Today’s Contemplation: Collapse Cometh CXXXIII

Steve Bull (https://olduvai.ca)
16 min readMay 29, 2023

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Mexico (1988). Photo by author.

Our Banking System: Government vs. Private Control, Part 4

In Part 1 of this now 4-part Contemplation I lay out the case that having our governments take over our banking system through nationalisation would not serve the interests of most people any better than the private interests that currently run them. This is primarily because both government and private corporate interests are part and parcel of a ruling caste in a large, complex society that functions to protect/extend the ruling elite’s control of systems that provide their revenue streams over all other concerns.

In Part 2, I explain why with the increasing recognition that humanity’s expansion has limits imposed by existence upon a finite planet has led to demands to have our sociopolitical systems lead society on a managed path away from environmentally-destructive industries, particularly fossil fuels, in order to ‘decarbonise’ civilisation. This societal ‘request’ is then leveraged by the ruling caste to expand not only their revenue streams but also their activities of legitimisation that serve to help establish moral validity for their privileged positions atop any large, complex society’s power and wealth structures.

In Part 3, I present evidence that the ruling caste of our modern, complex societies leverage virtually every event and/or demand of them to meet their primary motivation/goal — control/expansion of the wealth-generation/-extraction systems — marketing/spinning their policies and actions as a benefit for society-at-large. Control of the sociocultural stories that circulate amongst the populace is the preferred method of ensuring virtually unquestioned acceptance of such narratives, but aggressive/violent coercion (being a secondary means of societal control) tends to increase as such tales are questioned/critiqued/exposed as manipulative/fraudulent. Due to the increasing impact of diminishing returns on investments and existence upon a planet with finite resources, the elite are increasingly grasping for methods to support/grow our financialized economy that has taken on the characteristics of a Ponzi scheme that is subsequently growing in fragility and approaching inevitable collapse.

And as I concluded:

“Throughout pre/history one of the actions by the governing elite to aid their attempts to sustain/expand their power in and control upon society is to increase the ‘wealth’ that is needed to support those activities that ensure their revenue streams: military/security, bureaucracies, trade, social programmes, etc.. By controlling specific aspects of a society’s economic system, this can be accomplished relatively easily and mostly behind a curtain where virtually no one understands or is aware of the manipulations going on.”

In fact, the machinations that take place are increasingly heralded by the ruling caste (especially the mainstream/legacy media sycophants) as necessary and to the benefit of society-at-large. We are encouraged to celebrate and regard the manipulators as courageous ‘heroes’. The negative consequences of what they do are invariably denied, ignored, and/or rationalised away.

An increase in State revenue has been pre/historically accomplished via tax increases and geopolitical/military expansion. When these approaches encounter diminishing returns and/or the elite wish to spend more than existing revenues, another commonly used avenue has been to increase the amount of ‘money’ in the system, despite such a path always seeming to end in failure.

With metallic-based currency ‘coin-clipping’, where the precious metals that made up the currency of the day were decreased periodically allowing more coins to circulate, was introduced. The new ‘money’ was first used by society’s elite before the inflationary price increases that invariably follow would have their full impact. With the introduction of paper/digital fiat currency, this currency debasement has taken on a huge role in significantly increasing the monetary base of nations and thus the wealth of those that have first access to this new money.

In today’s world, the vast majority of this new ‘currency’ is created out-of-thin-air by financial institutions (regulated banks and non-regulated, non-bank financial intermediaries — also known as ‘shadow banks’; e.g., hedge funds, insurance firms, pawn shops, payday lending, currency exchanges, microloan organisations, retailers, etc.) in the form of loans/credit.

Many of these loans go towards enterprises that have good track records of production and thus the necessary profits to pay them back with interest, but they also go towards risky endeavours and individuals with increasingly poorer credit ratings where failure/default is increasingly likely.

More recently, the casino we call the stock market has taken an increasingly large share of this new money as novel financial products have been created to attract investments; some of them quite risky, such as derivatives[1]. Another avenue for this freshly minted ‘wealth’ tends to be certain assets (e.g., real estate, art, etc.) where positive feedback loops can create massive ‘bubbles’ (i.e., the ‘value’ increases so more money pours in, which leads to further increases in value that in turn attracts more investments, rinse and repeat).

For all intents and purposes, this financialization of our economic systems has turned it into a gargantuan Ponzi scheme[2] whose maintenance is not only dependent upon the creation of ever greater amounts of ‘money’ but exacerbated by the debt-/credit-nature of the fiat currencies now employed in all economic transactions[3].

