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The Internet Kill Switch – One Of The Favorite New Tools Of Tyrannical Governments All Over The Globe

Related: Egypt’s Internet Kill Switch: Coming To America

The Economic Collapse
Jan 31, 2011

This past week was a perfect example of how the “Internet kill switch” is rapidly becoming one of the favorite new tools of tyrannical governments all over the globe. Once upon a time, the Internet was a bastion of liberty and freedom, but now nation after nation is cracking down on it. In fact, legislation has been introduced once again in Congress that would give the president of the United States an “Internet kill switch” that he would be able to use in the event of war or emergency. Of course there would be a whole lot of wiggle room in determining what actually constitutes a true “emergency”. The members of Congress that are pushing this “Internet kill switch” bill want the U.S. to become more like China in this regard. In China, the Internet is highly controlled, highly regulated and highly censored. In fact, China has shut down the Internet in entire regions when they have felt it necessary. So what Egypt did in shutting down the Internet this past week is not unprecedented – but it was quite shocking.

Organizers of the protests in Egypt had been using the #Jan25 hashtag on Twitter and had been communicating with each other via Facebook, and so the Mubarak regime thought that they could significantly derail the protest movement by shutting down the Internet.

It has been widely reported that approximately 88 percent of the Internet in Egypt was shut down at one point.  Jim Cowie, the chief technology officer of an Internet monitoring firm known as Renesys, described on his blog just how complete and total this Internet shutdown in Egypt actually was….

“Every Egyptian provider, every business, bank, Internet cafe, website, school, embassy, and government office that relied on the big four Egyptian ISPs for their Internet connectivity is now cut off from the rest of the world.”

So how was this all done?  How could such a large section of the Internet be taken offline so rapidly?  Well, a recent article on MSNBC described how it works….

According to David Clark, an MIT computer scientist whose research focuses on Internet architecture and development, a government’s ability to control the Internet depends on its control of Internet Service Providers (ISPs), the private sector companies that grant Internet access to customers.

“ISPs have direct control of the Internet, so what happens in any country depends on the control that the state has over those ISPs,” Clark told Life’s Little Mysteries in an e-mail. “Some countries regulate the ISPs much more heavily. China has in the past ‘turned off’ the Internet in various regions.”


 

Whenever the subject of Internet censorship comes up, China always seems to be involved in the conversation.  China has more Internet users than anyone else in the world, but they also have the tightest controls.

The Chinese government is absolutely obsessed with “maintaining order” and it has shown that it will go to extreme lengths to quell dissent.

For example, the government of China cut off the entire Xinjiang region from the Internet for nearly a year after civil unrest erupted there in 2009.

The Chinese government is so sensitive to political dissent that they even began censoring the word “Egypt” on a number of micro-blogging websites this past week.

A recent article posted on Raw Story explained what happened….

On the sina.com and sohu.com sites, the Chinese equivalents of Twitter, which is censored in China, a query with the word “Egypt” returned the response: “According to the laws in force, the results of your search cannot be given.”

Isn’t that bizarre?

Nothing like that would ever happen in the United States, right?

Well, don’t be so sure.

Last year, U.S. Senator Joe Lieberman made the following statement to CNN’s Candy Crowley….

“Right now China, the government, can disconnect parts of its Internet in case of war and we need to have that here too.”

That statement should chill you to your bones.

U.S. Senator Joe Lieberman wants Chinese-style Internet censorship to come to the United States.

In fact, as mentioned above, legislation that would give the president of the United States an “Internet kill switch” has been introduced in the Senate once again, and in fact it has already been approved by a Senate panel.

The legislation has bipartisan support, and it is being pushed this time by Maine Senator Susan Collins, who is a ranking member on the Homeland Security and Governmental Affairs Committee.

This bill, S.3480, is entitled “The Protecting Cyberspace As A National Asset Act of 2010“.  It would create a brand new government agency (as if we needed more of those) known as the National Center for Cybersecurity and Communications.

This new agency would be given extraordinary power over the Internet – including the power to completely shut down the Internet for 30 days.

Collins insists that this new law is necessary because it would enable us to protect the Internet against “cyber threats” before they could cause serious damage.

While that may sound good on paper, the reality is that giving the government an “Internet kill switch” would create opportunities for tremendous government abuse.

Wired recently ran an article that detailed some of these concerns….

A congressional white paper (.pdf) on the measure said the proposal prohibits the government from targeting websites for censorship “based solely on activities protected by the First Amendment of the United States Constitution.”

Oddly, that’s exactly the same language in the Patriot Act used to test whether the government can wiretap or investigate a person based on their political beliefs or statements.

Of course we all know how that turned out.

It has been revealed time after time after time that the U.S. government has been investigating large numbers of people based on their political beliefs.

The Internet is a great way for people to express and share their political thoughts and ideas, but it is also providing a way for governments around the world to watch and track dissenters.

For example, major news websites in China now require users to register their true identities before they are able to leave any comments.  This enables the government to be able to identify (and potentially deal with) anyone that does not express the “right” views.

In the same manner, the Obama administration is now proposing the introduction of a “universal Internet ID” for Americans.  The program is being touted as “voluntary”, but how long do you think it would be before a whole host of government agencies started to use these universal Internet IDs to watch, monitor, track and control the Internet activities of tens of millions of Americans?

The following is a video news report from CBS News about these new universal Internet IDs….

So where does all of this Internet censorship end?

Well, the truth is that it is only going to get tighter and tighter as the years go by.

Eventually you will probably need a government-issued license to put up websites such as this one, and in fact someday you will probably need a government-issued license before you can even log on to the Internet.

So enjoy this era of relatively unlimited Internet freedom while you can, because it is rapidly coming to an end.  Tyrannical governments all over the globe are realizing that in order to maintain “control” they must place a much tighter grip on the flow of information on the Internet.

If you live in the United States or another nation where there is still at least a limited amount of liberty and freedom, it is going to be important to let your representatives know that you do not want Internet censorship and you certainly do not want any sort of an Internet kill switch.

Liberties and freedoms are incredibly precious, and once they are taken away they are very difficult to get back.

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10 Things That The Egypt Riots Can Teach Us About What Happens When Society Breaks Down

The American Dream
Jan 31, 2011

The rioting in Egypt is perhaps the biggest single news story so far in 2011.  The pace at which Egyptian society has been transformed over the past week has been absolutely breathtaking.  A few months ago, nobody would have ever dreamed that there would be huge riots in the streets of major Egyptian cities calling for the resignation of Hosni Mubarak.  But it has happened, and now Egypt will never be the same again.  So what does the future hold for Egypt?  Well, many are hopeful that this revolution will bring about a better government in Egypt and a better way of life for average Egyptians.  Personally, I am not nearly so optimistic.  In fact, I believe that there is a great danger that an even more repressive government could take the place of the current regime.  But in any event, there are important lessons that the Egypt riots can teach all of us about what happens when society breaks down.  Societal collapse is often a very messy, very violent affair.  Someday if the global economy completely implodes, we may see economic riots erupt all over the world (including inside the United States) and we all need to get prepared for that.

So far more than 100 people have died during the rioting that has rocked Egypt over the past week.  Other reports put the true number of dead much higher.  Scores of shops and businesses have been looted.  There have been dozens of rapes.  Groups of citizens have formed vigilante groups to protect their own homes.  These are the kinds of things that happen when society breaks down.

But could such a thing happen in the United States?  Of course it could.  Just remember what happened in the aftermath of Hurricane Katrina.  Imagine what would happen in this country if a disaster on an even larger scale happened.  What any of us be truly safe?

In a previous article, I detailed some of the things that all of us can do to get prepared for the collapse of society.  Unfortunately many Americans will never start to prepare until it is far too late.



But for the rest of us that are willing to learn, there are some things that have happened during these Egypt riots that are important lessons for all of us….

#1 When society breaks down, people look for whatever weapons they can find.  Over this past week, abandoned police stations throughout Egypt have been stripped of their arsenals by looters.

#2 When society breaks down, nobody is safe.  Average Egyptians “armed with sticks and razors” have formed vigilante groups to protect their homes from the crazed looters that have emerged during the rioting.

#3 When society breaks down, you better protect your women and children.  At least 60 rapes have been officially reported since the rioting began.  The unofficial number is surely far higher than that.

#4 When society breaks down, criminals do not fear the law.  There are reports that at least 4 prisons have been attacked and that thousands of convicts have escaped into the streets.

