Guest Post: The Great Reset

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

The Great Reset

Since the Status Quo is unsustainable, there will be a Great Reset. The timing and nature of that Reset is up to us.

Yesterday I laid out why the Status Quo is financially unsustainable in The Promises That Cannot Be Kept. The unavoidable consequence of that is the the nation will experience a Great Reset in which the promises of the Savior State are relinquished, either voluntarily or involuntarily.

As I discussed in July 4, 2011: The Cycle of Dependency and the Atrophy of Self-Reliance, our reliance on the Savior State has sapped our will and confidence, and hollowed out communities that have become dependent on the Savior State and its quasi-private partners, the corporate cartels of banking, defense, healthcare and so on.

The Great Reset will thus be a great shock to everyone who has grown dependent on Big Government and global Corporate America.

An unprecedented array of interconnected trends are converging that will force a Reset not just in the economy but in the American society and culture.

1. Peak Government and Moral Hazard. When the Savior State promises to "fix" any and all problems in the nation, such as banks making bad bets and becoming insolvent, it introduces a pervasive moral hazard into the culture. The defining characteristic of moral hazard is that it insulates a person from risk. That person will behave much differently than someone who is not insulated from risk.

In the case of finance, the person insulated from the consequences of his gambles will have an insatiable appetite for risky bets that would be viewed as insanely foolhardy by a person exposed to the full, real risk.

In broad brush, the financial crisis was caused by the Savior State backstopping all "too big to fail" banks and Wall Street bets. These financial institutions are essentially free to make stupendously risky bets and keep the gains, if any, while passing the losses back to the Savior State's taxpayers. Imagine being given a stake at the roulette table where you get to keep your winnings but Uncle Sam makes good your losses.

Closer to home, the Savior State's promises to fund our retirement and healthcare via modest payroll deductions has introduced a moral hazard that is reflected in the nation's anemic savings rate: there is no need to save, because the heavy lifting of our retirement and healthcare will be done by the Savior State.

The numbers are something like this: the average Medicare recipient pays in $10,000 and extracts $250,000 in benefits. This kind of system is only sustainable if there are 25 workers for every retiree. Right now, there are roughly 2.5 workers for every retiree in the U.S., and if you consider only private-sector workers, it's more like 2 to 1.

We are at Peak Government and Peak Promises.

2. Demographics. "Pay as you go" systems like Social Security and Medicare only function sustainably if the retirees drawing benefits remain about 1/10th of the number of workers paying the taxes. Alternatively, the population must pyramid up every generation to maintain that 10-to-1 ratio.

The Baby Boom is roughly 76 million people, or about 25% of the population. There are about 139 million workers and about 310 million residents. The Baby Boom has started retiring en masse; all of my relatives and friends who work for state or local government are already retired well before the age of 60, and the first Boomers qualify for Medicare this year.

Once the Boomers are in the system, the worker-retiree ratio will be less than 2-to-1. This is completely unsustainable in a "pay as you go" system. Here are the charts:

3. The End of Work. The cheerleaders will claim the U.S. economy will generate 50 million new jobs in the next 20 years and thus stave off demographic collapse of entitlements, but there is scant evidence to support this claim and plentiful evidence to suggest we are also at Peak Employment in terms of civlian participation in the workforce.

I have addressed these issues many times:

End of Work, End of Affluence I: Cascading Job Losses (December 8, 2008)

End of Work, End of Affluence III: The Rise of Informal Businesses (December 10, 2008)

Endgame 3: The End of (Paying) Work (January 21, 2009)

The "End of Work" and the Coming Revolution in Education (June 7, 2011)

4. Peak Health. We're past Peak Health and well into a level of chronic lifestyle and diet diseases that is unprecedented in our history.

(Check your own BMI with the National Institute of Health BMI calculator.)

I have covered sickcare and the decline of health many times
, for example, The American Diet: Manufacturing Ill Health (April 25, 2007)

As expected, developing nations like Egypt and Asian nations with low-fat, low protein cuisines like Japan have few obese adults. The surprise is that European nations with high-fat diets rich in chocolate and cheeses like France are relatively low. (Switzerland, though not shown, was just above Japan despite a very high per capita intake of chocolate.)

