Growth is a Zombie
(aka: Le Ambassador on g+)
Governments, politicians and policy makers are always striving to maximise economic growth in the mistaken belief that this somehow translates into a better standard of living for the general population. But the dire state of the economy prevailing now is clear evidence in itself that this policy of attempting to stimulate perpetual growth simply hasn’t worked.
“The economic model that generated the longest period of uninterrupted rapid growth in our history is bust”. Robert Peston
For the past thirty years since the early 1980’s, developed countries in the west (including the UK) have over-indulged in a party of rampant consumerism and debt-fuelled consumer spending. Even though incomes were falling in real terms consumers felt better off because of the housing bubble and the rising prices of their homes. People felt rich and went on a spending spree with their equity.
Deregulation allowed the banks a free reign to gear up lending to unprecedented levels by engaging in one of history’s biggest fraud schemes. Big banks such as Lehman Brothers and Goldman Sachs packaged up mortgage backed securities (very dangerous and toxic sub-prime loans) as triple ‘A’ investments (knowing they were toxic) and then sold them to state pensions, foreign governments and banks.
The party ended when it all came crashing down in 2008.
Yet the politicians, economists and mainstream media continually promote the concept of ‘growth’. They talk about the speed and intensity of ‘recovery’ in an attempt to quantify it. They’ve been doing it since the beginning of the economic collapse three years ago. Are we in recovery? As we shall see, no, we most certainly are not.
It is now more than three years since the so-called ‘credit crunch’ heralded the beginning of the end of our economic paradigm in March 2009. Since then the crisis has been evolving and mutating with a series of phases which can be identified:
1) The Housing Crisis. It all started when the US housing bubble burst as a result of the bank practices outlined above. This spread throughout the developed world like a wild fire.
2) The Financial Crisis. In the second phase we witnessed the global bank collapse, heralded by the collapse of Lehman Brothers. Nothing was learned from this. Incredibly the same old practices are still going on. As a result of this, the next collapse will be terminal.
3) The Sovereign Debt Crisis. Having bailed out the banks, Governments, like rabbits in the headlights, are realising they have spent and borrowed way beyond their means. This is now leading to defaults on a National scale, which has started with Greece, and will continue like a cancer throughout the rest of the developed world.
4) The Age of Austerity. The fourth phase of the crisis is a full-scale assault on social spending via Government cutbacks. Welcome to the age of Austerity. Having used our money to bail out the banks and default on loans, governments are now about to start hitting us with the bill. In an article in the Guardian in March, 2011, Mervyn King (Governor of the Bank of England) blamed forthcoming spending cuts on the bank bailouts, stating:
“The price of this financial crisis is being borne by people who absolutely did not cause it”.
5) The Global Slump. Deflationary depression on a global scale. This is likely to last at least a generation or more. Afterwards, there can be no return to debt-fuelled capitalism in the west. The current system as we know it will have altered forever.
The Governments and mainstream media also talk incessantly about inflation. They dare not mention the ‘D’ word: Deflation. But in my view this is actually their real fear, and so it should be, because it is becoming a reality. In fact we are heading out of the proverbial stagflation frying-pan and into the deflationary fire towards a deflationary depression which will be global in scope.
For too long governments have been blindly following economic models that have now been proven to be seriously flawed.
In economics, the majority are always wrong. Less protectively, contemporary “economists” lie because the whole, purposed lie of usury and unearned taking is unsustainable in any practical implementation, and because therefore, no intelligent public would ever assent to the dispossession and usurpation which the lies are designed to impose upon them. Thus the study of “money,” above all other fields, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. John Kenneth Galbraith
In his book “Eve of the Apocalypse”, Michael Bond outlines why economic growth is unsustainable:
“The design of the global economy demands that by 2019 the economy will be twice the size it was in 2000. At its present rate of growth, by 2059 the global economy will be ten times its 2000 size. But Earth cannot sustainably support a global economy the size it was in 2000.
Even if the economy slid along at a minimal 3% growth it would still be 10 times its 2000 size by the year 2080. So in order to survive, the global economy is compelled to keep growing like a cancer, at an unsustainable rate that will kill its host. This self-destructive design is a direct result of the flaw in the global money system.”