#5 When society breaks down, authoritarian governments begin hoarding food.  The Telegraph is reporting that governments throughout the Middle East and North Africa have started stockpiling huge amounts of food in response to all the rioting that has been going on.

#6 When society breaks down, food shortages can happen shockingly fast.  As commerce has been brought to a standstill in Egypt, serious shortages of some of the most important basic food staples are starting to be reported.  Many families in Egypt only have enough food to be able to survive for a couple more days.

#7 When society breaks down, respect for personal property goes out the window.  All over Egypt shops and businesses are being broken into and totally looted.

#8 When society breaks down, mobs will start doing some of the most stupid things imaginable.  According to Egypt’s top archaeologist, Zahi Hawass, looters broke into the Egyptian Museum during the rioting “and destroyed two pharaonic mummies”.

#9 When society breaks down, it always creates a “power void”.  The Obama administration is calling for an “orderly transition of power” in Egypt, but there is absolutely no guarantee that is going to happen – especially in a nation that has no history of legitimate democracy.

#10 When society breaks down, often outside influences are involved.  The individual being touted as the new “leader” of the protest movement in Egypt is Mohamed ElBaradei.

So exactly who is Mohamed ElBaradei?

Well, Paul Joseph Watson of prisonplanet.com describes him this way….

ElBaradei serves on the Board of Trustees of the International Crisis Group, who today issued a press release protesting the decision on behalf of Egyptian authorities to place ElBaradei under house arrest.

International Crisis Group is a shadowy NGO (non-governmental organization) that enjoys an annual budget of over $15 million and is bankrolled by the likes of Carnegie, the Ford Foundation, the Bill & Melinda Gates Foundation, as well as George Soros’ Open Society Institute. Soros himself serves as a member of the organization’s Executive Committee. In other words, this is a major geopolitical steering group for the global elite.

Well isn’t that convenient?

Let us hope that the protests in Egypt result in some positive changes being made for the Egyptian people.  But let us also understand that those with their hands on the levers of global power are going to try to direct events in a way that benefits them.

In any event, one of the main things that the rioting in Egypt has taught us is just how rapidly society can change.  Will someday we end up seeing scenes in the United States similar to the ones that we have witnessed in Egypt over the past week?….

Mike Ruppert – The Beginning Of Systemic Failure – Latest Update, 26th January 2011

Before You Shoot Your Next Arrow


David Galland

While I have read certain works on the life and ponderings of Buddha, I claim no deep knowledge of his philosophy. Note I didn’t use the word “religion,” because Buddha himself claimed no supernatural powers and even begged his followers not to deify him after his death. Hardly had he drawn his last breath, however, when the deification began – though most Buddhists won’t claim it as such.

Even so, there are Buddhist practices I think useful in this hectic world of ours – practices that don’t involve dressing in robes and refusing to swat flies. For example, I rather like to meditate from time to time. Nothing too involved, just ten or fifteen minutes of quiet deep breathing as part of calming the mind and all that.

I also find a lot of wisdom in the training of the Zen archers, who seek to clear their minds of all internal dialogue not related to the simple process of releasing the arrow at the target. Simply, they strive for only one goal – perfect form. Thus they clear their minds of all others, even those that might be considered complementary to the task at hand – for example, getting a pat on the back from the instructor, or plopping the arrow closer to the bull’s-eye than the next person down the line.

Of course, as humans are wont to do, Buddha’s successors have taken the man’s simple approach to life and wrapped it in gaudy and self-important rituals, in the process turning it into a livelihood for predatory priests. But that’s another story and shouldn’t take away from Buddha’s core beliefs.

Especially the bit about simplifying and focusing your goals. That idea has always seemed to me to have relevance for a wide range of pursuits, from the putting green to the stock market.

Based on my many interactions with investors over the years, I have concluded that there are really just two sorts. There are those that have clear goals, and those who don’t. Those who do make the money. Those who don’t provide the money to those who do (investing in a zero-sum game – for every winner, there is a loser).

This thought was made more tangible to me in recent days, based on a personal experience. Long story short, I had invested in a pre-public company years ago. It wasn’t a big investment, and it took longer than anticipated to ultimately go public. When it did, it had a fairly good run, but as the reason I bought it in the first place was still ahead of it, I hung on. Well, as is so often the case, the company’s missed a hurdle and came tumbling back to earth. With the stock trading hardly at all, and for just a few pennies a share.

Lo and behold, the company’s management reinvented the company as targeting rare earths and managed to acquire a project of merit. The investment that I had written off as worthless soared on high volume.

Now, if there is one thing that anyone with experience in the small-cap resource stocks will tell you, is that the time to sell is when there is someone to sell to – because absent volume, getting out of a decent-sized position is not easy.

So, there was the dilemma – hold on in the hope that the surprise home run turns into the sort you bestow on your grandchildren? Or secure your gains by selling and moving on?

At the point of such a decision, the mind gets very un-Zen-like. Visions of untold riches dance in the head, followed by fits of fretting as the stock pulls back. Next thing you know, you are tossing and turning in the night, conflicting thoughts chasing each other around like cats.

In the final analysis, I recalled the old adage that pigs get fat but hogs get slaughtered. I sold enough to take my initial investment off the table, and a healthy profit – holding on to a modest position to enjoy any further upside. And, having done so, the internal dialogue came to an abrupt halt.

Now, the funny thing is that after a brief pause, the company is again moving up – but I have no intention of second guessing my decision to sell when I did. On a percentage basis, my returns were in the moon shot category – the sort that only the junior resource sector can produce – so it would be just plain churlish to gripe.

More to the point, the stock could just as easily have peaked and once again collapsed, in which case I would really feel like a dolt had I not taken an exit.

All of which delivers me to the point. Namely that it is very important, especially for the resource investors among you, that you actually have a firm goal in mind for each investment you make – and that you remain single-mindedly focused on that goal.

Do you own gold or silver as a protection against inflation? If so, then why even bother checking the price on a daily basis, let alone every few minutes?

Or do you own it as a speculation? If so, what is your specific profit target? Don’t have one? If not, then it seems to me a bit like setting off on a journey without knowing where you want to actually go.

Do you know exactly why you own the resource stocks you do? What hurdle are you betting they will clear next, and by doing so ratchet the price higher? Is your goal to get your original investment off the table on a double? Or do you have a specific price target in mind, at which point you will close the position entirely and move on to more fertile ground?

This idea of keeping an easily understood, single goal in mind for each of your investments is hugely important, because without it you are going to be susceptible to the fears, fantasies, and folly that ultimately cause investors to end up on the losing side of the equation… by selling good companies on pullbacks, holding on to positions well past the point of reasonableness or chasing stocks after they’ve spiked.

Probably the most successful investor I know – I won’t say his name, because he might not like my pointing out that he has tucked away close to a billion dollars, thanks primarily through investments in the resource sector – has a well-deserved reputation for selling too early.

While it is remarkable that he has made so much money in this sector, what is more remarkable is how he did it. Which I would sum up as follows…

  • First and foremost, he follows a process – almost mechanically.
  • He buys low, with a specific objective in mind. Both in terms of hurdles he expects the company to clear, but also in terms of the returns he expects to get on his investment.
  • When his return objectives are met, he sells. Maybe enough to get his original investment off the table, maybe the entire position – depending on his reassessment of the company’s potential to clear the next hurdle. But he always sells at least enough to get his original investment off the table, no matter how much exciting news there is and how much optimism others may feel about the stock.
  • He only buys on his own terms. If invited to participate in a private placement, he will do so only if he is completely comfortable with the terms. If the company is offering a warrant with a one-year expiration term and he thinks the development work will take two years, he’ll ask for a two-year warrant. If the company won’t budge, he moves on, confident in the knowledge that there will always be another deal coming down the pike.
  • He’s careful with his money. As he likes to say, if you spend your dollars, they can’t mate and make you more dollars.
  • He’s not afraid to concentrate investments, but again on his terms, and only when he has done the due diligence needed to be confident that the potential reward warrants the level of risk involved.

If those principles and practices sound simple, it is because they are. But following that process is also incredibly effective.

Interestingly, this process rhymes with the finely honed investment methodologies of the late great Benjamin Graham, author of The Intelligent Investor and mentor to a small cadre of close associates that included Warren Buffett, Jean-Marie Eveillard, William Ruane and Irving Kahn – all of whom used what they learned from Graham to become billionaires, or close to it.

Let that sink in for a moment. One man, Graham, developed a methodology for investing – and it’s actually a pretty simple methodology – that the people working with him were able to duplicate in building their own fortunes. Following a proven process works.

