This Is How The Status Quo Unravels

Tyler Durden's picture

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Fragmentation, discord, discontent, class war: this is the inevitable result of a shrinking pie.

The politics of the past 70 years was all about horsetrading who got what share of the growing pie: the "pie" being cheap energy, government revenues and consumption, sales and profits.

Horsetrading over a growing pie is basically fun. There's always a little increase left for the losers, so there is a reason for everyone to cooperate in a broad political consensus.

Horsetrading over a shrinking pie is not fun. Everybody is shrilly demanding their piece of the pie should either grow or be left untouched; any cuts must come out of someone else's slice.

Everyone turns on their most compelling emotion-based defense: "we wuz promised" is a reliable standard, as is "we need more money to defend the nation from the rising threat of XYZ." "Help those in need" plays the heartstrings effectively--as long as the "help" comes out of somebody else's pocket.

Everyone sharpens their knives, the better to carve a slice off somebody else's slice of the pie. A passive-aggressive free-for-all ensues as everyone reacts with aggrieved defensiveness to any attempt to diminish their slice, even as they launch shrill attacks on everyone else's defense.

As the pie shrinks, the motivation to join a broad consensus vanishes like mist in Death Valley. Any cooperation is merely a brief tactical move designed to carve a big chunk off another player's slice. Once that's accomplished, the alliance quickly splinters as the survivors battle over the meager spoils.

Any victory is temporary, as a new alliance will arise to decimate the previous winner. Winners in the zero-sum game of divvying up a shrinking pie merely set themselves up as the juicy target for the next ferocious attack by the resentful losers.

Political survival boils down to masking the cuts behind illusory "victories" and bogus projections of solvency. Some modest policy tweak will be heralded as "saving Social Security," meanwhile the end result is a reduction in the purchasing power of whatever benefits remain.

You may well get "what we wuz promised" but it will only buy 50% of what it did a few years ago, after taxes, inflation and "adjustments" are factored in.

Every compromise will be projected to restore solvency to imploding entitlement programs, but it will all be illusion. In two years, insolvency will rear its ugly head again.

The debts, unfunded liabilities, demographics and diminishing pools of income to tap are beyond policy tweaks and minor cuts. Take a look at these charts to grasp the unwelcome realities: sorry, we can't "grow our way out of debt" because the debts and unfunded liabilities are simply too large and expanding at too fast a rate.

Here's the current federal spending pie: 55% is entitlements and interest. Both of those are set to soar as the populace ages and interest rates rise.

Massive, ever-expanding deficits will push federal debt much higher, pushing interest rates up. Everybody wants to raise taxes on "the rich," but a funny thing happens when tax revenues soar above a threshold--the economy spirals into recession, and employment, profits and tax revenues all plummet, forcing even higher deficits.

Entitlement program deficits are exploding higher, and all the conventional policy fixes are like building sand castles to stop a tsunami.

The problem is global: as we consume the cheap energy, what's left to extract and refine is more expensive, so energy costs rise. As the population ages, entitlements soar. As the "growth fixes everything" model fails under the burden of skyrocketing debts, the harsh reality becomes unavoidable:

We haven't "grown" at all. What we've done is borrow from future generations to create the illusion of growth.

Here's another look at debt: the global bond market has soared from $10 trillion to $100 trillion.

Fragmentation, discord, discontent, class war: this is the inevitable result of a shrinking pie. Our political, social and economic systems have no history or memory of how to navigate this systemic Degrowth successfully. Everyone will blame someone else for the insolvency and failure, and that is not a recipe for successful adaptation.

Here's a taste of what lies ahead:

Welcome to the new dark ages, where only the wealthy can retire

As I always say, don't focus on retiring comfortably; focus on working comfortably.

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LawsofPhysics's picture

Bullshit.  Power and control of real resources/assets is never willingly given up. There will be blood.

hedge/bet accordingly.

hedgeless_horseman's picture

 

Glad I am an experienced horse trader.

