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Saturday, November 26, 2011

What's Wrong? Fundamentally - what's wrong?

Society is a very complex system.

Complex systems require exponentially more energy to function, the more complex they become.
(for example: the human brain uses 75,000 times as much energy as the Sun - relative to mass.)

In their most efficient (ie: Simplest) form - governments can organize society so that energy use becomes more efficient - thus energy output in the form of productivity and rents are greater than the sum of the inputs -as measured by potential energy: Money.

In their most efficient (ie Simplest) form the creation and distribution of money through the Government/Banking System can facilitate the output of money in the form of productivity and rents.

As government become increasingly complex, as the banking system becomes increasingly more complex, as society itself becomes increasingly more complex, it reaches an INFLECTION POINT by which it requires more energy (Read Money) to sustain it than it is capable of outputting.

At this point the society - like any inefficient organism - begins to DIE.

At this point the ELITES: Those closest to the Money Producing Mechanism (Politicians and Bankers) become more concerned with the shrinking pie than the welfare of the society.

They begin to act like parasites- accumulating wealth through non-productive means: government patronage and postmodern finance: Leverage, exotic unregulated derivatives, off balance sheet accounting vehicles, cleverly disguised fraudulent gambling instruments.

These do not cause the death of society, but they greatly hasten the moment of collapse.

Where are we on the Efficiency curve?

It seems to me we have reached the stage of Elite Money Leeching from the dying system.

A pretty advanced state.

At this point there are only three choices.  A) Collapse and Die.  B)Conquer and steal resources.  C) Simplify both the Government and the Banking System.

To simplify the government you'd have to cut the Federal government in half, close down the army, and return administrative duties to the States.  Anything less, is a waste of time.  And you'd have to regulate the issuance of money.  The only way to do this is to tie it to a Convertible Gold Standard.  Any fiat system of money creation will be abused.

Or we can always implode and die.  It happens all the time, throughout history.  Then we rebuild - probably using a greatly simplified government and a money system tied to gold.

(this is basic Complexity Theory as developed by Joseph Tainter and explicated by James Rickards in "Currency Wars.")

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