And while Graham wouldn’t have touched a junior resource stock with a twenty-foot pole – his methodology was focused on balance sheet analysis, not a strong point for junior exploration stocks that have no E in their P/E – the principle of following a specific process that mitigates the odds of a loss holds up well. The proof in the pudding is the success of my aforementioned friend, and many others I know who are similarly disciplined.

With all of that said, do you know why you own what you own? Do you have a clear goal in mind for each of your positions? Do you know how much of your portfolio is allocated to speculative resource plays, and are you comfortable with the idea that those stocks have historically suffered extreme sell-offs?

Warren Buffett, whose investment acumen is hard to argue with, likes to quip that the two most important rules for investment success are, Rule #1 – Never lose money. Rule #2 – Never forget rule No. 1.

While it is almost impossible not to lose money along the way while investing in resource shares, it is equally true that once you have scraped your original investment off the table, it is impossible to lose money. Sure, you can give back your profits – but you can’t lose money.

All of which is, I think, worth reflecting on as you aim your next arrow.

A Decade Of Progress Wiped Out By Financial Policy


Bob Chapman

There is nothing dumb about the financial media. They know exactly what they are doing. All they want to do is keep their jobs and in that process they sell out themselves, their families and friends, other people and their country. They know government statistics are bogus, but they won‘t report that, because if they did they will be discharged. There are two sets of alternative figures. One shows inflation at 6.75% and the other 8%. As we have reported before the PPI reflects 13-1/2% to 14%, so how can official inflation be 1.2%? If this is truly the case how can inflation be tame with food and energy prices going through the roof?

What we are seeing are the results of QE1 and QE2 in the form of growing inflation. This is our gift from chairman Ben Bernanke. The recovery he envisions can only be translated into some kind of temporary relief, which is the product of monetary distortion, not recovery. In addition observers see higher sales, but never factor in the growth of inflation. That is why the CPI figures are distorted as much as they are officially by government. This year will be a classic inflation year with prices rising in all sectors. We see current inflation at 6-3/4% and by the end of the year that should be 14%. If you refer back to CPI -U it is 6.2%, the CPI-W 7.8% and the 1980 SGS of 8.9% you can see 14% is a very tame number. If we have to guess in December the official CPI will beat 5-1/2%.

In November of 2004 we predicted housing starts would fall 75% during the coming housing correction, up from 70% during the 1989-92 correction. Thus far the correction is just under 80%. During this past final quarter of 2010 starts fell at a more accelerated pace, which does not auger well for the economy. This slowing will present a formidable headwind for recovery. In 2011 and 2012 we see house prices falling 20%. The promiscuous lending and syndication of mortgages that has so ruined lenders balance sheets will be with us for years to come unless, of course, they do the right thing and declare bankruptcy. Much the same has happened in parts of Europe and is presently occurring in Asia, particularly in China. Monetary and then price inflation has taken hold worldwide because almost all governments have been using the same Keynesian policies. No country will escape the deflationary depression, which is on the way. There will just be degrees of misery.

QE1 and QE2 can be credited for the most part with today’s and the coming inflation. What is deeply disturbing is that the Fed, Treasury and most economists know that throwing money and credit at the problem is not going to work. Is the Fed just hoping that it will work, just this one time, or are they being deliberately destructive? We believe it is deliberate. You make your own choice. The food riots we see worldwide will worsen and in some countries revolution will follow. You will see more of what you just saw in Tunisia, where the president’s wife flees the country due to the upheaval and doesn’t forget to take 1-1/2 tons of gold with her. Upward pressure on prices is caused in part by growing populations of what the Bilderbergers call useless eaters. It is surprising these elitists haven’t as yet begun WWIII. That would help solve that problem.

QE1 was to save the financial sectors in the US, UK and Europe. QE2 is to save the US government. Very little if any of these funds have benefited the public. The direct affect of these rescues is much higher inflation. Unemployment has only fallen from 22-5/8% to 22-1/4% over the past three months. December saw a great acceleration in inflation and that will carry forward for at least two years, as QE3 becomes reality. Real GDP growth is minus 1-1/2% and even with QE2 it will only be 2% to 2-1/4% at a cost of another $2.5 trillion. M3 is down 2-1/2% to 3%, but don’t be deceived there are other ways to increase money and credit. The path of QE2 and then QE3 will lead to hyperinflation. How soon we don’t know, but you can plan on it coming. That is why gold and silver related assets are so important; they are your only refuge.

In order to keep the system from collapsing we have zero interest rates and quantitative easing. This may prolong the agony for the elitists, but it also causes higher inflation. One of the subscribers says she went to a swap meet and there were no bargains. Purchasing power is falling every day.

As an overview of last weeks Hollywood theatrics at the White House between a Chinese dictator in serious trouble and an illegal alien who desperately wanted higher poll numbers. The real meetings were in secret and the rest was a stage play, which included smoke and mirrors. Our sources tell us all over China there are demonstrations and riots, over 35% inflation and a demand for higher wages. That country is in deep trouble as the housing bubble bursts and the stock market falls. Periodically bank reserve ratios are raised, but they have not delivered the desired results. We see the Chinese economy slowing over the next few years as the world economy slows. That could cause 40 million people to be unemployed. They have built whole cities that are empty. They were simply make-work projects. That means the US and other economies will be negatively affected as well. China has serious problems that in time will lead to the sale of US dollars on a major basis.

2011 is going to be a year to remember. It could be the beginning of a major collapse – that is without an untoward event taking place. Almost everything the US and Europe have attempted has not worked. Could it be another Lehman Bros. or Bear Stearns, or a major bank going under? We will see the fall in financial stocks that we have been awaiting for, so long.

The social and political climate has changed over the past few years. We see demonstrations and riots in Europe, Africa and Asia. The international system cannot respond as strongly as it did just a few years ago. The cry by Bilderberg-type governments is that the people must make the banks whole. The people didn’t gamble in international markets, the banks did, but the people are still forced to pay for their mistakes. As we found out with the court forced exposure by the Fed that the fed has poured trillions of dollars in financial entities in the US, and Europe to make it look like they were solvent, when in fact they were all insolvent and still are bankrupt. Citizens are finally realizing that the banks are the problem and that they are being forced to bail them out. The result has been a reduction in world commerce, that is about to worsen, systemic high unemployment that nothing is being done to address and as a result there are socio-economic problems in many countries worldwide. In America they have 44 million people on food stamps and 15.7% of the population already living below the poverty level. What would that figure be like if there were no food stamps or extended unemployment benefits? Would it be 20% or 25%? We don’t know, but we do know that empty bellies bring on revolutions. Tens of millions of Americans, Europeans and British are living on the edge. The world financial situation is out of control and those in charge, who caused it, do not know how to fix it. All of the fundamental imbalances are still there and for the most part are not being addressed. Nations and peoples have been warned. The system is broken and cannot be fixed. Keep your eyes on Ireland late in February, it could provide the catalyst for a new round of defaults and the breakup of the euro zone. In many countries retirees have had their social benefits frozen or cut and inflation is eating them alive. Politicians and elitists just turn their backs on the problem, as the rich spend with wild abandon. It reminds us of 1788 France just before the revolution. Deliberate blindness won’t solve the problem – it only makes it worse. The time is fast approaching when all these problems will bubble up and explode. It is only a matter of when. The elitists should remember that a collapse of the world banking system threatens their hold on financial and political power and that failure will include their unmasking, which will bring on the wrath of the mobs.

As they have many times before elitists have gone a step too far. They miscalculated in June of 2003, the point of no return. The Talk radio beamed all over the world and the internet would inform all who were willing to listen that trouble was on the way and who caused it and why. Recent moves behind the scenes, like those of the Rothschilds that they have some serious problems. They seem to think we do not know what they are up to, but we do know what they are doing and we will do everything possible to thwart their efforts. Perhaps that is why they are subscribers. Their efforts to keep people separated will fail. It will be difficult for everyone but in the end we will have learned a good lesson.

Increases in money and credit affect an economy like increases in oil prices. It will take a year to two years for the full impact to be realized. It is like all the price inflation that is in the pipeline. Yes, we have the deflationary undertow, but remember the Fed and other central banks have to create far more inflation than they need, because if they do not and deflation takes hold the whole game is over. The wealth affect created by stimulus one and now two and QE1 and QE2 are about to take their toll in the form of higher inflation. It is not just food and energy everything will be affected. One sure sign of this is that gold bullion sales machines are starting to appear all over the world. Then the question arises will the Fed go for QE3 with real inflation abounding? Of course they would. They have no other way out.