HockeyFool's picture

Cut the size of everyone's slice. Start by kicking people off SS, medicare and medicaide that don't deserve to get it. There is a ton of fraudulent claims for all of the above.

Go to a social security office and count how many retired people you see versus fat fucks that haven't worked in years. But could work if they put the twinkies and bong down.

NoDebt's picture

I'm just glad none of this can affect the price of my stawks.

 

Soul Glow's picture

Nobody really deserves it.

Especially the military.

mtl4's picture

The financial story of the markets above is the same as the cycle of the african watering hole..........time to get rid of the nanny state and after that those life giving rains can't come soon enough.

 

 https://www.youtube.com/watch?v=u26z1QRnfwo

MalteseFalcon's picture

Everyone turns on their most compelling emotion-based defense: "we wuz promised" is a reliable standard,

If you are talking about Social security, I believe the defense is "I paid in and if you mess with it you'd better find another career."  No emotion, just a straightforward statement of what it is.

Everyone sharpens their knives, the better to carve a slice off somebody else's slice of the pie.

There will be pie slicing.  The empire and the funds to support empire spring to mind immediately as a piece of pie to be reduced.  America first.

As the pie shrinks, the motivation to join a broad consensus vanishes like mist in Death Valley.

Actually a consensus is forming around Trump.

Any victory is temporary,

If by temporary you mean every three generations or so, I'd have to agree.  The new cycle has just begun BTW.

Political survival boils down to masking the cuts behind illusory "victories" and bogus projections of solvency. Some modest policy tweak will be heralded as "saving Social Security," meanwhile the end result is a reduction in the purchasing power of whatever benefits remain.

This all depends on the ability of the political class to continue BSing Joe six pack.  My gut tells me that those days are over.

You may well get "what we wuz promised" but it will only buy 50% of what it did a few years ago, after taxes, inflation and "adjustments" are factored in.

You're assuming that the happy consensus of the past 70 years remains intact.  A view of history tells me that a consensus that doesn't work, doesn't last.

Every compromise will be projected to restore solvency to imploding entitlement programs, but it will all be illusion. In two years, insolvency will rear its ugly head again.

The era of compromise (worse, actually) is over.

The debts, unfunded liabilities, demographics and diminishing pools of income to tap are beyond policy tweaks and minor cuts. Take a look at these charts to grasp the unwelcome realities: sorry, we can't "grow our way out of debt" because the debts and unfunded liabilities are simply too large and expanding at too fast a rate.

Debt jubilee.  Most of the debt is odious anyway.  Growth won't be necessary to create a more equitable society.

Here's the current federal spending pie: 55% is entitlements and interest. Both of those are set to soar as the populace ages and interest rates rise.

People will need to work or show that they have worked or people get a greatly reduced standard of living.  Debt can be renegotiated or cancelled.  If necessary the Federal government can dip into it's balance sheet.  I wouldn't mind getting a slice of western land.  I guarantee you I'll get more income out of that land than the Feds can.

Massive, ever-expanding deficits will push federal debt much higher, pushing interest rates up. Everybody wants to raise taxes on "the rich," but a funny thing happens when tax revenues soar above a threshold--the economy spirals into recession, and employment, profits and tax revenues all plummet, forcing even higher deficits.

Take the means of production away from the 'rich' and then who cares what they do?

The problem is global: as we consume the cheap energy,

Here we go again: "Peak Oil".  "Sorry kids, you burnt up all the oil in your SUVs, so we're going to have to euthanize you."  Seems fair.

We haven't "grown" at all. What we've done is borrow from future generations to create the illusion of growth.

Clearly we need new people in charge of "growth".  The current ones are incompetent.

Here's a taste of what lies ahead:

Welcome to the new dark ages, where only the wealthy can retire.

The wealthy are going to have to make do with 6 vacation homes instead of 12.  As for the rest of us, those who plan carefully can retire.  Even now.  A comparison of the behavior of the baby boom generation to their parents is quite revealing.  For example, I grew up in a two car family with a 1,000 square foot house.  We were sufficiently happy, and we took pride in our independence.

