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Lessons from the Unraveling of the Roman Empire: Simplification, Localization

Lessons from the Unraveling of the Roman Empire: Simplification, Localization

The fragmentation, simplification and localization of the post-Imperial era offers us lessons we ignore at our peril.

There is an entire industry devoted to “why the Roman Empire collapsed,” but the post-collapse era may be offer us higher value lessons. The post-collapse era, long written off as The Dark Ages, is better understood as a period of adaptation to changing conditions, specifically, the relocalization and simplification of the economy and governance.

As historian Chris Wickham has explained in his books Medieval Europe and The Inheritance of Rome: Illuminating the Dark Ages 400-1000the medieval era is best understood as a complex process of social, political and economic natural selection: while the Western Roman Empire unraveled, the Eastern Roman Empire (Byzantium) continued on for almost 1,000 years after the fall of the Western Roman Empire, and the social and political structures of the Western Roman Empire influenced Europe for hundreds of years.

In broad-brush, the Roman Empire was a highly centralized, tightly bound system that was remarkably adaptive despite its enormous size and the slow pace of transport and communication. Roman society was both highly hierarchical–the elites claimed superiority and worked hard to master the necessary tools of authority– slaves were integral to the building and maintenance of Rome’s vast infrastructure–and open to meritocracy, as the Roman Army and other classes were open to advancement by anyone in the sprawling empire: every free person became a Roman Citizen once their territory was absorbed into the Empire.

When the Empire fell apart, the model of centralized control/power continued on in the reigns of the so-called Barbarian kingdoms (Goths, Vandals, etc.) and Charlemagne (768-814), over 300 years after the fall of Rome. (When the Ottomans finally conquered Constantinople in 1453, they also adopted many of the bureaucratic structures of the Byzantine Empire.)

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Did the Economy Just Stumble Off a Cliff?

Did the Economy Just Stumble Off a Cliff?

The signs are everywhere for those willing to look: something has changed beneath the surface of complacent faith in permanent growth.
This is more intuitive than quantitative, but my gut feeling is that the economy just stumbled off a cliff. Neither the cliff edge nor the fatal misstep are visible yet; both remain in the shadows of the intangible foundation of the economy: trust, animal spirits, faith in authorities’ management, etc.
Since credit expansion is the lifeblood of the global economy, let’s look at credit expansion. Courtesy of Market Daily Briefing, here is a chart of total credit in the U.S. and a chart of the percentage increase of credit.
Notice the difference between credit expansion in 1990 – 2008 and the expansion of 2009 – 2017. Credit expanded by a monumental $40+ trillion in 1990 – 2008 without any monetary easing (QE) or zero-interest rate policy (ZIRP). The expansion of 2009 – 2017 required 8 long years of massive monetary/fiscal stimulus and ZIRP.
This chart of credit change (%) reveal just how lackluster the current expansion of credit has been, despite unprecedented trillions of stimulus pumped into the financial sector.
Here are two other snapshots of debt: margin debt and private credit. Both have hit new highs.
Note the tight correlation of margin debt to the S&P 500 stock index: when punters borrow more on margin to buy more stock, stocks keep rising.
When credit stops expanding, the economy stumbles into recession.
Back in the real world, have you noticed a slowing of animal spirits borrowing and spending? Have you tightened up your household budget recently, or witnessed cutbacks in the spending habits of friends and family? Have you noticed retail parking lots aren’t very full nowadays, and once-full cafes now have empty tables?

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Are We Fiddling While Rome Burns?

Are We Fiddling While Rome Burns?