The pursuit of economic growth at all costs is driving planetary destruction and creating untold misery for huge numbers of people. However, policies to try to fix climate change, pollution, austerity, poverty and a host of other problems, which do not address the fundamental issue of the debt-based economy and its need for economic growth, are doomed to fail.
David Ashton

All one has to do is look at the relationship between gross domestic product (GDP; a proxy for all economic transactions in a nation state) and ‘currency’ creation to understand this. The following chart for the United States shows an almost perfect correlation between bank liabilities (i.e., credit created/debt owed) and the country’s GDP.

And consider that this probably misses much of the debt/credit that exists due to only being representative of traditional bank liabilities, the complexity of the system and its various subsystems, and also the bookkeeping shenanigans that take place on a daily basis to help hide much of it (such as off-balance sheet liabilities).

A slightly broader calculation of debt indicates that liabilities are actually increasing much faster than GDP, suggesting that diminishing returns on credit growth has for some decades been occurring. In other words, greater and greater amounts of credit are being required to sustain (or slightly increase) economic growth. We can see this quite clearly when one looks at and considers the data that shows how much debt is being created in relation to a nation’s gross domestic product. Again, probably a significant undercounting of true debt levels. And keep in mind that all this credit-based ‘wealth’ is a potential claim on future resources (especially energy) that are in finite supply.

It’s well known that the nature of a Ponzi scheme requires that it continues to have an input of funds to keep from collapsing, and our economic system has become no different.

One of the most ignored but fundamental issues is that the growth it is dependent upon is material in nature so the perpetual expansion that our economic systems (and all the subsystems it connects to) depend upon infinite resources, especially energy — a bit of a predicament given the finite nature of our planet and the resources we extract and use; to say little about the devastating ecological systems impacts of this exponential growth. Even so-called service industries that some economists argue can grow infinitely as they do not require a resource base do, in fact, rely upon finite resources be it the energy to power or the products necessary to carry out their service; to say little about the material needs of the people providing the service.

Once the material growth that our economic system relies upon encounters diminishing returns (as it appears to have done), today’s elite will do what elite have done through the ages: debase the currency to keep the game going for as long as it can. But this strategy also eventually encounters diminishing returns and must increase exponentially just to maintain the status quo. And the evidence is greatly increasing that these processes have already begun in earnest for our globalised economic system. The only thing required for this current cycle to reach its inevitable endgame — collapse — is the passage of time.

It matters not one iota who is ‘managing’ this Ponzi — it will all implode in the not too distant future as all such schemes eventually do when they can no longer expand. Of course, nation state governments no more want this scheme to implode than the non-governing elite given their wealth (and thus power/prestige) is very much tied up within it and dependent upon it. And, to be honest, most of world’s citizens, especially those still caught up in the matrix of fraud this all portends, don’t want this house of cards to collapse either. So, it is likely we will continue to create currency to avoid the inevitable reckoning just a bit longer…while most everyone denies/ignores/rationalises away its implications because, you know, this time is different.

One of the knock-on impacts of this exponentially-increased ‘printing’ of money — although it is debated by economists — is price inflation[4]. While the mainstream use of the term ‘inflation’ has taken on a meaning of a general increase in the price of goods/services, its fundamental definition is that of an increase in the monetary base (i.e., credit-/debt-based currency). And what the evidence shows is that we are heading for a collapsing debt bubble where “[e]ventually, we may see a reset of the world financial system leading to fewer interchangeable currencies, far less international trade and falling production of goods and services. Some governments may collapse.”

Whether the private banking cartel or our politicians are ‘in charge’ of our banks and the monetary/economic systems as described above very likely makes little to no difference; except perhaps in the narratives we anxiety-avoiding, story-loving apes tell ourselves and others.

It appears that the main difference between our preference towards private verses public management of banks is simply our perception of ‘control’ or ‘agency’ in all of this. Those who appeal to politicians and governments to manage such enterprises — and/or lead us to some idyllic sustainable future — believe deeply that we have agency in the sociopolitical realm (i.e., we have say in the way our society is organised and run via the ballot box). I would argue, however, that there is a compelling argument to be made that we actually have very little, if any at all, when it comes to sociopolitics.

It’s my contention that the elite that are in positions of governance in so-called democratic societies are no more ‘representative’ of the ‘average’ person — especially the significantly disadvantaged — than those in non-democratic ones. The ‘democracies’ are perhaps simply better at spinning a yarn about the citizens having ‘choice’ and influence, especially via the ballot box.