Here is a government that spends 60% more than they have coming in via revenues. This year we do not have inventory buildup to help GDP and there are sure to be at least $50 billion cut from public spending. The dollar has fallen from 86 on the USDX to 78 over the past year. Exports are more competitive, what is left of them, but imports are more expensive and that is inflationary. This year the growth in business spending will probably be half of what it was in 2010. All these tax increases we see and the higher cost of goods will cut into consumption this year and 10% drop in the value of homes could also cut consumption by 1% of GDP. The increased cost of energy and food just at current levels will cut $100 billion from consumer spending on other items. States cannot spend money they do not have. There will be many bankruptcies, cuts in personnel and cuts in civic spending. Ten million are working part-time that will increase as well overall unemployment. Real wages have fallen for three of the past four months and that will continue as long as we have 30 million illegal aliens in the country and free trade, globalization, offshoring and outsourcing. GDP growth will be 2% to 2-1/4%, not 3% to 3-1/4%. On the plus side JPM says business lending is picking up. It rose $800 million over the past five weeks. In the US top corporations are holding $1.9 trillion in cash, but if they are unwilling to spend some of it the economy cannot recover. Then there is the issue of the additional $1.9 billion sitting in offshore accounts that major corporations want to bring to the US, but not at 35% taxation, but again at 5-1/4%. That is so they can buy stock in their companies on the stock market, which would drive the market higher and allow their officers to cash in their options and make billions. The hook of course is that part of those funds would supposedly be used to create jobs, and to buy Treasury and Agency securities, so that the Fed would not have to purchase as much. At best another temporary fix and little is really being spent to help the economy and unemployment. We may have extended unemployment for the next 20 years at the rate we are going.

As the above transpires consumers continue to pay down debt. They are taking out loans against equity in their homes, while there is still some equity left. Those types of loans by banks are four times more than commercial loans. Even that type of loan is slowing down. Money velocity is still moribund with M3 at about a minus 1% to 1-1/2%. QE has not improved employment or the economy, nor the real estate market. It has saved the financial sector in the US and Europe, funded Treasury and Agency debt and caused further speculation.

As a reflection of this mismanagement, inflation increases, as does the price of commodities, gold and silver. This saps consumer confidence and reduces spending. As the year progresses, thanks to the Fed and its owners – the major money center, legacy banks, the casino known as the market will hold firm. The stock and bond markets are the only two sectors that have not as yet been ravaged. Once they fall the bottom falls out. That is why you have the manipulation you do. It happens in all corporatist fascist societies. Why do you think commodities and gold and silver are at or near up to 30 year highs.

We are still five months away from July 1st, the beginning of the new fiscal year for the states and already their plight is front-page news. The word is out that public servants now make twice as much as those in private industry. It once was just the opposite. Public employees are the haves and the taxpayers who foot the bill are the have-nots. What has happened over the past 40 years is that the groundwork has been laid for class warfare. Is it any wonder the states have staggering fiscal problems? Even Democrats, who have counted on public-employee unions for handouts and support, are striking a militant pose, as families pay ever-higher taxes to service people who make twice as much money as they do, often for half the work.

Safety deposit box holders and depositors are not given advanced notice when failed banks shut their doors.

If people have their emergency money in a safe deposit box or an account in a bank that closes, they will not be allowed into the bank to get it out. They can knock on the door and beg to get in but the sheriff’s department or whoever is handling the closure will simply say “no” because they are just following orders.

Deposit box and account holders are not warned of the hazards of banking when they sign up. It is not until they need to get their cash or valuables out in a hurry that they find themselves in trouble.

Rules governing access to safe deposit boxes and money held in accounts are written into the charter of each bank. The charter is the statement of policy under which the bank is allowed by the government to do business. These rules are subject to change at any time by faceless bureaucrats who are answerable to no one. They can be changed without notice, without the agreement of the people, and against their will. People can complain but no one will care because this is small potatoes compared to the complaints that will be voiced when the executive order that governs national emergencies is enforced.

That order allows the suspension of habeus corpus and all rights guaranteed under the Bill of Rights.

A look at the fine print of the contract signed when a safety deposit box is opened reveals that in essence the signer has given to the bank whatever property he has put into that deposit box. When times are good people will be allowed open access to their safe deposit box and the property that is in it. This also applies to their bank accounts.

But when times get really bad, many may find that the funds they have placed on deposit and the property they thought was secured in the safe deposit box now belong to the bank, not to them. Although this was probably not explained to them when they signed their signature card, this is what they were agreeing to.

During the Great Depression in the early 1930’s people thought that many banks were going to fail. They were afraid they would lose their money so they went in mass to take it out, in what is known as a run on the banks. The government closed the banks to protect them from angry depositors who wanted their money back. Throughout history, governments have acted to protect the interests of banks and the wealthy people who own them, not the interests of depositors or box holders.

In a time of emergency, people will have no recourse if access to their safe deposit box and bank accounts is denied. If they are keeping money in a bank that would be needed in an emergency or in a time when credit is no longer free flowing, they may not be able to get it out of the bank. The emergency may occur at night or on a weekend or holiday when the bank is closed.

The solution is to take emergency cash or valuables out of the safe deposit box or bank account and secure them somewhere else, like in a home safe. An even better idea may be to close the safe deposit box account completely, letting someone else entertain the illusion of safety.

Americans have learned a few things since the Great Depression. They now have the FDIC to liquidate any failed banks.

The FDIC promises to set up a series of dates and times when safe deposit box renters can access their boxes by appointment to remove their property and surrender their keys. The FDIC also promises to mail bank customers an announcement of the dates for such events and include a question and answer page that addresses safe deposit box access.

The people have the FDIC to give them back the money they had on deposit that they were unable to get out of any failed bank that carries FDIC insurance. Sheila Bair, head of the FDIC, promises that depositor’s money will be available in 24 hours or less. But people should remember that the FDIC is just another bureaucracy, and it’s probably best not to rely on a bureaucracy in an emergency.

January 2006:

U.S DEPARTMENT OF HOMELAND SECURITY HAS TOLD BANKS – IN WRITING – IT MAY INSPECT SAFE DEPOSIT BOXES WITHOUT WARRANT AND SIEZE ANY GOLD, SILVER GUNS OR OTHER VALUABLES IT FINDS INSIDE THOSE BOXES!

According to in-house memos now circulating, the DHS has issued orders to banks across America which announce to them that “under the Patriot Act” the DHS has the absolute right to seize, without any warrant whatsoever, any and all customer bank accounts, to make “periodic and unannounced” visits to any bank to open and inspect the contents of “selected safe deposit boxes.”

Further, the DHS “shall, at the discretion of the agent supervising the search, remove, photograph or seize as evidence” any of the following items”bar gold, gold coins, firearms of any kind unless manufactured prior to 1878, documents such as passports or foreign bank account records, pornography or any material that, in the opinion of the agent, shall be deemed of to be of a contraband nature.”

DHS memos also state that banks are informed that any bank employee, on any level, that releases “improper” “classified DHS Security information” to any member of the public, to include the customers whose boxes have been clandestinely opened and inspected and “any other party, to include members of the media” and further “that the posting of any such information on the internet will be grounds for the immediate termination of the said employee or employees and their prosecution under the Patriot Act.”

In Vermont, state senator Virginia Lyons on Friday presented an anti-corporate personhood resolution for passage in the Vermont legislature. The resolution, the first of its kind, proposes “an amendment to the United States Constitution … which provides that corporations are not persons under the laws of the United States.

“The profits and institutional survival of large corporations are often in direct conflict with the essential needs and rights of human beings.”

Corporations “have used their so-called rights to successfully seek the judicial reversal of democratically enacted laws.”

Thus the unfolding of the obvious: “democratically elected governments” are rendered “ineffective in protecting their citizens against corporate harm to the environment, health, workers, independent business, and local and regional economies.”

‘The resolution goes on to note that “large corporations own most of America’s mass media and employ those media to loudly express the corporate political agenda and to convince Americans that the primary role of human beings is that of consumer rather than sovereign citizens with democratic rights and responsibilities.”

Denouncing this situation as an “intolerable societal reality,” the document concludes that the “only way” toward a solution is the amendment of the Constitution “to define persons as human beings.”

Resolution Calling to Amend the Constitution Banning Corporate Personhood Introduced in Vermont | News & Politics | AlterNet

The Great Recession wiped out what amounts to every U.S. job created in the 21st century

But even if the recession had never happened, if the economy had simply treaded water, the United States would have entered 2010 with 15 million fewer jobs than economists say it should have.