Solutions abound, but they require the retirement of obsolete systems that defend entrenched interests and soul-crushing inequalities.
It turns out Nero wasn’t fiddling as Rome burned–he was 60 km away at the time. Did Nero Really Fiddle While Rome Burned?
The story has become short-hand for making light of a catastrophe, either out of self-interest (one theory had Nero clearing a site he desired for a palace with the fire) or out of a mad detachment from reality.
Are we fiddling while Rome burns? I would say yes–because we’re not solving any of the structural problems that are dooming the status quo. Instead, we’re allowing a corrupt, corporate mainstream media to distract us with fake “Russians hacked our election” hysteria, false “cultural war” mania, and a laughably Orwellian frenzy over fake news which magically avoids mentioning the propaganda narrativespushed 24/7 by the mainstream media–narratives that are the acme of fake news.
The media is only half the problem, of course; the audience doesn’t want to hear about structural problems that can only be fixed by disrupting the status quo. If we don’t accept that the financial system we inhabit is imploding, maybe all the problems will go away.
The system is coughing up blood and we still want to believe it is “recovering” from a cold.
Here’s a short list of structural problems we should be tackling:
1. Soaring inequality and the institutionalization of economic privilege.Systemic economic privilege doesn’t exist in a vacuum–it’s enforced by a centralized hierarchy, a dynamic I describe in my book Inequality and the Collapse of Privilege. Systemic inequality doesn’t just undermine the economy–it also undermines the social and political orders.
2. The central state (government) has one default setting: endless expansion into every nook and cranny of daily life. There are no mechanisms for contraction and no institutional memory of government reducing its control of every aspect of life.

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Why We’re Doomed: Our Economy’s Toxic Inequality

Why We’re Doomed: Our Economy’s Toxic Inequality

Anyone who thinks our toxic financial system is stable is delusional.

Why are we doomed? Those consuming over-amped “news” feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency.
The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York TimesOur Broken Economy, in One Simple Chart.
While the essay’s title is our broken economy, the source of this toxic concentration of income, wealth and power in the top 1/10th of 1% is more specifically our broken financial system.
What few observers understand is rapidly accelerating inequality is the only possible output of a fully financialized economy. Various do-gooders on the left and right propose schemes to cap this extraordinary rise in the concentration of income, wealth and power, for example, increasing taxes on the super-rich and lowering taxes on the working poor and middle class, but these are band-aids applied to a metastasizing tumor: financialization, which commoditizes labor, goods, services and financial instruments and funnels the income and wealth to the very apex of the wealth-power pyramid.
Take a moment to ponder what this chart is telling us about our financial system and economy. 35+ years ago, lower income households enjoyed the highest rates of income growth; the higher the income, the lower the rate of income growth.
This trend hasn’t just reversed; virtually all the income gains are now concentrated in the top 1/100th of 1%, which has pulled away from the top 1%, the top 5% and the top 10%, as well as from the bottom 90%.
The fundamental driver of this profoundly destabilizing dynamic is the disconnect of finance from the real-world economy.
The roots of this disconnect are debt: when we borrow from future earnings and energy production to fund consumption today, we are using finance to ramp up our consumption of real-world goods and services.

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Our Financial Buffers Are Thinning

Our Financial Buffers Are Thinning

The fragility of our financial buffers will only be revealed when they fail in the next crisis.
While buffer has a specific meaning in chemistry, I am using the word in the broad sense of a reserve resource that absorbs the initial destructive impacts of crises or system overloads. Marshland along a sea coast is a buffer against destructive storm waves, for example.
A savings account acts as a buffer against financial drawdowns or losses of income that would otherwise quickly cascade into a full-blown crisis.
Redundancy of resources can act as a buffer. If an airline maintains an aircraft in reserve, this reserve plane acts as a buffer against the disruption to the airline’s scheduled flights should one of its aircraft be unexpectedly removed from service by a mechanical failure. The reserve aircraft can replace the plane that was withdrawn from service with minimal disruption.
Stockpiles act as buffers against supply disruptions. A storage tank of oil buffers a refinery against any delay in its incoming shipments of crude oil. Supplies of food and water buffer against severe natural disasters that disrupt regional water service and food deliveries.
Credit can act as a financial buffer against unexpectedly high expenses or declines in revenue. If a tire on our vehicle goes flat during a road trip and we only have a few dollars cash, a credit card buffers the disruption by funding the replacement tire and labor.
But over-using credit can end up thinning our financial buffers. If someone starts using their credit card not as an emergency buffer but to augment their cash income–in effect, acting as if the borrowed money was a pay raise rather than a loan–their credit line diminishes to near-zero and when they actually need credit for an emergency, it’s no longer available.