The advantage for the ruling caste has been an age of surplus energy that these elite power structures can leverage to their advantage. One avenue for this has been a broad narrative manipulation through a ‘sharing’ of resources/surpluses. Using a portion of the revenue streams generated by the various wealth-generation/-extraction systems they control to fund ‘public’ welfare (bread) and activities (circuses), the elite can they regale the masses with stories that their ‘leaders’ serve the people and are responsive to them. Meanwhile, the elite continue their skimming/scamming activities living high off the hog while the majority of society struggles.

Applying portions of surpluses to legitimisation activities that are perceived as providing agency to the hoi polloi (but also provide ‘moral validity’ to the status quo power/wealth structures) have been found to be somewhat more effective than coercive approaches, but it is still manipulation to convince the masses that their elite ‘deserve’ their positions as ‘leaders’ — and the ‘marginal’ benefits that come with this. It also creates a dependency by most everyone upon the various systems that the ‘rulers’ control.

Much of the wealth to fund such activities over the past several decades (perhaps longer), I would contend, has been facilitated not by productive surpluses but by an increasing creation of potential claims on the material resources required for economic growth through exponentially increasing financialization of our economic system and infinite ‘printing’ of fiat currency via debt/credit expansion.

Putting our governments in control of such systems outside of corporate influence (a hugely hopeful and likely impossible task/assumption), I believe, would change little to nothing in this equation outlined above.

Will/can a government fix this? No, I don’t believe so. They are as captured by this predicament as the rest of us (especially in so-called ‘advanced economies) who rely upon the economic system to keep functioning and supplying us with everything we have come to depend upon for our very survival. We have mostly lost the skills/knowledge to be self-sufficient, especially in complex societies that depend very much upon technologies created in the past century or two and requiring fossil fuels (or even more complex energy production technologies) for their creation/production to maintenance and/or disposal/reclamation — to say little about the long-distance supply chains and the fossil fuel energy put into food production and distribution.

In fact, I would further argue that as our surplus energy falls off the inevitable cliff that occurs upon a finite planet we will (and are) witnessing a shift towards increasingly coercive approaches by the ruling caste to maintain their privileged positions of power and wealth.

Further, it seems some governing elite are increasingly pointing towards ‘capitalism’ and corporations as the evil bogeymen — a strategy long used by politicians to attract/appease a base or some certain faction of supporters, but being primarily manipulative and not substantive — when, in fact, it may simply be an epiphenomenon of the way in which our complex societies have developed and resulted in differential access to resources and thus power and privilege. And, as economic contraction invariably proceeds during the decline/fall/collapse of a complex society, the ruling elite eventually turn on each other in attempts to sustain their own fragile positions for as long as they are able.

As I argued in a previous Contemplation that put these issues in the context of ‘patriotism’ and the warmongering that our ruling caste often engages in: “I could go on and on about this sociocultural shift towards control by the elite mostly because I view it as something that is so easily overlooked by most. To reduce one’s cognitive dissonance people deny or justify/rationalise away the actions/policies of their society’s ‘leaders’. They ‘allow’ themselves to be caught up in the fervour of ‘patriotism’. They are quick to point fingers at the ‘other’ that have been painted by the ruling caste as the cause of their problems/predicaments.”

In fact, I’ve written about the manipulation of the masses by the ruling caste a number of times. Here are just a sampling of posts that share my thoughts:
Today’s Contemplation: Collapse Cometh XXXVI
Today’s Contemplation: Collapse Cometh L
Today’s Contemplation: Collapse Cometh LXX
Today’s Contemplation: Collapse Cometh LXXIII
Today’s Contemplation: Collapse Cometh LXXXII
Today’s Contemplation: Collapse Cometh CXVII

I view things this way because I tend to subscribe to the conflict school of thought more so than the integration one when it comes to the development of a human society’s sociopolitical complexity — that is, governing institutions arose and ‘evolved’ to protect the privileged positions of a ruling caste, as opposed to arising as a result of shared social interests with ‘benefits’ to the ruling elite being the ‘cost’ of their ‘stewardship’.

The integration theory I refer to at the beginning of Part 1 I consider to be the one propagated by the ruling elite of a society to help legitimise their positions of power and privilege — a set of behaviours and actions carried out by every complex society’s ruling class throughout pre/history that has over time taken on a life of its own. I find it difficult to believe that an unwritten social contract that benefitted everyone in a large society just happened to grow out of the wondrous behaviours of some few ‘leaders’.

Once a society grew large enough (perhaps beyond Dunbar’s number) and a small number of individuals/families became responsible for overseeing the distribution of societal surpluses (thus having differential access/control of resources) and the kinship ties that kept individual/family power-seeking in check were lost, self-serving behaviours (e.g., narrative management and coercive control) arose to maintain such privileged/prestigious positions.