As I always say, don't focus on retiring comfortably; focus on working comfortably.

Focus a more equitable society and focus on your personal plan.

Anarchyteez's picture

What was Tyler's quote about the great compost heap?

On a long enough time line....

TahoeBilly2012's picture

Rothchild banking hasn't unravelled in a few hundred years, hope springs eternal.

shovelhead's picture

So you're ok with having your money stolen under false pretenses?

hedgeless_horseman's picture

 

No.  

Obviously.  

And I generally expect better rhetoric from you than that weak sauce.  

Neither am I OK with lying to myself that I somehow deserve what is so obviously stolen from others, especially from our children and grandchildren.

Do you think that ponzi scheme investors deserve the returns they were promised?

El Vaquero's picture

"Do you think that ponzi scheme investors deserve the returns they were promised?"

 

Madoff didn't tell people that they'd go to jail for not paying into his Ponzi.  The IRS and Social Security does.  

hedgeless_horseman's picture

 

The tactics and weapons of the thief matter not.

El Vaquero's picture

Just pointing out that people who have paid into Social Security are a bit more deserving of a return than people who were conned by Madoff.  I know enough now to avoid most con men.  I'd have a hard time saying no if somebody had a gun to my head.

 

But, the Ponzi nature of Social Security and the USD itself means that we're all going to get fucked.  Cheers!

hedgeless_horseman's picture

 

Just pointing out that people who have paid into Social Security are a bit more deserving of a return than people who were conned by Madoff.

Why?

Nobody really deserves it.


El Vaquero's picture

If you get a paycheck, you involuntarily pay into the social security fund.  I'm just saying, you should be allowed to get that back.  But you and I both know that isn't going to happen.  

Kayman's picture

With Government taking Social Security monies and spending them (leaving an IOU in the cash box), that leaves those that benefited from the con morally obligated to the intended beneficiaries.

So politicians, the corrupt elite, and government employees should be taxed to death to repay the stolen funds.

Bwana's picture

I hope I get back what I paid into social security for 56 years so far.

hedgeless_horseman's picture

 

They can guarantee you will be paid the amount of USD, just not the purchasing power.

Cat food, granny, it's what's for dinner.

markpower49's picture

For supporting evil such as Obama, the Clintons and the Bush's, Americans deserve to starve in the streets. They don't deserve Trump.

datdude's picture

There are plenty of bong smoking workers out there contributing to the twinkie eaters!

Sonny Brakes's picture

Is that work in the courtroom today and if so could you please identify it?

What we need if more information on all this work that is going undone.

As far as I can tell, unless you've already got a job, it is hard to be seriously considered for a job opening.

Applying for a job is not a simple as showing up with the proper PPE at 7 am ready to put in a solid day's work for a solid day's pay.

Haven't we been having this discussion since forever already?

Put your money where your love is.

therover's picture

There are so many fraudulent claims that it's probably cheaper to keep paying than to pay more people to investigate the fraud.

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) therover Feb 17, 2017 12:16 PM

That is exactly the claim being made by SS and others. I don't believe it. Bureaucrats are dis-incentivized to discover fraud. The nature of bureaucracies is to GROW.

Kayman's picture

Elco

For all the digital growth resulting in quantum leaps in electronic productivity, it is all squandered on government employees doing the circle jerk all day long.

In a world where government office worker heads should be dramatically falling, politics (the left wing votes from government workers) are the dam holding back progress.

Big Hugh's picture

Nevermind that the fucking pie isn't shrinking at all...

A greater and greater share of it is being hoarded and held exempt from excise, but the pie itself is not shrinking, just your piece.

 

What damned fool was it that initiated the idea that the pie could get bigger forever?

StychoKiller's picture

"The surface of a planet is the incorrect place for an expanding, technological civilization." -- R.A. Wilson

LawsofPhysics's picture

Damn straight. Even better to be one with a green thumb and control of productive land.