A recent paper by researchers at the Asian Development Bank Institute concluded that the iPhone, one of the United States’ top innovations of the past decade, actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. The paper also raises a conundrum for lawmakers and business leaders alike: If Apple moved its assembly line to the United States and created domestic jobs but didn’t raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.

California jobless rate ticks up to 12.5%

California adds just 4,900 jobs in December, with the government and construction sectors shedding thousands of positions. L.A. County’s unemployment rate hits 13%. The Employment Development Department said Friday, after adding 30,500 the month before.

The Phantom 15 Million

Taming unemployment starts with solving the mystery of the jobs that were supposed to have been created in the past 10 years but weren’t. Somehow, rapid advancements in technology and the opening of new international markets paid dividends for American companies but not for American workers.

In other words, American companies had adopted a more cold-blooded attitude toward recessions, one that fit the new model of globalization and automation. Technology made it easier to lay off your 100 least-effective workers and ship their jobs to India, or to replace them with a software program that made your remaining workforce dramatically more productive.

Mounting evidence suggests that educational stagnation has already socked American workers, particularly men. Businesses aren’t investing in American workers, either. The major productivity gains of the fledgling recovery came largely from companies producing more with fewer employees.

The simple truth is that American firms are either returning the spoils of globalization and technology to their shareholders, spending them on new projects abroad, or both. “U.S. companies are investing in plants and equipment, just not in our borders. What if the Peterson Institute’s Kirkegaard is correct when he says, “There is a significant risk that we wander aimlessly into a situation where U.S. labor markets end up becoming much more European than they were before,” less dynamic, less innovative, with persistently higher unemployment. “That’s not a description that I use lightly,” he says, “because that’s a very, very bad outcome.”

Payrolls decreased in 35 U.S. states in December, while the unemployment rate rose in 20, showing the labor market recovery is slow to gather momentum.

New York led the nation with 22,800 job cuts last month, followed by Minnesota with 22,400 firings, and Florida with 17,900, figures from the Labor Department showed today in Washington.

The report is consistent with figures on Jan. 7 that showed a fewer-than-forecast 103,000 jobs were created nationwide last month even as unemployment fell. Federal Reserve policy makers meeting today and tomorrow are likely to reiterate a pledge to buy $600 billion in government securities through June to help lower unemployment and spur growth.

“In spite of the fact that the economy is improving, there is not enough momentum to make a significant dent in the unemployment rate,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We really need two or three months of big numbers.”

Joblessness increased most in West Virginia, where it rose by 0.3 percentage point, followed by Colorado, Georgia and Nevada, which showed increases of 0.2 percentage point each. Nevada also faced the highest jobless rate in the country at 14.5 percent.

After Nevada, the jobless rate was highest in California at 12.5 percent and Florida at 12 percent, today’s report showed.

Joblessness in Michigan

Michigan, which is part of the so-called manufacturing Rust Belt, saw unemployment plunge by 0.7 percentage point, the biggest one-month decrease since records began in 1976 as about 37,000 people left the labor force. The jobless rate fell to 11.7 percent, the lowest level since January 2009.

The state, home to the nation’s biggest automakers, is seeing signs the industry is turning around. General Motors Co., the largest U.S. automaker, will add a third shift and about 750 jobs to its assembly plant in Flint, Michigan, to meet rising demand for pickups, Detroit-based GM said yesterday in a statement.

“Adding a third shift is a response to customer demand for heavy-duty pickups, which most people use to tow, haul and plow,” Mark Reuss, president of GM North America, said in the statement. “Equally importantly, it brings jobs and a needed economic boost to the Flint area.”

Unemployment in North Dakota, the lowest in the U.S., was 3.8 percent.

Payrolls Nationally

The Labor Department’s national report for December showed private payrolls, which exclude government agencies, rose by 113,000 last month after a 79,000 November gain. For all of 2010, about 1.1 million jobs were created, the most since 2006. The economy lost 8.4 million jobs during the recession that began in December 2007 and ended in June 2009. At the pace of improvement projected by Fed officials, “it could take four to five more years for the job market to normalize fully,” Feb Chairman Ben S. Bernanke said Jan. 7 in testimony to the Senate Budget Committee after the jobs report.

The workforce, those with jobs or looking for work, shrank by 260,000 workers last month, sending the share of the population in the labor force down to a 26-year low of 64.3 percent, the Labor Department’s national report showed Jan. 7.

Unemployment stuck above 9 percent is one reason why President Barack Obama last month signed an $858 billion bill extending all Bush-era tax cuts for two years. The bill also continues expanded unemployment insurance benefits through 2011 and cuts payrolls taxes by 2 percentage points.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government’s Bureau of Labor Statistics.

Many workers at the Metropolitan Water Reclamation District are collecting hundreds of thousands of dollars in severance pay despite leaving their jobs voluntarily.

The board is now trying change the decades old practice of awarding almost every employee severance pay. However, the department’s 2,000 workers won’t give up the perk without a fight.

Some workers are suing the Metropolitan Water Reclamation District, complaining that it’s not fair that a very expensive and uncommon perk has been yanked out from under them. So two months ago, the board voted to eliminate severance pay beginning Jan. 1. That led to a very expensive stampede out the door, as 74 veteran employees quit or retired in the last few weeks of the year, before the perk vanished.

Alan Abelson cites a Merrill Lynch report that warns that wage inflation in China, which Trichet and Bernanke must ignore to continue to keep their big banks and governments afloat, means China will no longer export deflation and might start exporting inflation.

In the latest Canton Fair in October-November 2010, the analysts report, export prices were hiked 3%- 5% (in dollar terms) from those exacted from foreign buyers at the same fair held in the spring, while labor-intensive goods apparel, shoes, luggage were boosted an immodest 10%-20% migrant workers who got an 18.7% raise in wages in the first three quarters of last year, and the shrinkage of the supply of rural surplus workers younger than 40, which had provided a steady flow of cheap labor. Rising paychecks also have lifted food prices, which account for about 75% of the rise in the country’s [CPI]. This switch on the part of the Chinese from a disinflationary or even deflationary role to an inflation generator in the world economy at the very least is going to stoke inflation and exert upward pressure on interest rates pretty much everywhere, including our fair land.

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The significant shift was tucked quietly into the Fed’s weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.

But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world’s most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted. “Could the Fed go broke? The answer to this question was ‘Yes,’ but is now ‘No,'” said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. “An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital.”

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

This enhances transparency by providing clearer, more frequent, snapshots of the central bank’s finances, analysts say. The bonus: the number can now turn negative without affecting the central bank’s underlying financial condition.

“Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible,” said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.

“The timing of the change is not coincidental, as politicians and market participants alike have expressed concerns since the announcement (of a second round of asset buys) about the possibility of Fed ‘insolvency’ in a scenario where interest rates rise significantly,” Smedley and his colleague Priya Misra wrote in a research note.

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

Now, there is no pretense that US taxpayers are on the hook for all Ben’s QE and other schemes, scams and follies. We think Congress will have much more to say about this in coming weeks.

The Federal Reserve on Wednesday reluctantly opened the books on its monumental campaign to save the financial system in the midst of the recent crisis, revealing how it distributed some $3.3 trillion in relief.

The data revealed that the Fed’s aid was scattered much more widely than previously understood. Two European megabanks Deutsche Bank and Credit Suisse were the largest beneficiaries of the Fed’s purchase of mortgage-backed securities (also known as “toxic derivatives” – ed.)

The Fed’s dollars also flowed to major American companies that are not financial players, including McDonald’s and Harley-Davidson, through unsecured short-term loans. The measure, initiated in Jan. 2009 to stimulate the flow of credit and keep household borrowing costs low, led the nation’s central bank to purchase more than $1.1 trillion in mortgages packaged into the form of securities. The mortgage bonds are backed by Fannie Mae and Freddie Mac, the twin mortgage giants now owned by taxpayers.

Deutsche Bank, a German lender, has sold the Fed more than $290 billion worth of mortgage securities, Fed data through July shows. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.

The data had previously been secret. It was released Wednesday per the recently-enacted law overhauling the federal financial regulation. The Fed, ferociously backed by the Obama administration, fought lawmakers’ desire for full disclosure throughout the financial reform debate.

