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  • From: bob ford <bobford79 AT yahoo.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] Kuntsler , new commentary, super-inflation
  • Date: Fri, 28 Nov 2008 02:54:44 -0800 (PST)

I don't consider Kunstler predictions with the same regard as someone like
Peter Schiff; simply because Schiff's calls have been timely and correct, and
Kuntsler's still have , yet, to be fulfilled.

But, he is very bright and does have quite a following, and, who knows, if
his new projection of super inflation might be correct. It falls right in
line with Schiff, Sinlair, Ron Paul, et al.

If you are not familiar with Kuntlser, he believes that, soon, travel will
almost cease to exist, which I find wild-eyed; but; he always makes a good
case...................


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Zombie Economics: Super-inflation snap-back will occur six to eighteen
months from now


By James Kunstler




(Kunstler) -- Though Citicorp is deemed too big to fail, it's hardly
reassuring to know that it's been allowed to sink its fangs into the Mother
Zombie that the US Treasury has become and sucked out a multi-billion dollar
dose of embalming fluid so it can go on pretending to be a bank for a while
longer. I employ this somewhat clunky metaphor to point out that the US
Government is no more solvent than the financial zombies it is keeping on
walking-dead support. And so this serial mummery of weekend bailout schemes
is as much of a fraud and a swindle as the algorithm-derived-securities
shenanigans that induced the disease of bank zombification in the first
place. The main question it raises is whether, eventually, the creation of
evermore zombified US dollars will exceed the amount of previously-created US
dollars now vanishing into oblivion through compressive debt deflation.

My guess, given the usual time-lag factor, is that the super-inflation
snap-back will occur six to eighteen months from now. And the main result of
all this will be our inability to buy the imported oil that comprises
two-thirds of the oil we require to keep WalMart and Walt Disney World
running. At some point, then, in the early months of the Obama
administration, we'll learn that "change" is not a set of mere lifestyle
choices but a wrenching transition away from all our familiar and comfortable
habits into a stark and rigorous new economic landscape.

The credit economy is dead and the dead credit residue of that dead economy
is going where dead things go. It came into the world as "money" and it is
going out of this world as a death-dealing disease, and we're not going to
get over this disease until we stop generating additional zombie money out of
no productive activity whatsoever. The campaign to sustain the unsustainable
is, besides war, the greatest pitfall this society can stumble into. It
represents a squandering of our remaining scant resources and can only
produce the kind of extreme political disappointment that wrecks nations and
leads to major conflicts between them. I don't know how much Mr. Obama buys
into the current adopt-a-zombie program -- his Treasury designee Timothy
Geithner was apparently in on this weekend's Citicorp deal -- but the
President would be wise to steer clear of whatever the walking dead in the
Bush corner are still up to.

All the activities based on getting something-for-nothing are dead or dying
now, in particular buying houses and cars on credit and so it should not be a
surprise that the two major victims are the housing and car industries.
Notice, by the way, that these are the two major ingredients of an economy
based on building suburban sprawl. That's over, too. We're done building it
and the stuff we've already built is destined to loose both money value and
usefulness as the wrenching transition goes forward.

All this obviously begs the question: what kind of economy are we going to
live in if the old one is toast? Well, it's also pretty obvious that it will
have to be based on activities productively aimed at keeping human beings
alive in an ecology that has a future. Once you grasp this, you will see that
there is no reason to despair and more than enough for all of us to do, so we
can recover from the zombie nation disease and get on with the next chapter
of American history -- and I sure hope that Mr. Obama will get with the new
program.

To be specific about this new economy, we're going to have to make things
again, and raise things out of the earth, locally, and trade these things for
money of some kind that we earn through our own productive activities. Don't
make the mistake of thinking this is optional. The only other option is to go
through a violent sociopolitical convulsion. We ought to know from prior
examples in world history that this is not a desirable experience. So, to
avoid that, we really have to put our shoulders to the wheel and get to work
on things that matter, and do it at a scale that is consistent with what the
world really has to offer right now, especially in terms of available energy.

In my view -- and I know this is controversial -- a much larger proportion of
the US population will have to be employed in growing the food we eat. There
are many ways of arranging this, some more fair than others, and I hope the
better angels of our nature steer us in the direction of fairness and
justice. The prospects of a devalued dollar imply that we very shortly will
not be able to get the all the oil-and-gas based "inputs" that have made
petro-agriculture possible the past century. The consequences of this are so
unthinkable that we have not been thinking about it. And, of course, the
further implications of current land-use allocation, and the property
ownership issues entailed, suggests formidable difficulties in re-arranging
the farming sector. The sooner we face all this, the better.

