The War for Stuff

Rex Weyler

I don’t like to think about it either. The war that’s going on. Not the war going on in Syria, or Iraq. Not the war in Ukraine, Nigeria, Afghanistan, Chad, Somalia, Pakistan, or Kashmir. Not the war in Mexico or Columbia, Turkey, Maghreb, or Darfur. But, you know: the big war.The war that never stops. The war, that gives birth to all the other wars.

That war started 5,000 years ago, at the dawn of great empires, and has always been about greed, about seizing somebody else’s trees, farmland, or oil, their fish, their markets, their currency. The perpetual war, financed by emperors, bankers, and oligarchs, orchestrated to enrich the rich. That war.

That war arises from fear and delusions of power, and leads to consumption, waste, and extravagance. That war is growing more desperate in our era, because the centuries of consumption, waste, and extravagance have depleted the best of Earth’s bounty. Humans took the best forests first, the biggest fish, richest soil, cheapest oil, easiest copper, and the most available fresh water. Humanity tossed its garbage away in the most convenient dumps, landfill, rivers, ocean, and atmosphere.

If you wonder why the global economy appears an historic malaise, consider that the best or easiest of every critical material has already been extracted. Since there is no genuine resource boom anywhere (the fracking “boom” is an illusion of debt and fast depletion), the super-rich have turned to  derivative trades, credit swaps, stock plays, swindles, weapons making, and military contracting. None of this creates real wealth.  

The US Federal Reserve is a private bank, owned by international bankers, that possesses the monopoly to create U.S. money. Since the financial collapse of 2009, the bank has created trillions of dollars to bail out and fund faltering businesses. Corporations used the free money to buy their own stocks, fatten their net worth, and boost the US stock markets, but this “growth” was an illusion. Faced with mounting debt, crashing international markets, and national defaults in Europe, the bankers lost their nerve. In the fall of 2015, they backed away from a previously announced 1/4-percent interest rate hike, after seven years of near-zero interest intended to revive U.S. economy.

One may fairly wonder: Who cares? And what does a 1/4-percent interest have to do with the state of the world?

Money is something quite distinct from real wealth: water, soil, fish, forests, and productive ecosystems. Money in our modern world is ephemeral, based on faith, hyped like snake oil, and relentlessly eroding in value as banks print more. Central Banks — US Federal Reserve, People’s Bank of China, Bank of Japan, and the European Central Bank — create money from thin air, based on nothing real. Pumping paper currency into an economy enriches bankers and corporate insiders, but lowers the currency value, punishes wage earners, and sets the economy up for a fall.

When paper currency first appeared in China a millennium ago, money represented a receipt for something real — gold, silver, livestock, wheat — held by someone for the owner. But when bankers realized they could write receipts without actually holding the goods, everything changed. The scams began. Roman bankers reduced the silver in their coins, eventually to zero. Two thousand years later, Enron Corporation shuffled assets and liabilities through shell companies and sold the bogus stocks to their victims. From 17th century tulip bulbs to modern mortgage-backed security derivatives, without the real wealth of a productive ecosystem, the global economy becomes a giant Ponzi scheme.

Since the economic collapse of 2008, world banks have created some 10-trillion dollars (Euros, Yuan, Rubbles, etc.) and loaned this money to governments and corporations. Debt-based currency is fake energy. Bankers, governments, and most people, want their economies to grow, so if an economy won’t grow, bankers reduce interest rates to make the fake energy cheaper to borrow. But what happens when economies become so sluggish that interest rates drop to zero, and still the economy won’t respond? There is a dark side to this game.

Once interest rates hit zero, bankers and governments lose their primary tool to stimulate the economy. The US government debt now stands at over $19-trillion, so even a meagre 1/4-percent would mean $45-billion more, annually draining from US public coffers to the banks. The bankers would love to get this money, but they fear crashing the economy and exposing the ephemeral nature of their overvalued currencies and stocks. The U.S. Federal Reserve Bank is now stuck in this trap, unable to raise the prime rate a quarter-percent above zero. The banks have lost control. The economy will not behave as their theories had predicted.  The greatest error in industrial economic theory — capitalist and socialist — is that they failed to account for Earth’s contribution, conditions, and limits. 

