What would be truly optimistic would be to surrender our dependence on asset bubbles and malinvested debt to prop up an unstable delusion of effortless “wealth.”
The most sacred liturgy of American culture is to always be positive and optimistic. The greatest taboo is breaking this sacred duty to say something upbeat and optimistic; it is acceptable (barely) to make awkwardly negative observations, but only if you immediately follow up the negative comments with a treacly, double-serving of sugary optimism: for example, inflation is transitory, the economy is growing strongly, wages are rising, etc.
And so we sleepwalk into 2022, ill-prepared to deal with reality which most annoyingly continues responding to systemic dynamics no matter how much sugary optimism is spread around.
The endless servings of sugary optimism serve several purposes:
1. They create an appealing illusion that systemic problems can be solved without materially changing the status quo or demanding any sacrifices.
2. They mask the inconvenient reality that the status quo is incapable of solving systemic problems because doing so would demand sacrifices of those skimming the vast majority of the benefits of the status quo, i.e. the wealthy and powerful.
3. They mask the enormous sacrifices being imposed on the bottom 90% to keep the status quo unchanged, i.e. benefiting the few at the expense of the many.
4. The demand to always be sugar-high optimistic is a handy tool to bludgeon critics who point out the systemic failure of the status quo as alarmists, doom-and-gloomers, etc.
In other words, you’re only allowed to point out a critical systemic flaw if you also parrot a completely unrealistic, impractical “solution” that fits the sugar-high optimism requirement: fusion: unlimited energy for everyone forever! Modern Monetary Theory: free money for everyone forever! And so on, in an endless gush of detached-from-reality “solutions” that all magically solve all problems without changing anything in the power structure of who benefits from the existing arrangement or demanding any reduction in our waste is growth Landfill Economy.
We no longer solve the hard problems because they require changing a system that benefits the wealthy and powerful to the exclusion of everyone else. Only the debt-serfs and tax-donkeys suffer, but since they’re passive and powerless, who cares?
The sugary optimism also masks the destructive nature of the easy fixes that are so beloved by the political class: debt, inflation and narrative control. All are politically and economically painless at first, and but the systemic consequences eventually erode the entire status quo, which collapses in a putrid heap of lies, artifice, fakery, profiteering, delusion and deception.
Making everyone feel warm and fuzzy by borrowing and distributing “free money” works wonders more or less like a sugar-cocaine speedball. The cost of the new debt is spread over years in the future, and a Federal Reserve beholden to those reaping the profits from debt (banks, financiers, the wealthy) is always ready to lower interest rates to ease the pain of servicing debt as a means of enabling ever-greater borrowing going forward.
What could be better? Borrow and spend now, pay in installments stretching far into the future. Alas, the advance of time is inexorable, and the future soon becomes the present. And despite the declining rate of interest, all that rapidly expanding debt is now sucking the income well dry, leaving insufficient income to borrow more or spend more.
Oops. Don’t you hate it when the system works so well and then it suddenly implodes due to its self-reinforcing, self-destructive structural incoherence? A system dependent on debt for “growth” is self-liquidating, meaning that the debt eats the system alive by siphoning off income while malinvestment, waste and speculative gambling destroys the “capital” funded by the debt.
Inflation is equally beloved by the political class for the same reasons: it’s painless at the start and everyone loves the illusion that assets are rising without anyone actually creating any additional value or productivity–it’s all magic. Just print a few trillion dollars and pump the “free money” into stock buybacks and speculative bets, and voila, everyone who already owns assets gets richer without doing anything but being a genius.
All the fun stuff eventually generates real-world inflation and inflates assets into insane bubbles that eventually pop at the least opportune time, right when everyone watching their wealth swell like clockwork starts believing not just in their own genius but in the perpetual-motion machine of Fed-printing and rapidly expanding debt.
Those expecting assets to bubble higher forever and real-world costs to deflate have it backward: it’s the assets which have inflated that will deflate back to starting levels of valuation and it’s real-world inflation that will gather momentum and shred the economy and political structure.
Those depending on earned income will see the purchasing power of their earnings drop precipitously while those who were counting on their vastly enlarged unearned “wealth” in asset bubbles to fund their lifestyle and lavish retirement will experience 80% declines in the “wealth” they presumed was permanent.
It will be a great shock to the political class, but controlling the narrative to protect your interests won’t actually stop the systemic momentum careening over the cliff. Demanding that everyone disavow problems doesn’t actually solve the problems.
Alas, expedient speedball fixes to systemic problems only create new instabilities while fueling the instabilities of the problems left unsolved. Sleepwalking in a fantasy-dream of free money forever, free energy forever and endlessly expanding asset bubbles of “wealth” will take us to the edge of the cliff and then into the abyss.
What would be truly optimistic would be to surrender our dependence on asset bubbles and mal-invested debt to prop up an unstable delusion of effortless “wealth” and an unsustainable waste is growth Landfill Economy.
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A Grand Strategy to Address the Global Crisis (54 min., with Richard Bonugli)
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