This suggests that fat alone (or sweets alone) cannot be singled out as the "cause" of obesity.

Now please don't take this entry personally if you are overweight. By the NIH standards of what constitutes "normal weight," some 2/3 of American adults are overweight or obese. Since this wasn't the case 40 years ago, we have to ask what's different now.

What's different? Lifestyle and diet. Boiled down, here is the situation: unprocessed foods are healthy and unprofitable, processed foods are unhealthy and immensely profitable.

Here is a long-term study which supports the connection between lowering salt intake and lowering the risk of heart disease:
Scientists prove that salty diet costs lives; "Eating less salt reduces the chances of suffering a heart attack or stroke, the first long-term study of salt’s impact on health confirms today."

The usual image of a high-salt diet is someone shaking loads of salt on their steak or veggies. Too bad it's not this simple. A careful study of standard American manufactured foods has led me to conclude that even if you don't add a single grain of salt to a single morsel of food, you are eating far more salt than is healthy.

And by manufactured foods I don't mean just frozen dinners; I mean canned beans, prepared salads, packaged noodles, sausage, snacks, etc. Everything which isn't fresh produce, bread. dairy/soy or fresh meat/fish, i.e. foods which require some preparation.

The "recommended salt intake per day" is about 2300 mg (milligrams), which in terms of limiting your risk of dying prematurely should be viewed as a maximum best avoided--about half that would be a better target. So let's "eat healthy"--low fat and low sugar--and see how we do:

Breakfast: Wheat Chex: 420 mg of salt and a low-fat Aidells sausage: 300 mg
Lunch: Trader Joe's mushroom rice noodle soup bowl: 700 mg
one bag of low-fat chips: 600 mg
dinner: organic garbanzo beans, 390 mg, salad with blue-cheese dressing with bacon bits (500 mg), frozen low-fat enchiladas (750 mg.)

Total salt content of "low calorie, restricted fat" diet: 3660 mg. What can we say about this level of salt intake? It raises the risk of stroke and heart disease. Put simply: it will very likely take years off your life.

So next time you're in a fast food outlet or a supermarket, try to find something you can eat that won't kill you. It will be a challenge, I guarantee you.

Here's a short list of what I no longer eat:

  • chips: out, too much salt
  • fries: out, too much salt
  • sausage: out, too much salt
  • fast food in general: out, too much salt
  • salted nuts: out, too much salt
  • canned goods: out, too much salt
  • most cereals: out, too much salt
  • bottled salad dressings: out, too much salt
  • sports drinks: out, too much salt
  • pre-packaged salads: out, too much salt in the dressing
  • frozen meals: out, too much salt
  • packaged snacks: out, too much salt
  • packaged noodles: out, too much salt

In other words, literally everything in the supermarket except the fresh produce and the meat counter (with rare exceptions like frozen blueberries, which are essentially produce anyway).

If you want to locate the cause of American obesity and poor health, look no further than the label on virtually every item in the American supermarket.

Demographically, the Savior State programs of healthcare are unsustainable, even as the costs of treating chronic lifestyle diseases with expensive medications is skyrocketing along with the population at risk of these chronic lifestyle diseases.

5. Peak Cheap Oil. Cheerleaders assure us the world has 40 years of oil, no problem, but these cheerleaders inevitably avoid the consequences of EROEI. It now takes more capital to extract a barrel of oil or process shale into liquid oil, a dynamic measured by EROEI, energy returned on energy invested (or EROI, energy returned on investment, which to the degree that money is a measure of energy is the same thing).

In the good old days, oil gushed out of the ground and the total recovery cost was $1 per barrel, or perhaps $5 if the well was deep. So what happens as the recovery cost rises to $50 per barrel? That is the cost for deep offshore wells, tar sands, shale oil and all the other so-called "unconventional" sources of oil.

