Wednesday, August 26, 2009

Uncle Gregor Samsam

One morning, when Uncle Gregor Samsam woke from troubled dreams, he found himself denuded of all his weapons and munitions. His vast armies were no longer in uniform and did not acknowledge or follow any of his orders. His own currency, which he used to buy a huge array of imports and maintain an enviable lifestyle, was no longer accepted by his trading partners who, instead, demanded valuable goods in exchange.

"What's happened to me?" he thought. It wasn't a dream...

Gregor Samsa by Migvel Tepes

The illusion of global power can become a "Metamorphosis" of harsh reality very quickly, indeed. Just ponder the abrupt extinction of The Bug, genus Sovieticus and the collapse of its associated aphids, once crawling madly about its anthill.

And presently we have come to an extremely difficult choice for Messrs. Obama and Bernanke: Should they (a) quickly restore fiscal and monetary sanity, albeit at the cost of prolonging the economic contraction and its deflationary pressures, or should they (b) continue to pump "air" dollars (windhandel) into a world that is increasingly questioning their worth as a global storehouse of value?

This is no small matter, for it is the ability to issue readily accepted dollars into the global economy that has allowed the United States to maintain its empire and a very high living standard, despite astonishingly foolish behavior from its leaders. This became very clear during the eight years of the Bush II administration, with such astonishing pronouncements as: you're either with us or against us, go shopping, etc. The world did not completely disavow the dollar then because it believed that Americans would eventually see their error and shift to a more rational course*. Perhaps that's another reason why Mr. Obama was greeted with enthusiasm and hope from the entire world, financiers included.

The time has come for us to show the world that we mean business, that we mean to put our actions where our (very big) mouths are and to keep our promise that we shall make good on the flood of IOUs we so recently issued. I, for one, would rather see a policy of radically shifting our economy towards the German or Danish model, with all the associated pain this would entail for the present generation, rather than bequeathing my children with the ruins of a collapsed Dollar Empire.

The time to act is now and the way forward is known: get as far away as possible from debt-induced maxi-consumerism and, instead, save to invest in a rationally sustainable economy. Create alternative energy sources and networks, transportation systems, organic/responsible farming, arrest environmental destruction.

Otherwise, I fear, choice (b) may result in a Kafkaesque nation: Amerika.

* "You can always trust the Americans. In the end they will do the right thing, once they have exhausted all the other possibilities." Winston Churchill.


  1. as if you would bequeath your children dollars....

  2. That's awesome Jennifer! Maybe you should forward that to our treasury secretary Geithner. Uncle Sam sure could use a 58% debt reduction.
    The current debt will most likely build for another 10 years or so before the most stubborn fools will reject Dollar denominated IOUs. Eventually only the FED will be left as buyer of last resort.
    The current debt can not and will not be paid back, it's really as simple as that. It is just a question as to how long we can fool others into believing we will pay it back.

  3. We are living already in Amerika

  4. It's nice to hope but it ain't gonna happen. Obama is pushing hard for the national healthcare boondoggle, like we have the capital to implement it.

    That, right there, should be sufficient evidence the USD/US Empire is a dead pair walking.

    Joe M.

  5. I would say that this post will mark the dollar bottom :)

  6. Greenie,

    You are being facetious, right????

  7. I agree with Greenie: When everyone knows the dollar is toast, the bottom is in or nearly in. It's time to sell some of your gold and gold stocks.

  8. Well, Hell, I find it rather interesting that you are starting to talk more and more in parables, just like another one of my great models...
    Don't go into TOO many explanations afterwards, that spoils the effect, and the fun.
    Jennifer is getting a little annoying, particularly as "she" is probably NOT Jennifer at all, as we know.
    I have no satisfaction whatsover in proclaiming "I told you so" about Barack Obama for whom I did NOT vote. (Last time voting in/for the mère patrie for Ralph Nader ? That I can stomach... )
    The U.S. empire is ALREADY dead. It's only going through the motions now. Sorry, Barack.
    Really, our leaders have no FAITH that the U.S. debt will be repaid. They just... have no imagination for what could come next, that's all. And they don't know what to do with all the nonexistant virtual loot/debt/ numbers.
    Unlike many small local initiatives that are doing just fine, thank you, with people honest to God working, and getting things done.
    Having your eyes constantly fixed on the BIG picture keeps you from seeing what's going on at the SMALL level.
    And Hell, I certainly hope that my utopism is not going to get all SPOILED by some green energy bubble on the near horizon. That would be terrible.

  9. Reason, rational, rationalizing...
    Just how many of those words refer to REAL THINKING ?
    Man is not a rational animal. Trying to make believe that he is/could be/should be is very... IRRATIONAL too.