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The “News” Is Content-Free

The “News” Is Content-Free

We’re “your” trustworthy news source, even though we’re all owned by six corporations or billionaires with political agendas.
The “news” has loomed large in The News–a classic self-referential loop in which the media itself becomes its own content. While the controversy over what constitutes “fake news” and “real news” has itself become “the news,” the cold reality is all “news,” “real” or otherwise, is content-free.
The “news” is so devoid of content that a simple software program could assemble a semi-random daily selection of headlines, scrolling banners, and radio/TV “news” reports from a pool of typical “news” stories and insert a bit of context (local highways that are congested, rough neighborhoods where shootings occur, names of local authorities, etc.), and the consumer of “news” would be hard-pressed to tell the difference between the randomly generated “news” and the “real news.”
Here’s a taste of the Random Content-Free News Generator Application that would produce “news” that was virtually indistinguishable from the “real” news.
Traffic is backed up near the (insert the usual congestion point) on the I-XX (local Interstate/highway). (TV/video: show randomly selected video clip of slow-moving traffic).
A serious accident occurred on I-XX (TV newscasters look somber if the wreck resulted in fatalities.)
Local Authorities held a news conference to Say What People Want to Hear about (insert hot-button topic): this concern is being addressed by authorities. We’ve got top people working on this–top people. (Newscasters look serious.)
A horrific terrorist attack occurred somewhere in the world–insert semi-randomly selected city, with preference given to Mideast and Central Asian war zones and Western capitals.
Bad weather of some kind is threatening us, or could threaten us shortly. (Insert video clip of flooding, heavy rain, or scorching heat in desert climes, etc.)

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We’re in a Boiling-Point Crisis of Exploitive Elites

We’re in a Boiling-Point Crisis of Exploitive Elites

The “fixes” to the stagnation of postwar Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt–all have run out of steam.
Many of us have written about cycles in the past decade: Kondratieff economic cycles, business/credit cycles, the Strauss–Howe generational theory (an existential national crisis arises every four generations, as described in their book The Fourth Turning), and long-wave cycles of growth and decline, as described in seminal books such as The Great Wave: Price Revolutions and the Rhythm of History and War and Peace and War: The Rise and Fall of Empires.
There is another Rhythm of American History that few recognize: the economic, social and political crises sparked by exploitive Elites. There are two dynamics that drive these crises:
1. The exploitation of commoners by financial/political Elites reaches extremes that create systemic instability as commoners no longer have the means to improve their conditions.
2. The economic mode of production that generated Elite wealth no longer functions, but the Elites cling to the failing system and enforce it with increasingly violent suppression of dissent.
Here are the previous Crises of Exploitive Elites:
1. Slavery, 1850 to 1865. Though the toxins generated by slavery are still with us, the existential political, social and economic crisis arose in the years between 1850 and the end of the Civil War in 1865.
In broad brush, the rise of the American West triggered a political crisis in the U.S. as the southern states realized the non-slave West’s rising political power would doom the fragile balance between the non-slave Northern industrial-economy states and the cotton/agricultural slave-economy South.
It was a trend the South couldn’t possibly win, but the South’s exploitive Elites refused to concede any of their power–and that refusal to adapt tp changing conditions guaranteed the Civil War.

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Debt Has No Consequences? Color Me Skeptical

Debt Has No Consequences? Color Me Skeptical

The entire status quo is based on the delusion that rapidly rising debt will never generate any negative consequences.

Here’s a chart of America’s national debt, extended a mere dozen years into the future: the current $20 trillion in debt will double to $40 trillion, and that assumes 1) trillions of dollars in private and local government pensions don’t implode and have to be bailed out by the federal government, a bail-out that will have to be paid by borrowing more money, 2) a recession doesn’t slash federal tax revenues, 3) Universal Basic Income (UBI) doesn’t become policy, adding $1+ trillion in additional borrowing annually–and so on.