We should recall here that relatively modest (in the long view) increases in the cost of energy in the 1970s sent the U.S. economy into a decade-long stagflation. Cheerleaders reassure us that energy is a much smaller part of the economy now, but that reassurance is hollow, for oil leverages everything from air travel to plastics to fertilizer to the cheap frozen foods in the supermarket.

Bottom line, more of our national income will be diverted to pay for higher energy costs, leaving less discretionary income for the consumer society that has become the foundation of the economy. As the Savior State promises are revealed as impossible, then people will respond by saving more as they are exposed to the real-world risks of having no savings. This will leave less discretionary income for consumption.

The Great Reset won't just transform government, it will transform the economy and culture. Although it will be marketed as a great tragedy by those losing power and profits, the end of Savior State moral hazard will not be a tragedy, it will simply be a return to reality. Those exposed to risk behave differently than those insulated from risk. That is neither "good" nor "bad," it is an observation any of us can make.

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hedgeless_horseman's picture

The writer is wise to include Peak Health and rampant obesity, which is rarely mentioned in these types of discussions.

What say our Surgeon General?  Has anyone heard from her...ever?

SilverIsKing's picture

Nice to meet you ma'am.  Have you seen Eric Holder?

chumbawamba's picture

Warren Pollock wants his essay title back:

I am Chumbawamba.

Cognitive Dissonance's picture


Is that you mooning Warren in the window?  :)

Maniac Researcher's picture

CD, your comment is a perfect example of the intellectual bankruptcy on display here at ZH. Tyler presents a one-sided case, taylor-made for apocalypse yearning, responsiblity dodging, armchair blowhards - whose policy recommendations [anti-tax, anti-social safety net, pro-privatization] eerily match those of the corporate criminals they claim to abhor. And then people like CD, Chumba, Trav, and all their little brownshirt friends joke around while the mess called human civilization gets worse.

I'm sure after I leave all the scamps will get their panties in a bunch and return to their tiresome "If A then B" regarding my comment - claiming that I'm on the left, a socialist, a commie, [or...gasp! I have a jewish grandparent] etc etc - when, in fact, my dubious little friends, a critique of one approach does not necessarily mean sympathy for another. Of course, it's easier to react than formulate your own ideas, is it not? That's why you're called reactionaries.

I suggest you unplug and make yourself useful as I am doing

Shell Game's picture

Would enjoy hearing how you are making yourself 'useful' right now. I rarely meet one who knows beyond a shadow of doubt that their actions and thoughts are supreme to all other's here.  You are a lucky man, or cursed. Depends..

p.s.  I've noticed that your tactic is to never draw your platform nor explain what you believe in, only to lob snarky rhetoric at those who do.  Grow a pair and share your utopian, socialist ideas on where we go moving forward, Copernicus.

SoNH80's picture

An ad hominem attack is the lowest form of rhetoric.  CD is like Jerry Garcia and C. Wright Mills rolled into one, while your comment leads me to believe that you think that The New Republic offers "fresh insights on the problems of today."

Maniac Researcher's picture

I don't read the New Republic.

If you are suggesting my point does not have any empirical merit, I invite you to track my comments. You will easily discover many instances of the problems I have just detailed.

I'm familiar with The Power Elite and the idea that CD somehow has the depth Mills had in '56 is a joke. That, and most of Garcia's music was noodily and wanky. My guess is that a majority of Dead fans delude themselves into thinking that their music was somehow insightful and interesting, when in reality they're just nostalgic and listening to stoned, lazily constructed and executed compositions.

BigJim's picture

So you slag off the article and other commenters with a high-handed contempt for their not offering any constructive ideas on our present situation... without offering any constructive ideas on our present situation yourself. Then, when this laughable piece of hypocrisy is pointed out, you 'invite' people to track your comments.

Well, I suggest you 'track' their comments yourself, fuckwit. You'll see they've all expressed their opinions at great length in the past.

Maniac Researcher's picture

Contempt, yes. Calling it high-handed is merely your way of being dismissive.

Perhaps you should reread what I have posted and/or read my older comments. I have, in fact, offered many constructive opinions in the past, but have become fed up with the intellectual cesspool ZH has become; thus, my [continual] point is to address the inherent hypocrisy of ZH's claim "to get the word out to the people" about corporate corruption while tolerating hateful commentary [not to mention ironic policy leanings -see above].