  10. Well, I see Hell is finally singing my tune.

    To all you would be contrarians, the dollar may indeed have a rebound, (though it's not my bet) but regardless, make no mistake, the greenback is a currency well on its way to reverting to its intrinsic value which is zero.
    No fiscal discipline will be enacted to save it.

    Pure fiat currencies, of which the dollar is one, (Nixon closed the international gold window in August 1971, and FDR confiscated domestic gold in 1933) don't last for very long before they disintegrate. The reasons should be obvious.

    We are now getting very close to the logical and most unpleasant end of a process that began with the advent of The Federal Reserve Bank in 1913, and has continued apace with the aforesaid "fiat" actions of the 30s and 70s. It is worth noting that both political parties have been fully involved in furthering this lamentable trend.

    The time to start "diversifying" out of dollar denominated assets has long since passed, but it is far from too late to take prophylactic action against the inevitable sharp markdown in the purchasing power of the world's reserve currency.

    It should go without saying that diversifying into other fiats is not the way forward.

  11. I am long the buck but do not think we are at the bottom, not by a long shot.

    I am looking for a decent bounce this fall as stock markets correct, followed by another plunge to new lows in 2010.

  12. Well Edwardo, I certainly am not a contrarian on this blog, but I'm rather interested in the fact that you guys STILL seem to be reasoning as though the Mère Patrie were empire, that is to say, without taking into account the international scene.
    The dollar is not the ONLY fiat currency out there which is free floating, connected to nothing, with no future, etc.
    The Euro is another one. In fact, it looks like (unless I'm mistaken, and I could well be...) ALL the currencies of the modern nation states, aping the behavior of the U.S. government, are in the same boat.
    So... just what does THAT mean ?
    Who's gonna be picking up the pieces if EVERYBODY is vulnerable in this one ?

  13. A bit theatrical Hell?

    The strength of a country comes from the strengths of its peoples and their ability to cooperate (like any good football club, it is all about the quality of its players and their ability to play well together). It is/has and always will be about teams and cooperation, plane and simple. The rest is just advertising.

    So whether America's currency collapses or not (I tend to think both Edwardo/Joe and Greenie have a point on this issue), knowing many Americans and being one myself, America is going no where in either the near or long term unless we all do something stupid as a species like nuke ourselves to oblivion.

    And America will still going no where even if a colossal environmental tragedy of the commons happens; something that would be truly tragic.

    "a sucker is born every minute"
    - attributed to P.T. Barnum (amongst others) by some

  14. What is the real stand-out power of this empire in historical context? Military, and when times get tough pain increases, and the reaction to pain is aggression.

    When dollars are not accepted, "protection" will be the value we export.

  15. Amerika has been exporting "protection" for some time now. But I agree there is yet a large untapped market for Amerikan "protection". Hell even the Chinese might want some. They let the British "protect" them.

  16. The problem with the Kubler Ross model, like the problem with Freud's model for describing the grieving process, is that human behavior can't be sequenced the way she seems to think : we are constantly reactivating behavior from different periods in our past, we don't go THROUGH experiences to ACHIEVE any pie in the sky ideal of "acceptance".
    Personally, I rather favor Dylan Thomas :
    Do not go gentle into that good night
    Rage, rage against the dying of the light.

    That said, confronting one's mortality on an individual basis is not quite the same thing as collectively coming to terms with the end of empire.

    Freud sketched out the pertinent question in his excellent 3 page article on negativity : CAN we construct a collective/individual identity without setting up an exterior third party as an enemy ?
    Possible, or not ?
    I hope so. IF we tone down our collective hubris.

    I rather dislike the perspective of the U.S. military becoming the world's mercenaries. Yuckky. What a fate. That would be a SEVERE humiliation.
    Just like one of those bouncers in the chic department stores... You know who THEY are, and what they're worth in the social body's eyes.

  17. Your suggestions are all well and good but would be met by those on the right as part of a global conspiracy by environmentalists to trick us into pursuing green technology. Organic farming? But recent articles suggest organic food has no nutritional value and is only eaten by snobbish hipsters. Invest in infrastructure? A waste of money, we don't have any money to spend! Don't raise our taxes! Don't give us healthcare for all! Don't tread on me....etc etc.
    I'd love to see our country embrace your suggestions, but there is a loud group that would resist.
    As for saving money, it would be easier to do if interest rates on savings accounts or CDs were higher, wouldn't it? Seems like it would go a long way towards encouraging everyone to save. Do you see interest rates going up anytime soon?

    ps. Love the greenback entry!

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