Corporations and politicians are blindly assuming that global resources are infinite. The second reason growth is unsustainable is because it is linked to the illusion that sustainable prosperity could be built on debt. Michael Bond goes on to say:
“The second problem stems from the fact that in order to sustain 4% annual economic growth, global debt must increase at about 10% annually. Because it is annual growth, this means it is exponential rather than mathematical growth.
Because global debt increases exponentially 6% faster than the global economy, debt will quickly smother the economy by demanding its entire output merely in interest payments.
The figures of 4% economic growth and 10% debt growth are about the same for the entire global economy. The Global Economy is on course to collapse well before 2030 due to a looming global inability to repay annual interest. The reason why debt outpaces economic growth stems from a fault in the global money supply”.
The UK has now officially returned to recession having double-dipped to negative growth in both the 4th quarter of 2011 and the 1st quarter of 2012 (-0.2% GDP).
Why is it that governments have a propensity to make the same mistakes over and over again and still expect a different outcome? This is the definition of insanity. I think it is more to do with greed and self-interest. Their actions are not commensurate with what the people of a nation actually need, but rather what they (the politicians) themselves want to suit their own agendas.
Having been bailed out with those not insubstantial sums, the banks have continued to award themselves bonuses. For example, the now state owned RBS recently announced losses of almost £1 billion. Perhaps if the bank’s executives had refrained from awarding themselves bonuses of around the same amount of losses (approx. £1 billion) the bank would have at least broken even. Alas, corruption and greed is still crippling our system.
The Chancellor George Osborne has augmented other measures by introducing austerity cutbacks aimed mainly at the poorest in society such as those on disability benefits and pensioners. At the same time he has introduced tax breaks for millionaires and has also recently agreed to loan the IMF £10 billion stating that this is in ‘everyone’s interests’.
The current system of governance is corrupt to the core. In the US it has become blatantly obvious. They no longer seem to see the need to hide the fact. They are content that the vast majority of the population are asleep and remain subdued.
MPE – A Solution
There is one economic model which I believe could work if given the chance. “The Mathematically Perfected Economy (MPE)” which is the brainchild of Mike Montagne. In a nutshell (from the MPE website):
MPE is the singular integral solution to 1) inflation and deflation, 2) systemic manipulation of the cost or value of money or property, and 3) inherent, irreversible multiplication of debt in proportion to a vital circulation, engendering inevitable systemic failure at a finite system lifespan defined by an inevitable, terminal sum of insoluble debt. Mathematically Perfected Economy™ is every prospective debtor’s right to issue their promise to pay, free of extrinsic manipulation, adulteration, or exploitation of that promise, or the natural opportunity to make good on it.
At first glance, it may seem a bit complicated to many, but essentially it really is quite simple. It involves the removal of the interest element from the whole economic and banking system which is usury. In practical terms it would mean the following as an example (again from the MPE website):
While 12,000 homes a day continue to go into foreclosure, mathematically perfected economy™ would re-finance a $100,000 home with a hundred-year lifespan at the overall rate of $1,000 per year or $83.33 per month. Without costing us anything, we would immediately become as much as 12 times as liquid on present revenue.
Transitioning to MPE™ would apply all payments already made against existent debt toward principal. Many of us would be debt free. There would be no housing crisis, no credit crisis. Unlimited funding would immediately be available to sustain all the industry we are capable of.
There is no other solution. Regulation can only temper an inherently terminal process. If you are not promoting mathematically perfected economy™, then you condemn us to monetary failure.
Finally, there seems to be many definitions of the word ‘zombie’ available online. In deciding which one to use I came up with one of my own by combining a few of the best to arrive at this:
“A zombie is the soulless body of a dead person that has been given the semblance of life by means of witchcraft or voodoo, usually for evil purposes”.
So what does that have to do with ‘growth’ you might ask?
Well, the purpose of this piece has been to show, that with reference to our ‘exponential growth’ based economic system, the terms ‘zombie’ and ‘growth’ are synonymous. In short, the present economic growth model is a paradigm that is already dead in the water. Despite being given the appearance of something that is alive, as presented by our politicians and mainstream media, it is clearly unsustainable and doomed to fail.
©2012 – Allan Ewart – All Rights Reserved