Archive for January 2010
THE GREAT MONETARY SCIENTIST Isaac Newton, who served as England’s Master of the Mint for 24 years, also did some ancillary work in physics. The laws of Newtonian physics are known by nearly everyone and are often used by analogy to apply logical reasoning in other fields. In this case, a few of these laws are particularly applicable in discussing the impending state of the economy in 2010 based on the massive momentum of 2009.
LAWS OF MOTION
Stated in layman’s terms the three great Newtonian laws of motion are:
1. A body persists in a state of uniform motion or of rest unless acted upon by an external force.
2. Force equals mass times acceleration or F = ma.
3. To every action there is an equal and opposite reaction.
In regards to human action a body seems to stay at rest rather than work unless acted upon by some type of force. The force can be either internal such as hunger, the desire for self-actualization or anywhere in between on the Maslow hierarchy of needs or external such as a saber-tooth tiger, boss or customer. To sustain life the human body must consume fuel.
Capital is the means of production and the difference between production and consumption flows into or out of the store of capital. Out of this dynamic human society has attempted to efficiently allocate capital to produce more and this has resulted in institutions, large and small, where individuals work in the attempt to produce in order to meet their needs and wants. Of course, the great fiction of government is that everyone can live off someone else’s production.
MASSIVE FAILING INSTITUTIONS
The chains of habit are too weak to be felt until they are too strong to be broken. The mass of the economy times its speed in the Information Age has resulted in a tremendous force. But this mass has largely been built from the atomic level upon something which is inherently unstable and undefinable leading to chronic fingers of instability.
The problem is debt and because psychology is changing, The Great Credit Contraction has begun and the rate at which the mass of the economy is evaporating is truly scary. While many attribute the ongoing financial crisis to the subprime mortgage mess, which is surely a contributing factor, the problem is much more systemic than a few defaulted mortgages.
LATELY, I’VE BEEN STUDYING THE CLIMATE-CHANGE induced melting of glaciers in the Greater Himalaya. Understanding the cascading effects of the slow-motion downsizing of one of the planet’s most magnificent landforms has, to put it politely, left me dispirited. Spending time considering the deleterious downstream effects on the two billion people (from the North China Plain to Afghanistan) who depend on the river systems – the Yellow, Yangtze, Mekong, Salween, Irrawaddy, Brahmaputra, Ganges, Indus, Amu Darya and Tarim – that arise in these mountains isn’t much of an antidote to malaise either.
If you focus on those Himalayan highlands, a deep sense of loss creeps over you – the kind that comes from contemplating the possible end of something once imagined as immovable, immutable, eternal, something that has unexpectedly become vulnerable and perishable as it has slipped into irreversible decline. Those magnificent glaciers, known as the Third Pole because they contain the most ice in the world short of the two polar regions, are now wasting away on an overheated planet and no one knows what to do about it.
To stand next to one of those leviathans of ice, those Moby Dicks of the mountains, is to feel in the most poignant form the magnificence of the creator’s work. It’s also to regain an ancient sense, largely lost to us, of our relative smallness on this planet and to be forcibly reminded that we have passed a tipping point. The days when the natural world was demonstrably ascendant over even the quite modest collective strength of humankind are over. The power – largely to set an agenda of destruction – has irrevocably shifted from nature to us.
ANOTHER TIPPING POINT HAS ALSO been on my mind lately and it’s left me no less melancholy. In this case, the Moby Dick in question is my own country, the United States of America. We Americans, too, seem to have passed a tipping point. Like the glaciers of the high Himalaya, long familiar aspects of our nation are beginning to feel as if they were, in a sense, melting away.
For a moment, put yourself into the well-polished shoes of the president. You’ve worked all your life to get to your position at the very apex of global power. Feels pretty good, eh? Except for a burning sensation on the back of your neck you suspect is connected with Brown’s win in Massachusetts. Damn!
After quickly reacquainting yourself with presidential powers related to ordering assassinations and being disappointed, you return to your calculations. What can you do to bring your former supporters, those fickle bastards, back under your rainbow-colored tent? After all, even after your $1.8 trillion in deficit spending last year, the job picture still sucks, and so does the housing market. The public has caught on to your cozy insider dealings with the big banks. The threat of global warming you were so vocal about has been exposed as a farce. And now your universal healthcare legislation is unraveling – and with it, your last best chance for a place in history as something other than a cultural footnote.
Oh, the humanity! Why can’t these fools realize that you know what’s best for them? That with just a bit more patience, you’ll lead them to a promised land of high-speed trains, affordable healthcare for all, and green jobs aplenty? But, noooo. Where you see high-speed trains, Mr. John Q. Stupid sees government make-work and waste. Where you see universal healthcare, the two-thirds of people who already have health insurance see nothing but higher costs, more taxes, and rationing. Green jobs? A joke. Why, things are getting so bad that the political cartoonists have gone from this… Read the rest of this entry »