its high horse about the rule of law in Burma, but when a patriot revealed to the Times that Bush was violating US law, the Times’ editors sat on the leak for one year until after Bush was safely re-elected.

Holder, of course, will not attempt to hold Bush accountable for the crime of torture. Indeed, Assistant US Attorney John Durham has just cleared the CIA of accountability for its crime of destroying the videotape evidence of the US government’s illegal torture of detainees, a felony under US law.

Last February Cheney said on ABC’s This Week that “I was a big supporter of waterboarding.” US law has always regarded waterboarding as torture. The US government executed WW II Japanese for waterboarding American POWs.  But Cheney has escaped accountability, which means that there is no rule of law.

Vice president Cheney’s office also presided over the outing of a covert CIA agent, a felony. Yet, nothing happened to Cheney, and the underling who took the fall had his sentence commuted by president Bush.

President Obama has made himself complicit in the crimes of his predecessor by refusing to enforce the rule of law. In his criminality, Obama has actually surpassed Bush. Bush is the president of extra-judicial torture, extra-judicial detention, extra-judicial spying and invasions of privacy, but Obama has one-upped Bush.  Obama is the president of extra-judicial murder.

Not only is Obama violating the sovereignty of an American ally, Pakistan, by sending in drones and special forces teams to murder Pakistani civilians, but in addition Obama has a list of American citizens whom he intends to murder without arrest, presentation of evidence, trial and conviction.

The most massive change brought by Obama is his assertion of the right of the executive branch to murder whomever it wishes without any interference from US and international law. The world has not seen such a criminal government as Obama’s since Joseph Stalin’s and Hitler’s.

On November 8, the US Department of Justice (sic) told federal district court judge John Bates that president Obama’s decision to murder American citizens is one of “the very core powers of the president.” Moreover, declared the Justice (sic) Department, the murder of American citizens is a “political question” that is not subject to judicial review.

In other words, federal courts exist for one purpose only–to give a faux approval to executive branch actions.

If truth be known, there is more justice in Burma under the military regime than in the USA. The military regime put Aung San Suu Kyi under house arrest in her own home.

The military regime did not throw her into a dungeon and rape and torture her under cover of false allegations and indefinite detention without charges. Moreover, the military “tyrants” released her either as a sign of good will or under pressure from international human rights groups, or some combination of the two.

But, alas, in America macho tough guys approve the virtual strip search of their wives and daughters by full body scanners and the grouping by TSA thugs of three-year old children screaming in terror.