A Letter from the Future


Richard Heinberg

Greetings to you, people of the year 2011! You are living in the year of my birth; I am one hundred years old now, writing to you from the year 2111. I am using the last remnants of the advanced physics that scientists developed during your era, in order to send this electronic message back in time to one of your computer networks. I hope that you receive it, and that it will give you reason to pause and reflect on your world and what actions to take with regard to it.

Of myself I shall say only what it is necessary to say: I am a survivor. I have been extremely fortunate on many occasions and in many ways, and I regard it as something of a miracle that I am here to compose this message. I have spent much of my life attempting to pursue the career of historian, but circumstances have compelled me also to learn and practice the skills of farmer, forager, guerrilla fighter, engineer – and now physicist. My life has been long and eventful . . . but that is not what I have gone to so much trouble to convey to you. It is what I have witnessed during this past century that I feel compelled to tell you by these extraordinary means.

You are living at the end of an era. Perhaps you cannot understand that. I hope that, by the time you have finished reading this letter, you will.

I want to tell you what is important for you to know, but you may find some of this information hard to absorb. Please have patience with me. I am an old man and I don’t have much time for niceties. If what I say seems unbelievable, think of it as science fiction. But please pay attention. The communication device I am using is quite unstable and there’s no telling how much of my story will actually get through to you. Please pass it along to others. It will probably be the only such message you will ever receive.

Since I don’t know how much information I will actually be able to convey, I’ll start with the most important items, ones that will be of greatest help in your understanding of where your world is headed. Energy has been the central organizing – or should I say, disorganizing? – principle of this century. Actually, in historical retrospect, I would have to say that energy was the central organizing principle of the nineteenth and twentieth centuries as well. People discovered new energy sources – coal, then petroleum – in the nineteenth century, and then invented all sorts of new technologies to make use of this freshly released energy. Transportation, manufacturing, agriculture, lighting, heating – all were revolutionized, and the results reached deep into the lives of everyone in the industrialized world. Everybody became utterly dependent on the new gadgets; on imported, chemically fertilized food; on chemically synthesized and fossil-fuel-delivered therapeutic drugs; on the very idea of perpetual growth (after all, it would always be possible to produce more energy to fuel more transportation and manufacturing – wouldn’t it?). Well, if the nineteenth and twentieth centuries were the upside of the growth curve, this past century has been the downside – the cliff. It should have been perfectly obvious to everyone that the energy sources on which they were coming to rely were exhaustible. Somehow the thought never sank in very deep. I suppose that’s because people generally tend to get used to a certain way of life, and from then on they don’t think about it very much. That’s true today, too. The young people now have never known anything different; they take for granted our way of life – scavenging among the remains of industrial civilization for whatever can be put to immediate use – as though this is how people have always lived, as if this is how we were meant to live. That’s why I’ve always been attracted to history, so that I could get some perspective on human societies as they change through time. But I’m digressing. Where was I?

Yes – the energy crisis. Well, it all started around the time I was born. Folks then thought it would be brief, that it was just a political or technical problem, that soon everything would get back to normal. They didn’t stop to think that “normal,” in the longer-term historical sense, meant living on the energy budget of incoming sunlight and of the vegetative growth of the biosphere. Perversely, they thought “normal” meant using fossil energy like there was no tomorrow. And, I guess, there almost wasn’t. That was a classic self-confirming expectation – nearly.

At first, most people thought the shortages could be solved with “technology.” However, in retrospect that’s quite ludicrous. After all, their modern gadgetry had been invented to use a temporary abundance of energy. It didn’t produce energy. Yes, there were the nuclear reactors (heavens, those things turned out to be nightmares!), but they cost so much energy to build and decommission that the power they produced during their lifetimes barely paid for them in energy terms. The same with photovoltaic panels: it seems that nobody ever sat down and calculated how much energy it actually took to manufacture them, starting with the silicon wafers produced as byproducts of the computer industry, and including the construction of the manufacturing plant itself. It turned out that the making of the panels ate up nearly as much power as the panels themselves generated duing their lifetime. Nevertheless, quite a few of them were built – I wish that more had been! – and many are still operating (that’s what’s powering the device that allows me to transmit this signal to you from the future). Solar power was a good idea; its main drawback was simply that it was incapable of satisfying people’s energy-guzzling habits. With the exhaustion of fossil fuels, no technology could have maintained the way of life that people had gotten used to. But it took quite a while for many to realize that. Their pathetic faith in technology turned out to be almost religious in character, as though their gadgets were votive objects connecting them with an invisible but omnipotent god capable of overturning the laws of thermodynamics.

Naturally, some of the first effects of the energy shortages showed up as economic recessions, followed by an endless depression. The economists had been operating on the basis of their own religion – an absolute, unshakable faith in the Market-as-God; in supply-and-demand. They figured that if oil started to run out, the price would rise, offering incentives for research into alternatives. But the economists never bothered to think this through. If they had, they would have realized that the revamping of society’s entire energy infrastructure would take decades, while the price signal from resource shortages might come only weeks or months before some hypothetical replacement would be needed. Moreover, they should have realized that there was no substitute for basic energy resources.

The economists could think only in terms of money; basic necessities like water and energy only showed up in their calculations in terms of dollar cost, which made them functionally interchangeable with everything else that was priceable – oranges, airliners, diamonds, baseball cards, whatever. But, in the last analysis, basic resources weren’t interchangeable with other economic goods at all: you couldn’t drink baseball cards, no matter how big or valuable your collection, once the water ran out. Nor could you eat dollars, if nobody had food to sell. And so, after a certain point, people started to lose faith in their money. And as they did so, they realized that faith had been the only thing that made money worth anything in the first place. Currencies just collapsed – first in one country, then in another. There was inflation, deflation, barter, and thievery on every imaginable scale as matters sorted themselves out.

In the era when I was born, commentators used to liken the global economy to a casino. A few folks were making trillions of dollars, euros, and yen trading in currencies, companies, and commodity futures. None of these people were actually doing anything useful; they were just laying down their bets and, in many cases, raking in colossal winnings. If you followed the economic chain, you’d see that all of that money was coming out of ordinary people’s pockets . . . but that’s another story. Anyway: all of that economic activity depended on energy, on global transportation and communication, and on faith in the currencies. Early in the twenty-first century, the global casino went bankrupt. Gradually, a new metaphor became operational. We went from global casino to village flea market.

With less energy available each year, and with unstable currencies plaguing transactions, manufacturing and transportation shrank in scale. It didn’t matter how little Nike paid its workers in Indonesia: once shipping became prohibitively expensive, profits from the globalization of its operations vanished. But Nike couldn’t just start up factories back in the States again; all of those factories had been closed two decades earlier. The same with all the other clothing manufacturers, electronics manufacturers, and so on. All of that local manufacturing infrastructure had been destroyed to make way for globalization, for cheaper goods, for bigger corporate profits. And now, to recreate that infrastructure would require a huge financial and energy investment – just when money and energy were in ever shorter supply.

Stores were empty. People were out of work. How were they to survive? The only way they could do so was by endlessly recycling all the used stuff that had been manufactured before the energy crisis. At first, after the initial economic shock waves, people were selling their stuff on internet auctions – when there was electricity. Then, when it became clear that lack of reliable transportation made delivery of the goods problematic, people started selling stuff on street corners so they could pay their rents and mortgages and buy food. But, after the currency collapse, that didn’t make sense either, so people began just trading stuff, refurbishing it, using it however they could in order to get by. The cruel irony was that most of their stuff consisted of cars and electronic gadgets that nobody could afford to operate anymore. Worthless! Anybody who had human-powered hand tools and knew how to use them was wealthy indeed. And still is.

Industrial civilization sure produced a hell of a lot of junk during its brief existence. Over the past fifty or sixty years, folks have dug up just about every landfill there ever was, looking for anything at all that could be useful. What a god-awful mess! With all due respect, I have always had a hard time understanding why – and even how – you people could take billions of tons of invaluable, ancient, basic resources and turn them into mountains of stinking garbage, with apparently almost no measurable period of practical use in between! Couldn’t you at least have made durable, well-designed stuff? I must say that the quality of the tools, furniture, houses, and so on that we have inherited from you – and are forced to use, given that few of us are capable of replacing them – is pretty dismal.

Well, I apologize for those last remarks. I don’t mean to be nasty or rude. Actually some of the hand tools left behind are quite good. But you have to understand: the industrial way of life to which you have become accustomed will have horrific consequences for your children and grandchildren. I can vaguely remember seeing – when I was very young, maybe five or six – some old television shows from the 1950s: Ozzie and Harriet . . . Father Knows Best . . . Lassie. They portrayed an innocent world, one in which children grew up in small communities surrounded by friends and family. All problems were easily dealt with by adults who were mostly kind and wise. It all seemed so stable and benign.