Power corrupts as the saying goes and when surplus energy began giving some members of large settlements differential access to resources, the road to hell was firmly paved; and has taken on a whole new level of nefariousness with the exploitation of fossil fuels and the tremendous amounts of surplus energy they have provided.

It’s of course no surprise that our elite never raise the prospect that they are where they are and doing what they do to protect the privileges of a relatively small cadre of society. Heaven forbid. They are there for ‘the people’ in their beneficent, selfless way.

In fact, I believe that the dominant environmental narrative that focuses upon climate change (mostly carbon emissions) is because the ruling caste discovered a means of monetising it while also advancing their ability to control the population. Addressing our fundamental predicament of ecological overshoot would require an entire dismantling of the wealth-generation/-extraction systems that provide the ruling caste’s revenue streams (and thus positions of power and privilege) but also the pursuit of perpetual growth that keeps the various monetary/financial schemes from collapsing and that could and likely would lead to massive domestic revolution and loss of control by the elite (and thus their revenue streams).

The power brokers of this world are not going to ‘go gentle into that good night’ for they are not interested in that, at all. Despite everything these snake oil sales people say and promise on a regular basis and repetitive nature, pre/historical evidence demonstrates that the elite are primarily interested in maintaining and/or expanding their positions of power and prestige. They accomplish this through manipulations of people’s emotions and belief systems, as well as the social systems that enculturate a society’s people (e.g., education, mass media, etc.).

It is perhaps worthwhile to keep pressuring our political ‘representatives’ to pursue a dismantling of the systems that continue to exacerbate our ecological overshoot predicament — especially pursuit of perpetual growth, regardless of how ‘clean/green’ it is marketed — even if just to get the message out in a public forum to help make others aware. However, since these systems tend to serve the maintenance/expansion of status quo power and wealth structures it’s perhaps not a great idea to expect too much from this pressure upon our governing elite.

In fact, what one should expect (because this is what always appears to happen) is that the concerns raised by some in the public sphere will be used/leveraged to spin/market sociopolitical policies/actions as addressing these existential concerns while they are actually being made to help expand/control various revenue streams for the ruling caste of society. For example, currently the push is on towards massive investments in industrial production of complex technologies (e.g., solar photovoltaic, nuclear, wind) as THE solution to our energy conundrum and increasing legislation towards forcing everyone to replace any and everything of the ‘evil’ oil-power regime. Our ruling elite’s interests, who happen to own/control the industry and financial institutions necessary for this energy transition, do not align with the long-term prospects of humanity. Never have in large, complex societies and likely never will.

“In the entire history of mankind there has never been a political elite sincerely concerned about the wellbeing of regular people. What makes any of us think that it is different now.”
Christine Anderson, European Parliament

I’ve shared this image before but will share it once again for any that haven’t seen it. It speaks volumes, and I like it so much I even had a hoodie sweatshirt printed with it on the front. I realise most people don’t want to believe this because of the cognitive dissonance it creates, but I firmly believe it is reflective of our world’s reality and the political system is NOT going to come to the rescue; in fact, it’s going to most certainly make things far, far worse.

The evidence appears overwhelming that placing ‘hope’ in the idea that the-powers-that-be will move society in a direction of sustainability is significantly misplaced and, unfortunately, opens the door to their leveraging of it to meet their own goals — not those of the larger part of humanity, let alone all the other species on this planet.

Those interested in ‘doing the right thing’ may be much further ahead coordinating like-minded, local community members to pursue self-sufficiency/-resiliency activities — such as sustainable, local food production that considers the environmental impacts of such a pursuit and aims to increase biodiversity and minimise the negative consequences of human existence upon the planet.

A handful of interesting and/or supportive articles:

Our Financialised Economy
James Howard Kunstler
Charles Hugh Smith

Narrative Management
Racket News
Caitlin Johnstone: this and this.

If you’ve made it to the end of this rather long contemplation and have got something out of my writing, please consider ordering the trilogy of my ‘fictional’ novel series, Olduvai (PDF files; only $9.99 Canadian), via my website — the ‘profits’ of which help me to keep my internet presence alive and first book available in print (and is available via various online retailers). Encouraging others to read my work is also much appreciated.

[1] I recommend watching the movie, or reading the Michael Lewis book, The Big Short for an entertaining look into the monstrosity that our markets have become.

[2] See this, this, this, this, and/or this.

[3] See this, this, this, this, and/or this.

[4] See this, this, this, this, this, and/or this.

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Steve Bull (https://olduvai.ca)

A guy trying to make sense of a complex and seemingly insane world. Spend my days pondering our various predicaments while practising local food production...