A thought experiment

In the fifteenth century, European aristocrats — experiencing land and resource constraints at home — gained access to the western hemisphere, Africa, and the South Pacific, which they viewed as resources colonies. In 1667, British King Charles II granted to his cousin Prince Rupert sole rights to some five million square kilometres of North America, which of course he presumed to confiscate from the Inuit, Naskapi, Cree, Ojibwa, and other nations, who lived there. The charter’s language provides a vivid account of the wealth that these oligarchs coveted:

“We have given … all those Seas Bayes Lakes Rivers Creekes and Soundes … Lands and Territoriyes … with the Fishing of all Sortes of Fish Whales Sturgions and all other Royall Fishes … and all Mynes Royall … Gold Silver Gemms and pretious Stones …” 

Like all colonizers before them, they wanted the stuff. Charles and Rupert raised investment for ships, and their first haul of pelts from Hudson’s Bay fetched £1,380  in London (£3 million in modern currency). The European occupation of the Western Hemisphere, Africa, and the south Pacific was not a campaign for democracy, “progress,” or religious freedom; it was a conquest for plunder. Twice in history the human population growth rate turned negative: During the Eurasian epidemics in the last days of Roman imperialism, and again during the genocide and occupation of the Western Hemisphere.

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European oligarchs grew extremely rich from the looting, which has not ceased. At the most fundamental level, the last three centuries of Western economic “growth” was made possible by plundering the wealth of the Western Hemisphere, Africa, the oceans, and the rest of Earth’s biophysical stores. That orgy is now over. The virgin forests, ocean bounty, and mineral bonanzas that enriched the global elite are depleted or gone.

So here is the thought experiment: Imagine that humans could find another pool of resources comparable to the Western Hemisphere, a new continent, islands, and oceans. You might imagine harvesting a productive, Earth-like planet. If the industrial economists could lay claim to a new productive ecosystem, there would be no stock market malaise or hand-wringing over a quarter-percent of interest. Borrowing rates and stock markets would soar in a massive competition among Exxon, Cargill, Gazprom, Sinopec, and other corporate monsters, to exploit the new storehouse. Investors would swarm to get in line for the bonanza. The pundits would praise the brilliance of entrepreneurs and capitalism.

However, there is no new continent to discover or ocean to plunder. There is no accessible new planet to scour. We’ve reached Earth’s limits, and we have to make human economies work here.

New technology does not save us from these realities. Since the 1987 Bruntland Report and 1992 Rio summit, faced with life on a depleted Earth, market economists have placed  great hope in “sustainable growth,” the notion that economic growth can be “decoupled” from ecological impact. However, none of this “decoupling” has actually occurred. Remember when computers were going to save paper? Computers actually helped increase paper consumption by six-times, from about 50 million tons annually in 1950 to 300 million tons today. Meanwhile, we lost 600 million hectares of forest, human population has tripled, and we’ve changed Earth’s climate by leveling forests and burning hydrocarbons. During this computer era, industrial productivity growth — the measure of return on materials, energy, and time — has declined by fifty percent. What happened to all the “efficiency?” 

Ingenuity does not create materials or energy. Ingenuity helps us plunder Earth more quickly. Efficiency doesn’t save us. Historically, when humans became more efficient with a resource, they used more of it, not less (see Jevon’s paradox and the Rebound Effect.) Fancy batteries that require a massive mining industry and leave a trail of waste, are not energy sources; batteries are energy sinks. New technologies can make life more pleasant, entertaining, and efficient for those who can afford them, but new technology does not solve humanity’s challenge to live within Earth’s capacity. That requires modesty and contraction.

Overshoot

During the 2015 financial collapse, investment advisor Monty Guild told his subscribers, “Panic over Chinese stock markets and the Chinese economy is irrational… With U.S. economic fundamentals continuing to strengthen, we … view the current correction [as] a buying opportunity.”

This is cheerleading for a doomed paradigm, the eternal promise of  “growth,” a modern version of insisting in the 16th century that the Sun circled a stationary Earth. Real fundamentals are not “job growth” or “low inflation,” and certainly not the tortured statistical versions fed to the public by governments and stock salesmen. The real fundamentals of economy are found in ecology.

Economy requires a living Earth, powered entirely by sunlight, that provides materials, energy, and nutrients, the trees, fish, water, metals, minerals, and soil.

Hydrocarbons represent 500-million years of stored sunlight, and industrial humanity has burned through the best half of that storehouse in a century, using Earth’s atmosphere as our waste dump for carbon dioxide. With cheap energy stores depleted, bankers and stock promoters attempt to sustain the growth delusion with debt, with fake energy. However, investment advisors now warn clients that they should prepare for a “low return world,” for a while, until growth recovers. Biological and physical reality suggests that we exist in a low return world forever, based on the rate at which plants, windmills, and solar panels can transform solar energy into biomass and electrical energy.

Every global economy on Earth is now resource-constrained. Forests have been reduced by half, fish and marine mammals depleted, and fresh water, soil fertility, and essential phosphorus stores depleted. We have been warned.