It is fairly obvious that you care little for "constructive comments" anyway. Why? because you are using the obvious mirroring ploy used by many individuals here. What is mirroring? It is when one reflexively blames a critic for exactly that which they are critiquing. It's the rhetorical equivalent of honking at the person you just cut off on the road. Your comment only demonstrates your lack of sophistication and capacity to carry on a debate. You might want to work on that.

sgt_doom's picture

I think this is a Chas. Smith blog post, but overall I agree with the gist of your comment, Maniac Researcher.

The blog poster obviously has great difficulty with relatively simple arithmetical concepts, and therefore does not comprehend that there is NO American economy, it HAS been dismantled over the past 35 years, yielding all those debt-financed billionaires, which is why the GDP is 74% or greater fantasy finance; we are witnessing the Oligarchic Financial System made whole, and the end of predatory capitalism (better known as their Ponzi-Tontine scam) -- expect full demise in 2012.

Around one hundred years ago, Wilson preemptively arrested activists and jailed them, including Eugene V. Debs, of whom he used the Espionage Act against.

In 2011, Obama once again (although it began with the Bush clown) has preemptively arrested activists, and gone after more whistleblowers than all previous US presidents combined, and he has used the Espionage Act at least 5 times which we are aware of.

Little has really changed, or else THEY follow a One-Hundred Year Plan.


RockyRacoon's picture

So you're saying that we're not going to hell -- this IS hell.

Maniac Researcher's picture

It is rare to see Debs brought up on ZH. I doubt any of the wannabe brown shirts and Beck/Limbaugh fans have ever heard of him.

He is a figure well worth discussing more within the context of today's political scene in the US. Hell, there might even be some gems of wisdom worth unearthing that could be useful.

Individuals like Chumba, CD, Trav, and all the other regulars claim to be looking for answers, but it's mostly a bitterness and bigotry jerk off. Thus, a discussion about Eugene Debs' history, his various campaigns, strategies, successes and failures would likely have little impact here.

chumbawamba's picture

First of all, get your shit straight.  If the article is "intellectually bankrupt" then why should you get your panties in a wad if I'm joking about it?  Would you rather I take a brainless piece of shit article and attempt to respond to it eruditiously to not downgrade the sanctimony of the topic?

Second, I wasn't joking: Warren Pollock is all over The Great Reset like white on rice, a Jew on a penny, and a sensationalistic story on ZH.

Third, where were you 2 years ago when I actually still cared?  Why weren't you there with me working with me to try to get some motion going in the rebellion department?  You're just a Johnny-Come-Lately here, junior.  I've been there, done that, got the t-shirt and the adjudications.  I've blown that wad and am taking a necessary respite in preparation for round 2, coming soon.

I suggest you make yourself relevant by following your own damn advice!  Give us some ideas to work with.  If all you're going to do is harangue other people over petty foibles then I suggest you go make HuffPost or some other oasis of degeneracy your home for a while.  This is an intermission.  Act 2 is just around the corner.  Lead, follow, or get out of the way.

I am Chumbawamba.

RockyRacoon's picture

And a happy ZH birthday to you, Chumba.   2 years of eating some of the crap here is a landmark.

Maniac Researcher's picture

I'm glad you're finally asking questions instead of just spouting off, Chumba.

First, I was here two years ago. I remember Marla actually attempting to moderate the recklessly foolish comments from individuals such as yourself. I tend to listen be for I talk, thanks.

Second, I have no interest in the type of rebellion you believe you would like to engage in. Any system proposed by individual who does not seriously take into account any and all historical contingencies is doomed to fail. I have expanded on such contingencies on numerous occasions here in the past. 

Third, the only point I wish to make now is that it has become obvious that ZHers would revel in their own ignorance rather than address all options for social, political, cultural, and economic change. Sorry, but I'm not going to put much energy into discussing these details.