Color me skeptical that doubling the debt in 12 years won’t have any negative consequences. Let’s start by noting that federal debt is only the tip of America’s total debt load, which is rising fast in all sectors: federal, state/county/city, corporate and household.

Total government, corporate and household debt soared from $15.5 trillion in 2000 to $41.1 trillion in 2016. (see chart below, courtesy of 720Global). If we extend this expansion another 12 years, we will have a total debt load in the neighborhood of $100 trillion by 2030. And that’s if the “recovery” news is all good.

The consensus is that all this debt will have no negative consequences because 1) interest rates will remain near-zero forever and 2) it’s all “investment”, right? Actually, no; the vast majority of this debt is consumption, not investment, or even worse, it simply services existing debt or funds speculative gambling (stock buybacks, etc.)

Recall that every debt is somebody’s asset. Debt jubilees sound great to debtors, but not so appealing to insurance companies, pension funds, mutual funds, etc. that own the debt and rely on the income from that debt to pay pensioners their pensions, settle insurance claims, etc.

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The Path to Inflation: “Helicopter Money”

The Path to Inflation: “Helicopter Money”

The general view in inflation is dead, essentially forever. Maybe. Maybe not.
We all know real-world inflation for big-ticket expenses is far above the official rate of around 2% annually.
Yet conventional economists are virtually unanimous that deflation is the danger and inflation is a “good thing” we need to spur so servicing existing debt becomes easier for debtors.
Due to the deflationary pressures of technology and stagnant wages for the bottom 90%, the consensus sees low inflation as far as the eye can see.
When the consensus is near-100% on one side of the boat, we can safely bet Reality will not conform to expectations. This leads to a question: what could cause official near-zero inflation to surprise the consensus and leap higher?
One possible answer is “helicopter money”: money created by central banks that is distributed directly to households via tax rebates, debt forgiveness, or Universal Basic Income (UBI).
For the past 17 years, central banks have funneled credit and liquidity into the banks at the top of the wealth-power pyramid. Very little of this new “wealth” has trickled down to the bottom 90% of households in the real economy who have seen their earnings stagnate and their costs rise.
Now that debt and essentials are absorbing much of the bottom 90%’s earnings, there’s little fuel left for additional debt-based consumption. This is why we see auto sales plummeting.
The only way the central banks/states can fuel more debt and spending is to drop “helicopter money” directly into the consumers’ checking accounts.
Once they do this, the “new money” goes directly into the real economy. This is quite different than the past 17 years of monetary stimulus that went mostly into assets owned by the wealthy.
There’s another driver of inflation: shortages of essential commodities. I define inflation very simply: a loss of purchasing power, which means we are paying more money for the exact same good or service.

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Will the Crazy Global Debt Bubble Ever End?

Will the Crazy Global Debt Bubble Ever End?

There are multiple sources of friction in the Perpetual Motion Money Machine.

We’ve been playing two games to mask insolvency: one is to pay the costs of rampant debt today by borrowing even more from future earnings, and the second is to create wealth out of thin air via asset bubbles.

The two games are connected: asset bubbles require leverage and credit. Prices for homes, stocks, bonds, bat guano futures, etc. can only be pushed to the stratosphere if buyers have access to credit and can borrow to buy more of the bubbling assets.

If credit dries up, asset bubbles pop: no expansion of debt, no asset bubble.

The problem with these games is the debt-asset bubbles don’t actually expand the collateral (real-world productive value) supporting all the debt. Collateral can be a physical asset like a house, but it can also be the ability to earn money to service debt.

Credit card debt, student loan debt, corporate debt, sovereign debt–all these loans are backed not by physical assets but by the ability to service the debt: earnings or tax revenues.

If a company earns $1 million annually, what’s its stock worth? Whether the market values the company at $1 million or $1 billion, the company’s earnings remain the same.

If a government collects $1 trillion in tax revenues, whether it borrows $1 trillion or $100 trillion, the tax revenues remain the same.

If a government collects $1 trillion in tax revenues, whether it borrows $1 trillion or $100 trillion, the tax revenues remain the same.

