The Old World Passes Away

"I saw a new heaven and a new earth," says John the Revelator, "for the first heaven, and the first earth were passed away..."*

Likewise, James Howard Kunstler this week sees, if not a new heaven, at least a new earth in which all the old institutions, economic relationships, and habits of mind are vanishing like doomed endangered species.

The wishes of the "green shoots and mustard seed" crowd really hinge on whether the various organs of the suburban economy can be jump-started back to life, Kunstler muses; the production home-builders, the granite countertop outfitters, the mall and strip-mall gang, the national chain discount retailers, all the people who make Happy Motoring possible from the factory to the showroom, and, of course, the banks who shovel money into these enterprises.

All these organs of our now-former economy are gravely impaired, and a realistic appraisal of them would have to conclude that they've entered the zone of congestive failure. The choice we face really comes down to this: do we put our dwindling resources and "hopes" into resuscitating those dying systems, or do we move forward to the next chapter of American life, cut our losses, and make new arrangements more consistent with the realities on offer from the universe? To take it a step further, can we remain one nation, a common culture, without such a conscious re-purposing of our collective spirit?

The short and accurate answer to Kunstler's question is "no," but I would also add that the re-purposing he speaks of is already occurring, in many cases unconsciously. The people formerly known as consumers are driving less and buying less. This is not a temporary expedient for dealing with a "crisis" as much as a permanent change, and the awareness of the meaning of the new reality will naturally follow the improvised adjustments to it.

The institutions in charge of our former way of life and the people who run them are not dead yet, however. They're still capable of mischief, as the bank bailouts have shown, and they have one more trick up their sleeves -- debasing the currency through inflation.

An article at Bloomberg News Service today shows how promoting inflation is stealthily becoming the new ruling class policy.

“I’m advocating 6 percent inflation for at least a couple of years,” says Kenneth Rogoff, a professor at Harvard Business School and a former chief economist at the International Monetary Fund. “It would ameliorate the debt bomb and help us work through the deleveraging process.”

And that's the idea -- to help debtors, like the banks and other large corporate enterprises who are holding all the bad collateral (nearly worthless, often abandoned houses) and bad paper they generated during the Great Mania earlier in this decade. They hope thereby to get out from behind the eight ball and "jump start" the economy, and don't care that such a policy will penalize and injure those of us who save money and have no debts.

It's not government policy yet, but where Harvard Business School goes, the gov is sure to follow.

It won't work, for a number of reasons. First of all, the experts might think they can control the rate of inflation, but once that monster is turned loosed it could easily spin out of control, ravaging everything in its path. For another, it's not going to make us spend more. People are already hoarding and stockpiling food and other supplies, and those who can will ride out the inflationary period eating rice and beans, heating their houses with wood they cut themselves (amazing how much you can get done when you don't have to go to work), and finding both meaningful work and entertainment at home.

Face it, banksters. What you want, and what you're going to get are two entirely different things.

*Revelation: XXI: 1