The Wizard's picture

What needs to be considered when discussing topics of distribution of resources is what resources have been suppressed through manipulation and control. Energy is a perfect example. Had universites been spending 10% of the money given to them by the government and energy companies on advancing Tesla principles of magnetic energy the world wouldn't be wasting so much on oil and coal. Life would be much less expensive. There are many more examples in energy and other fields like medical care where alternative medicine has been around for years.. I just received an interesting video on a medical device. Being a student of Royal Rife's technology I believe these people may be onto something.

 

http://neilkeenan.com/neil-keenan-update-the-revolution-begins-quantum-experts-state-the-healing-computer-stands-in-a-class-of-its-own/

wildbad's picture

I lie some pie but not so much mincemeat

chunga's picture

Financialization and fraud ate all the pies and then some.

Even our unborn grandkid's pies have been rehypothecated!

LawsofPhysics's picture

The U.S. bond market is 37 trillion? fucking wow...

...epic ponzinomics!!!!

Bernie Madoff should be the fucking treasury secretary!!!!

El Vaquero's picture

Those charts understate the debt problem.  Total credit market seurities is up around $60 trillion, and IIRC, the Fed stopped producing that chart a year or so ago.  Start adding in the securitized debt, and the problem is even worse.  And you know as well as I do that relying on total credit market securities to measure total debt in the US is still mark-to-unicorn accounting.  

DontFollowMyAdviceImaDummy's picture

Socialism always fails once they run out of other people's money to spend.

LawsofPhysics's picture

LOL!!!  I don't think you know what that word means.

Totally_Disillusioned's picture

Really?  Some wrongly argue globalism is National Socialism but central banks and elites are not looking to run out of other people's money anytime soon.

LawsofPhysics's picture

The "money" is coming out of NOTHING you stupid fuck (printer/computer)!!

If it really was "other people's money" then real work would have been involved in generating that money!!!!

This is CORPORATISM/FASCISM!!!!!!!!!!!!!!!!

They (central banks and elites) have a printer/computer and YOU don't moron!!!!!

 

LMFAO!!!!!

fucking "devolution" at work.

Anarchyteez's picture

Fucking "devaluation" eminent.

chunga's picture

I don't think a corporate tax cut is gonna go over too well in the general population.

HillaryOdor's picture

"This is CORPORATISM/FASCISM!!!!!!!!!!!!!!!!"

Yes, socialism.  Same thing.  Socialism, corporatism, fascism, state capitalism, crapitalism, communism, etc... all STATISM.  It's all the same thing.  Power brokers sell influence and get rich off of everyone else.  There is not a single system of government where this doesn't happen because government by definition is the illegitimate exercise of undue power.  It's been said many times before; If we as individuals do not possess the authority to act as the government does, then we cannot vest that power into such a body in the first place.  The government is the problem, as it always has been, and unlike some people I do not believe this entity can ever be contained or constrained for long.  It must be totally abolished.  We do not need it, and it does nothing for us.

LawsofPhysics's picture

FAIL. the very definition of socialism is that the people own the productive capacity.

Socialism may devolve to FASCISM/CORPORATISM, yes, but it is NOT the same. In fact, look who OWNS shit now!!!

No matter, such "let the majority eat cake" monetary, social, political, and economic experiments have been tried before, this one will end the same way!

 

Verniercaliper's picture

Get rid of elected government and we'll just end up with corporate government. Inevitable with the current, skewed distribution of incomes. Socialism/statism is everywhere because it works for elites. Difficult to move to a better model as long as high levels of personal wealth are part of the program

LawsofPhysics's picture

Socialism = the people own the productive capacity!!!!   This is NOT the case now.  Socialism can devolve to fascism/corporatism (as the former soviet union demonstrated) and so can capitalism (as america has now demonstrated) when the rule of law is replaced by the rule of men.

As a producer of food, I see honest people/producers being gutted/bankrupted by the corporatist/fascist who control the money. Eventually all producers will simply say "fuck you" and produce for themselves and their private armies. Global fucking Weimar!

Hedge accordingly.

shovelhead's picture

So the stock market is socialism?

That's where the people own the means of production.