When I was born, that world, if it had ever really existed, was long gone. By the time I was old enough to know much about what was happening on the bigger scene, society was beginning to come apart at the seams. It started with electricity blackouts – just a few hours at a time at first. Then the natural gas shortages clicked in. Not only were we cold most of the winter, but the blackouts got dramatically worse because so much electricity was being produced using natural gas. And then the oil and gasoline shortages hit. At this point – I guess I was a young teenager then – the economy was in tatters and there was political chaos.

By the time I was an older teenager, a certain identifiable attitude was developing among the young people. It was a feeling of utter contempt for anyone over a certain age – maybe thirty or forty. The adults had consumed so many resources, and now there were none left for their own children. Of course, when those adults were younger they had just been doing what everybody else was doing. They figured it was normal to cut down ancient forests for wood pulp for their phone books, pump every last gallon of oil to power their SUVs, or flick on the air conditioner if they were a little warm. For the kids of my generation, all of that was just a dim memory. What we knew was very different. We were living in darkness, with shortages of food and water, with riots in the streets, with people begging on street corners, with unpredictable weather, with pollution and garbage that could no longer be carted away and hidden from sight. For us, the adults were the enemy.

In some places, the age wars remained just a matter of simmering resentment. In others, there were random attacks on older people. In still others, there were systematic purges. I’m ashamed to say that, while I didn’t actually physically attack any older people, I did participate in the shaming and name-calling. Those poor old folks – some of them still quite young, by my present perspective! – were just as confused and betrayed as we kids were. I can imagine myself in their shoes. Try to do the same: try to remember the last time you went to a store to buy something and the store didn’t have it. (This little thought exercise is a real stretch for me, since I haven’t been in a “store” that actually had much of anything for several decades, but I’m trying to put this in terms that you will understand.) Did you feel frustrated? Did you get angry, thinking, “I drove all the way here for this thing, and now I’m going to have to drive all the way across town to another store to get it”? Well, multiply that frustration and anger by a thousand, ten thousand. This is what people were going through every day, with regard to just about every consumer item, service, or bureaucratic necessity they had grown accustomed to. Moreover, those adults had lost most of what they had in the economic crash. And now gangs of kids were stealing whatever was left and heaping scorn on them as they did so. That must have been devastating for them. Unbearable.

Now that I’m so ancient myself, I have a little more tolerance for people. We’re all just trying to get by, doing the best we can.

I suppose you’re curious to know more about what has happened during this past century – the politics, wars, revolutions. Well, I’ll tell you what I know, but there’s a lot that I don’t. For the last sixty years or so we haven’t had anything like the global communications networks that used to exist. There are large parts of the world about which I know almost nothing. But I’ll share what I can.

As you can imagine, when the energy resource shortages hit the United States and the economy started to go into a tailspin (it’s interesting that I still use that word: only the oldest among us, such as myself, have ever seen an airplane tailspin, nose-dive, or even fly), people became angry and started looking around for someone to blame. Of course, the government didn’t want to be the culprit, so those bastards in power (sorry, I still don’t have much sympathy for them) did what political leaders have always done – they created a foreign enemy. They sent warships, bombers, missiles, and tanks off across the oceans for heaven knows what grisly purpose. People were told that this was being done to protect their “American Way of Life.” Well, there was nothing on Earth that could have accomplished that. It was the American Way of Life that was the problem!

The generals managed to kill a few million people. Actually, it could have been tens or hundreds of millions for all I know; the news media were never very clear on that, since they were censored by the military. There were antiwar protests in the streets, and persecutions of the antiwar protesters – some of whom were rounded up and put in concentration camps. The government became utterly fascistic in its methods toward the end. There were local uprisings and brutal crackdowns. But it was all for nothing. The wars only depleted what few resources were still available, and after five horrible years the central government just collapsed. Ran out of gas.

Speaking of political events, it’s worth noting that, in the early years of the shortages, the existing political philosophies had very little to offer that was helpful. The right-wingers were completely devoted to shielding the wealthy from blame and shifting all of the pain onto poor people and overseas scapegoats – the Arabs, North Koreans, and so on. Meanwhile, the Left was so habituated to fighting corporate meanies that it couldn’t grasp the fact that the problems now facing society couldn’t be solved by economic redistribution. Personally, as a historian, I tend to be much more sympathetic to the Left because I think that the accumulation of wealth that was occurring was just obscene. I suspect that a hell of a lot of suffering could have been averted if all of that wealth had been spread around early on, when the money was worth something. But to hear some of the leftist leaders talk, you’d think that once all the corporations had been reined in, once the billionaire plutocrats had been relieved of their riches, everything would be fine. Well, everything wasn’t going to be fine, no way.

So here were these two political factions fighting to the death, blaming each other, while everybody around them was starving or going crazy. What the people really needed was just some basic common-sense information and advice, somebody to tell them the truth – that their way of life was coming to an end – and to offer them some sensible collective survival strategies.

Much of what has happened during the past century was what you have every reason to expect on the basis of your scientists’ forecasts: we have seen dramatic climate shifts, species extinctions, and horrible epidemics, just as the ecologists at the turn of the last century warned there would be. I don’t think that’s a matter of much satisfaction to those ecologists descendants. Getting to say “I told you so” is paltry comfort in this situation. Tigers and whales are gone, and probably tens of thousands of other species; but our lack of reliable global communications makes it difficult for anyone to know just which species and where. For me, songbirds are a fond but distant memory. I suppose my counterparts in China or Africa have long lists. Climate change has been a real problem for growing food, and for just getting by. You never know from one year to the next what swarms of unfamiliar insects will show up. For a year or two or three, all we get is rain. Then there’s drought for the next five or six. It’s much worse than a nuisance; it’s life-threatening. That’s just one of the factors that has led to the dramatic reduction in human population during this past century.

Many people call it “The Die-off.” Others call it “The Pruning,” “The Purification,” or “The Cleansing.” Some terms are more palatable than others, but there really are no nice ways to describe the actual events – the wars, epidemics, and famines.

Food and water have been big factors in all of this. Fresh, clean water has been scarce for decades now. One way to make young people mad at me is to tell them stories about how folks in the old days used to pour millions upon millions of gallons of water on their lawns. When I describe to them how flush toilets worked, they just can’t bear it. Some of them ‘m making this stuff up! These days water is serious business. If you waste it, somebody’s likely to die.

Starting many decades ago, people began – by necessity – to learn how to grow their own food. Not everyone was successful, and there was a lot of hunger. One of the frustrating things was the lack of good seeds. Very few people knew anything about saving seeds from one season to the next, so existing seed stocks were depleted very quickly. There was also a big problem with all the modern hybrid varieties: few of the garden vegetables that were planted would produce good seeds for the next year. The genetically engineering plants were even worse, causing all sorts of ecological problems that we’re still dealing with, particularly the killing off of bees and other beneficial insects. The seeds of good open-pollinated food plants are like gold to us.

I did some traveling by foot and on horseback when I was younger, in my fifties and sixties, and we do get some reports from the outside world. From what I’ve seen and heard, it seems that people in different places have coped in different ways and with widely varying degrees of success. Ironically, perhaps, the indigenous people who were most persecuted by civilization are probably doing the best. They still retained a lot of knowledge of how to live simply on the land. In some places, people are dwelling together in makeshift rural communes; other folks are trying to survive in what’s left of the great urban centers, ripping up concrete and growing what they can as they recycle and trade all the old junk that was left behind when people fled the cities in the ‘twenties. As a historian, one of my biggest frustrations is the rapid disappearance of knowledge. You people had a mania for putting most of your important information on electronic storage media and acid-laden paper – which are disintegrating very quickly. For the most part, all we have are fading photographs, random books, and crumbling magazines.

A few of our young people look at the old magazine ads and wonder what it must have been like to live in a world with jet airplanes, electricity, and sports cars. It must have been utopia, paradise! Others among us are not so sanguine about the past. I suppose that’s part of my job as a historian: to remind everyone that the advertising images were only one side of a story; it was the other side of that story – the rampant exploitation of nature and people, the blindness to consequences – that led to the horrors of the past century.