Simplicity and modesty appear in every spiritual tradition on Earth, and for very good reasons. Babylon fell into its own depleted soils. Thomas Malthus (who was not wrong) warned of the coming clash between growth and a finite Earth over a century ago. “Limits to Growth,” by Donella Meadows and colleagues, published in 1972, and confirmed in scores of updated reviews, warned of surging consumption in a dwindling biosphere. William Catton published Overshoot, explaining this crisis in clear language, 35 years ago. In 2009, Nature journal published “Planetary Boundaries” by Earth systems scientist Johan Rockström and colleagues, showing that human activity has pushed seven essential systems – biodiversity, temperature, ocean acidification, nitrogen and phosphorus cycles, land use, fresh water, and ozone depletion – near or beyond critical tipping points. In 2012, Nature published “Approaching a State Shift in Earth’s Biosphere,” by 22 international scientists warning that human sprawl and consumption could “transform Earth rapidly and irreversibly into a state unknown in human experience.” William Rees, at the University of British Columbia, created the “ecological footprint” analysis to measure human impact compared to Earth’s capacity, and summarized the results in “The Way Forward” in Solutions Journal in 2012: “A virtual tsunami of evidence suggests that the global community is living beyond its ecological means… by about 50 percent.”

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How much evidence do we need? Disappearing species, forests, and soil? Melting glaciers and expanding deserts? A billion hungry humans and nine million starving to death annually?

The Quads are Coming

The faltering modern economies are not entirely unique in human experience. All dominant empires and economies in history have collapsed, typically following ecosystem collapse, as witnessed in Mesopotamia, Assyria, Maya, and so forth. There are no wheat fields on depleted soil, and there is no industrial growth on a depleted Earth.

Since the year 2000, to prop up financial markets with fake energy, the global consolidated debt grew from about $87-trillion to over $200-trillion today (McKinsey). Bankers make trillions from this debt, but the world is not any richer or better off.

Private investors and pension fund managers, chased this fake growth, by buying into the stock markets, creating a massive financial bubble, but an entire year of wealth growth vanished during a few days in 2009, and again in 2015, when some three trillion Euros (dollars, yuan, rubles, yen) of speculative wealth simply disappeared overnight, returning into the thin air from which it had been conjured. And the bloodletting is far from over. The “big one” growls in the shadows, and even the swindlers know it is coming.

Insiders and a few clever investors make a lot of money during a financial bubble, but the global economy does not get any richer, and when the financial bubble bursts, the gullible lose, but the insiders have long since moved on to new schemes. When the insiders get caught still holding the fake assets, as they did in 2009, they demand to be “bailed out” by the citizens, “to avoid a worse catastrophe.” In our modern resource-constrained world, the stock markets have grown less about investing or allocating available funds, and more about gambling. The stock markets resemble a giant casino, where insiders always win, a few lucky or clever players may win occasionally, but most players lose. The net flow of cash in global markets is to the wealthiest players.

Atop this house of cards sits a “derivatives” market worth an estimated — and completely presumptuous — quadrillion US dollars! Just when we’re getting our heads around “trillions,” here come the quads. This massive figure — a million-billion dollars or Euros or Yuan, representing $140,000 from every single person on Earth — does not reflect economic growth; it reflects economic inflation, speculation, and debt.

Derivatives are naked bets. They have nothing to do with “investing” in worthy enterprises or stimulating economies. Derivatives allow super-rich casino patrons to bet for or against certain rates, indices, or the likelihood that Greece or Japan will default next. Meanwhile, this entire casino game rests on the delusion that human enterprise can continue to grow forever on a finite Earth.

That big war — the war to possess, to consume, to use up the Earth — will eventually discover that there is nothing left to fight over. Humanity, or what endures of humanity will one day return home to a place on the Earth.

The delusion of limitless consumption is fading as surely as the belief in a flat Earth faded five centuries ago. The time has long since arrived whereby growth economics may be tossed into the recycling bin. Real economy will be driven by solar income, and real economists will help restore and protect our one and only Earth.

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Notes, References:

1. Anthony D. Barnosky, et. al., “Approaching a state shift in Earth’s biosphere,” Nature, v. 486, June 7, 2012.

2. William Rees, “The Way Forward: Survival 2100,” Solutions, v. 3, #3, June 2012.

3. William Catton, Overshoot: the ecological basis of revolutionary change; University of Illinois Press; 1982.

4. Howard Odum,”Energy, Ecology, & Economics,” 1974, Mother Earth News. 

5. Herman Daly, Steady State Economics; first edition, 1977; new addition, Island Press, 1991.

6. C. Hall and K. Klitgaard, Energy and the Wealth of Nations, Springer, 2011

7. Gail Tverberg, Our Finite World, “Low Oil Prices – Why Worry”: a good analysis of economy, vital commodities, and the current global recession.

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