Why? Again, I will repeat ad nauseum: There is no credibility to be had amongst a group of people that allow vile ignorant hate in their midst. If there was actually *any* sort of effort being made to curb this activity, then that would be a different story. But the opposite is true, and you know it - whether you admit it or not.


I am not Chumbawumba

..nor do I have the need to make a pretentious declaration at the end of all my comments.

BigJim's picture

Why? Again, I will repeat ad nauseum: There is no credibility to be had amongst a group of people that allow vile ignorant hate in their midst. If there was actually *any* sort of effort being made to curb this activity, then that would be a different story.

I see all sorts of comments here at ZH. Sometimes the bigotry is called out, sometimes it isn't. We're not paid internet PC policemen any more than you are, you pompous fuck. If you don't like the comments, reply to them yourself, you lazy bastard.

Maniac Researcher's picture

Your reply belies your attitude regarding my comments:

A) I am calling bigotry out, so your first sentence is a moot point. Feel free to track my comments for clarification [including those on this very thread].

B) the use of the term "PC" clues me in that you do not care to call out bigotry yourself. Perhaps you should familiarize yourself with history of the term "politically correct." It is rhetorical device that was created by individuals who were complaining about being called out on their racism, misogyny, and other various discriminatory attitudes in the first place. You seem like one of them to me.

C) In the light of A and B, you labeling me a "lazy bastard" more accurately applies to you. Thank you, "big jim" for helping display more ironic and hypocritical attitudes available here on ZH.

ImNotARobot's picture

It looks like she may have eaten Eric Holder. 

Oh regional Indian's picture

Everyone of this eating orientation and a healthy sense of humor should see this. Brilliant piece of work.
Rush Limbaugh Eats Everything.

Check out Patrick Farley's work in general. Pure genius.


DaveyJones's picture

can't blame her, he had that Chiquita sticker on him

sabra1's picture

i think she'd rather have had the weiner!

sasebo's picture

Yeah, the last time I saw Eric he had his head up his ass.

bigdumbnugly's picture

yeah she's seen him.

and then i think she ate him.

bigdumbnugly's picture

i was too late to see bastiat thinks so too.

equity_momo's picture

Too busy stuffing twinkies in her piehole by the looks of it.

Bring on the fucking reset  , theres no alternative and id sooner get on with the Brave New World whilst im younger and not a bled out , bitter taxpayer too old to get down with it.

Pick a side bitchez.

Long-John-Silver's picture

Too busy stuffing twinkies in her piehole by the looks of it.


Twinkies are low class junk food for the masses. This person obviously stuffs her mouth with French Bonbons.

chumbawamba's picture

Excuse me, but those would be Freedom Bonbons.

I am Chumbawamba.

Long-John-Silver's picture

The Office of Surgeon General has become a job filled by someone that provided the government a service.

Dr. Gonzo's picture

I'm worried about our Surgeon General. She looks like she could keel over from heart attack or stroke any day.

SilverDosed's picture

I'm sure Michelle Obama's ass is bigger but she can keep pushing that healthy living. Has there ever been a first lady as overweight? She's gotta be pushing 200# by now.

Bicycle Repairman's picture

"Has there ever been a first lady as overweight"

Barbara Bush comes to mind.

schoolsout's picture

My buddy had dinner with her not too long ago, coincidentally.

jiggerjuice's picture

...and? Chainsmoking unfiltered cigarettes while eating ipads?

CH1's picture

And his impressions?

trav7777's picture

she's black...that's all you need to know

chumbawamba's picture

That's "nigger" to you, boy.

I am Chumbawamba.

DaveyJones's picture

be careful, Trav is black too

Cognitive Dissonance's picture

News to me. I thought he was yellow with a white finger up his nose.

chumbawamba's picture

He is in fact white but sometimes he has a little black* in him.

I am Chumbawamba.

* his name is Leroy.

mkkby's picture

My how boring your stupidity has become.  The more shrill you get, the more convinced we all are that you are nothing but a whining loser who desperately craves recognition.

legal eagle's picture

Clearly she is included in the +30 BMI

Fukushima Sam's picture

Looks like she's thinking about eating more corn syrup.