As the fiesta of "globalism" (Tom Friedman-style) draws to a close -- another
consequence of currency problems -- we'll have to figure out how to make
things in this country again. We will not be manufacturing things at the
scale, or in the manner, we were used to in, say, 1962. We'll have to do it
far more modestly, using much more meager amounts of energy than we did in
the past. My guess is that we will get the electricity for doing this mostly
from water. It may actually be too late -- from a remaining capital resources
point-of-view -- to ramp up a new phase of the nuclear power industry (and
there are plenty of arguments from the practical and economic to the ethical
against it). But we have to hold a public discussion about it, if only to
clear the air and get on with other things, namely the new activites of
alt.energy. But I would hasten to warn readers (again!) that we'll probably
have to do these things more modestly too (don't count on giant
wind "farms"), and that we are liable to be disappointed by what they can
actually provide for us (don't expect to run WalMart on wind, solar,
algae-fuels, etc).

In any case, we're not going back to a "consumer" economy. We're heading into
a hard work economy in which people derive their pleasures and gratification
more traditionally -- mainly through the company of their fellow human beings
(which is saying a lot, for those of you who have forgotten what that's
about). Our current investments in "education" -- i.e. training people to
become marketing executives for chain stores -- will delude Americans for a
while about what kind of work is really available. But before long, the
younger adults will realize that there are enormous opportunities for them in
a new and very different economy. We will still have commerce -- even if it's
not the K-Mart blue-light-special variety -- and the coming generation will
have to rebuild all the local, multi-layered networks of commercial
inter-dependency that were destroyed by the rise of the chain stores. In
short, get ready for local business. It will surely be
part-and-parcel of our local food-growing and manufacturing activities.

I hate to keep harping on this -- but since nobody else is really talking
about it, at least in the organs of public discussion, the job is left to me
-- we have to get cracking on the revival of the railroad system in this
country, if we expect to remain a united country. This is such a no-brainer
that the absence of any talk about it is a prime symptom of the zombie
disease that has eaten away our brains. Automobiles (the way we use them) and
airplanes are utterly dependent on liquid hydrocarbon fuels, and you can be
certain we'll have trouble getting them. You can run trains by other means --
electricity being state-of-the-art in those parts of the world that do it
most successfully. I know that California just voted to create a high-speed
rail link between Los Angeles and San Francisco. It's an optimistic sign, but
it shows more than a little techno-grandiose over-reach. High speed rail
would require a mega-expensive re-do of the tracks. We need to
scale our ambitions for this more realistically. California (and every other
region of America) would benefit much more from normal-speed trains running
every hour on the hour on tracks that already exist than from a
mega-expensive, grandiose sci-fi program that might not get built for ten
years. The dregs of the Big Three automakers can and should be reorganized to
produce the rolling stock for a revived railroad system.

Even amidst the financial carnage underway right now, the public is enjoying
a respite from high-priced gasoline, but it is due to be short-lived. As I've
already said, we are in danger not just of oil prices going way back up
again, but of losing access to our supplies from the exporting countries. In
other words, we're just as likely to face shortages as high prices, and soon.
Oil shortages are certain to produce a political freak-out here unless we get
our heads screwed on right -- and this means that Mr. Obama had better
prepare quickly for a comprehensive action plan in the face of such an
emergency (which has to include a robust public information initiative).

In the meantime, Mr. Obama must dissociate himself from all activities aimed
at the care-and-feeding of zombies. Mr. Obama is correct that there is one
president and one government at a time, and since this is the case in
reality, he must avoid being contaminated by the choices they make as their
clock ticks out. Obviously, world markets might be more disturbed if Mr.
Obama were to step up and actively contradict everything that is being done
to cultivate zombies right now. He is in a very delicate position. But being
a man of intelligence and sensibility, he may successfully navigate this
rough passage.

That this melt-down is building straight into the Christmas holidays is one
of those accidents of history that leaves one reeling in wonder and nausea.
The cable networks better be prepared to bombard the public with
round-the-clock showings of It's A Wonderful Life, because they're going to
need all the moral support they can get as zombies stalk through the silent
night, holy night.









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