If the collateral supporting the debt doesn’t expand with the debt, the borrower’s ability to service debt becomes increasingly fragile. Consider a household that earns $100,000 annually. If it has $100,000 in debt to service, that is a 1-to-1 ratio of earnings and debt. What happens to the risk of default if the household borrows $1 million?

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Want to Understand Rising Wealth Inequality? Look at Debt and Interest

Want to Understand Rising Wealth Inequality? Look at Debt and Interest

“Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).”
I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.
Correspondent D.L.J. explains how debt/interest is the underlying engine of rising income/wealth disparity:
If we use $16T as the approximate GDP and a growth rate of, say, 3.5%, the total of goods and services would increase one year to the next by about $500B.
Meanwhile, referencing the Grandfather national debt chart with the USDebtClock data, the annual interest bill is $3 trillion ($2.7 trillion year-to-date).
In other words, those receiving interest are getting 5-6 times more than the increase in gross economic activity.
Using your oft-referenced Pareto Principle, about 80% of the population are net payers of interest while the other 20% are net receivers of interest.
Also, keep in mind that one does not have to have an outstanding loan to be a net payer of interest. As I attempted to earlier convey, whenever one buys a product that any part of its production was involving the cost of interest, the final product price included that interest cost. The purchase of that product had the interest cost paid by the purchaser.
Again using the Pareto concept, of the 20% who receive net interest, it can be further divided 80/20 to imply that 4% receive most (64%?) of the interest. This very fact can explain why/how the system (as it stands) produces a widening between the haves and the so-called ‘have nots’.
In other words, the wealthy own interest-yielding assets and the rest of us owe interest on debt.

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Our State-Corporate Plantation Economy

Our State-Corporate Plantation Economy

We’ve been persuaded that the state-cartel Plantation Economy is “capitalist,” but it isn’t. It’s a rentier skimming machine.
I have often discussed the manner in which the U.S. economy is a Plantation Economy, meaning it has a built-in financial hierarchy with corporations at the top dominating a vast populace of debt-serfs/ wage slaves with little functional freedom to escape the system’s neofeudal bonds.
Since I spent some of my youth in a classic Plantation town (and worked on the plantation as a laborer in summer), the concept of a Plantation Economy is not an abstraction to me, but a living analogy of the way our economy works.
The Plantation Economy is extremely hierarchical. Corporations and the state are both extremely hierarchical.
In the Plantation Economy, the Company has access to nearly unlimited credit.Small businesses serving the employees and the employees have enough credit to live on but not enough to buy productive assets. As a result, the Corporation can always buy up any productive assets, expanding its monopoly.
The state also has an essentially unlimited line of credit which it can use to fund its favored cartels and state fiefdoms.
In the Plantation Economy, the Company suppresses any innovation that threatens its monopoly and the state enforces whatever means the Corporation deploys: buying up patents and small companies, predatory pricing to bankrupt competitors, etc.
The Plantation Economy is a mono-culture of large corporations and their partner in rentier skimming, the state. Our economy is a state-cartel finance-debt system; it’s only capitalist on the margins, that is, in the fringes that aren’t profitable enough for corporations to control.
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What’s Your Plan B?

What’s Your Plan B?

Although Plan B includes a wide spectrum of options, these three basic categories define three different purposes for having an alternative residence lined up.

We all have a Plan A–continue living just like we’re living now.

Some of us have a Plan B in case Plan A doesn’t work out, and the reasons for a Plan B break out into three general categories:

1. Preppers who foresee the potential for a breakdown in Plan A due to a systemic “perfect storm” of events that could overwhelm the status quo’s ability to supply healthcare, food and transportation fuels for the nation’s heavily urbanized populace.

2. People who understand their employment is precarious and contingent, and they might have to move to another locale if they lose their job and can’t find another equivalent one quickly.

3. Those who tire of the stresses of maintaining Plan A and who long for a less stressful, less complex, cheaper and more fulfilling way of living.