You’re probably wondering if I have any good news, anything encouraging to say about the future of your world. Well, as with most things, it depends on your perspective. Many of the survivors learned valuable lessons. They learned what’s important in life and what isn’t. They learned to treasure good soil, viable seeds, clean water, unpolluted air, and friends you can count on. They learned how to take charge of their own lives, rather than expecting to be taken care of by some government or corporation. There are no “jobs” now, so people’s time is all their own. They think for themselves more. Partly as a result of that, the old religions have largely fallen by the wayside, and folks have rediscovered spirituality in nature and in their local communities. The kids today are eager to learn and to create their own culture. The traumas of industrial civilization’s collapse are in the past; that’s history now. It’s a new day.

Can you change the future? I don’t know. There are all sorts of logical contradictions inherent in that question. I can barely understand the principles of physics that are allowing me to transmit this signal to you. Possibly, as a result of reading this letter, you might do something that would change my world. Maybe you could save a forest or a species, or preserve some heirloom seeds, or help prepare yourselves and the rest of the population for the coming energy shortages. My life might be altered as a result. Then, I suppose this letter would change, as would your experience of reading it. And as a result of that, you’d take different actions. We would have set up some kind of cosmic feedback loop between past and future. It’s pretty interesting to think about.

Speaking of physics, maybe I should mention that I’ve come to accept a view of history based on what I’ve read about chaos theory. According to the theory, in chaotic systems small changes in initial conditions can lead to big changes in outcomes. Well, human society and history are chaotic systems. Even though most of what people do is determined by material circumstances, they still have some wiggle room, and what they do with that can make a significant difference down the line. In retrospect, it appears that human survival in the twenty-first century hinged on many small and seemingly insignificant efforts by marginalized individuals and groups in the twentieth century. The anti-nuclear movement, the conservation movement, the anti-biotech movement, the organic food and gardening movements, indigenous peoples’ resistance movements, the tiny organizations devoted to seed saving – all had a profound and positive impact on later events.

I suppose that, logically speaking, if you were to alter the web of causation leading up to my present existence, it is possible that events might transpire that would preclude my being here. In that case, this letter would constitute history’s most bizarre suicide note! But that is a risk I am willing to take. Do what you can. Change history! And while you’re at it, be kind to one another. Don’t take anything or anyone for granted.

How to Replace Austerity with Freedom, Independence and Prosperity


Scott Lazarowitz

The Economic Collapse Blog has this list of examples of how European-style “austerity” is already hitting the U.S., including cities closing schools and fire stations, and states eliminating whole state agencies and raising taxes. That includes the state of Illinois whose legislature has passed a “temporary” 66% personal income tax hike that the Democrat governor will sign. Rest assured, this income tax hike will be as “temporary” as the one in Massachusetts, still in place since 1989. Such austerity measures may lead to the same kind of social unrest Europeans have been experiencing.

The Economic Collapse Blog concludes,

We are entering a time of extreme financial stress in America. The federal government is broke. Most of our state and local governments are broke. Record numbers of Americans are going bankrupt. Record numbers of Americans are being kicked out of their homes. Record numbers of Americans are now living in poverty.

The debt-fueled prosperity of the last several decades came at a cost. We literally mortgaged the future. Now nothing will ever be the same again.

To say that “nothing will ever be the same again” is just pessimistic and unnecessary. We actually can return to the prosperity of the past, by replacing debt and austerity with freedom and independence.

There is no need for Americans to suffer through what European countries are suffering, because nearly all the problems we face are caused by governmental intrusions into many aspects of our personal and economic lives – intrusions by federal, state and local governments. Regardless of the good intentions that the welfare and military socialism statists have in justifying their use of compulsory government powers, what America needs is to cut the shackles of State-imposed dependence, restrictions, regulations, taxation, all those policies of moral relativism that involve violations of the Rule of Law: theft, trespass, denial of Due Process, and other acts of State-initiated criminal aggression.

Freeing Americans includes repealing all forms of intrusive presumption-of-guilt regulations and restrictions that are in place having nothing to do with whether any individual is suspected of any crimes against others. Regulations are before-the-fact demands by the government that presume the individual and one’s business guilty, in which one must submit one’s private personal or financial information to the government to prove one’s innocence. Government regulations and arbitrary restrictions are literally searches and seizures by the government of information that is none of anyone else’s business, and effect in the stifling of everyday citizens’ growth and prosperity.

Ending all personal income taxes, corporate taxes, estate taxes, and capital gains taxes frees people who own or share in the ownership of businesses – i.e. employers and prospective employers – to invest in their own research and development and in the expansion of their businesses, which is the genuine force behind jobs creation, in both blue collar and white collar sectors. Ending all personal income taxes frees people to explore their own ideas and inventions, and to start their own businesses that will employ more people and advance society further. Also, ending all personal and corporate income taxes allows individuals and businesses to donate more of their own money to worthy charitable organizations, like it used to be before the intrusiveness of the government entered the scene and discouraged such charity giving.

Some may respond to such suggestions, “Well, if we do all that, then how will government functions be funded?” My response is: do you mean, how do we fund public employees’ 6-figure pensions, how do we fund all the extravagant public employee salaries that are now on average higher than private sector salaries? Or, for example, do you mean to ask how we fund the federal Department of Education that has done nothing but create bureaucracies and turn American education into a Soviet-style indoctrination camp for State-worship? As far as the federal government is concerned, just about every agency and department in Washington can be eliminated, because they are unnecessary and have been nothing but parasitic and slowing America’s growth and progress almost to a halt.

We also need to be honest about the “War on Terror” and the War on Drugs, which are not wars on terror or drugs, but wars on freedom. The war on drugs has been extremely hypocritical, by going after only “street drugs,” but not alcohol and not prescription drugs, all of which have been just as dangerous and lethal. The war on drugs criminalizes victimless behavior, discourages personal responsibility, and has been a boondoggle for law enforcement agencies through confiscation of private property and through bribery, and has caused a black market in drugs which incentivizes the formation of drug gangs and cartels that leads to increased violence, as well as the corruption of otherwise “good” cops and other government officials. What would happen if we immediately ended the War on Drugs and required individuals to be responsible for their actions and decisions? Do we really need to have costly government “anti-drug” enforcement agencies?

And regarding this “War on Terror,” many of the terrorists themselves have expressed explicitly that their primary motivations for their terrorist acts have been political, and not religious, responding to the U.S. government’s many decades of intrusions on those foreign lands as well as the U.S. government’s intrusive interventionist foreign policy. Even a top U.S. general has recently stated that for every one innocent civilian the U.S. military and CIA murders, ten new terrorists are created.

So, what would happen if we simply just closed all the U.S. military bases on foreign lands and brought all U.S. troops, contractors, and bureaucrats back to the U.S.? Does anyone in his right mind actually believe that there would be more terrorism against the U.S.?

If we closed all those foreign bases and brought everyone home and ended the violence that the U.S. military has been committing against foreigners, why, that would mean that the military socialism and welfare redistribution of wealth from middle-class workers over to defense contractors would have to stop. And, I’d like to ask, just how selfish are those defense contractors, knowing how counter-productive U.S. government aggression in the Middle East has been, knowing that they are playing a major role in making America less safe and much less productive, less prosperous and less free?

And how selfish are these big corporate-statist financial institutions, such as Goldman Sachs, JP Morgan, Bank of America, etc., in insisting that their billions of dollars in bonuses that result from bailouts and quantitative easing continue, at the expense of poor, middle-class workers and producers? How selfish will the parasites continue to be, as America continues to decline economically and morally? How much longer do we need to suffer at the hands of the most destructive of political institutions, that Federal Reserve? Because Americans’ inherent, inalienable rights to trade, commerce and contracts with free, competing currencies have been unconstitutionally squashed by this voracious federal Leviathan, we are all becoming poorer, and America is literally turning into a Third World economy. Which isn’t even an “economy” anymore because of the intrusive crimes of the State – America is a State-owned political prison.

In other words, just how helpful has the federal government been to America’s progress? What would happen if we just eliminated the federal government, and restored to the states their constitutionally-recognized inalienable rights to independence and sovereignty that political criminals have stolen from them in these 235 years of America? Is it possible to have an organized country consisting of independent states, but without a central-planning compulsory federal government? Of course it’s possible – and, for us to survive, it is necessary to make such a change, in addition to the elimination of the theft of taxation, the search and seizure of regulations, and the counter-productive wars on drugs and terrorism, and the sooner the better.

In honestly considering such solutions, one would have to conclude that, without a central federal government and all of government’s intrusions, no one would be able to monopolize territorial jurisdictions, monetary functions or the defense of others. There would be freedom, prosperity, and yes, much more security, and with a further assurance of stability for future generations.