The Fragility and Vulnerability of Highly Optimized Supply Chains

Many people are unaware of the fragility of the supply chains that truck in food, fuel and all the other commodities of industrialized comfort to cities. As a general rule, there are only a few days of food and fuel in a typical city, and any disruption quickly empties existing stocks. (Those interested in learning more might start with the book When Trucks Stop Running: Energy and the Future of Transportation.)

Most residents may not realize that the government’s emergency services are actually quite limited, and that a relatively small number of casualties/injured people (for example, a few thousand) in an urban area would overwhelm services designed to handle a relative handful of the millions of residents.

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Is Your “Democracy” Actually a Totalitarian State? Take this Quick Quiz

Is Your “Democracy” Actually a Totalitarian State? Take this Quick Quiz

The USA is already a Totalitarian State with a Ministry of Propaganda that works overtime to generate a flimsy illusion of “democracy.”

Is your “democracy” (or republic) actually a Totalitarian State? That is, is it a “democracy” or “republic” in name only? To find out, take this quick quiz.

1. Does your government (federal, state and local) seize citizens’ assets without due process? In other words, the rule of law is dead; the state is the law. If the answer is yes, Your “democracy” is already a Totalitarian State. The answer in the USA is a definitive “yes.”

2. Does your government impose tyranny by complexity? If so, the average citizen lacks the wealth and connections needed to fight the seizure of private property without due process or recourse.

In the USA, the answer is “yes,” the government is a tyranny by complexity.

3. Is your government essentially “for sale” to wealthy elites? If the answer is yes, Your “democracy” is already a Totalitarian State–or more accurately, a fascist Totalitarian State.

4. Does your government spy on its entire citizenry? If the answer is yes, Your “Democracy” is already a Totalitarian State. The answer in the USA is a definitive “yes.”

Well, you have your answer: the USA is already a Totalitarian State with a Ministry of Propaganda that works overtime to generate a flimsy illusion of “democracy.” Please read the following links if you seek documentation of these systemic abuses of centralized power.

Orwell and Kafka Do America: How the Government Steals Your Money–“Legally,” Of Course (March 24, 2015)

Government in the USA is expropriating the private property of its citizenry without due process on a vast scale. I have provided documentation of this extraordinary reality many times over the years.

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Don’t You Hate Spammy, Sensationalist Click-Bait Like this?

Don’t You Hate Spammy, Sensationalist Click-Bait Like this?

So what’s the difference between “fake news,” spammy sensationalist click-bait and so-called “mainstream news” that serves the interests of the corporate-state? It’s getting hard to tell.
We’re inundated with spammy sensationalist click-bait. You know what I mean–the little boxes containing eye-candy photos and headlines such as “you won’t believe how badly these stars have aged,” “7 tricks to losing weight during Thanksgiving,” “These children of celebs are so good looking your jaw will drop,” “9 surprising signs of dementia” and outre classics such as “Hitler’s shocking final words.”
The “news” is “shocking,” “secrets are revealed,” and “surprising facts” are promised. Authorities are always cited as unimpeachable sources, and the headlines are quasi-plausible. (Why wouldn’t good-looking celebs have good-looking offspring?)
But the “authorities,” “facts” and “secrets” are all dubious. The spammy click-bait is self-serving to those promoting the sensationalist content, and to the media sites that promote the spammy content.
According to The New York Times, unidentified sources in the spammy sensationalist click-bait industry report that “We have been told from major, major publishers that we have become their No. 1 revenue provider.”
So the spammy sensationalist click-bait content serves the interests of those originating the bogus spam and the media that publishes it. Talk about a two-fer; no wonder this junk is everywhere in the Corporate Media.
Though the Corporate Media denies it, of course, the lines between propaganda, paid content and actual reporting have blurred. The C.I.A. has played a major role in the Corporate Media for decades. If you doubt this, please study the following:
The CIA and the Media by Carl Bernstein
The CIA and the Media: 50 Facts the World Needs to Know This article by Professor James Tracy first published in August 2015 is of particular relevance in relation to the “fake news” campaign directed against the alternative media.

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Olduvai IV: Courage
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Olduvai II: Exodus
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