Monday, May 12, 2014

Why Green Energy Will Utterly Destroy The US Economy

I had an interesting conversation on Amtrak with a retired CIA spook who worked "behind the Iron Curtain", funnelling money and means to anti-Soviet elements.

Of course that was not how he introduced himself - he vaguely identified as some kind of businessperson who had some kind of undefined job at one of the major stakeholders of Paramount Pictures and other firms and also spent a lot of time during the 1980s doing undefined business in a bunch of countries "behind the Iron Curtain" (he loved that phrase). But given that there are CIA insiders in business and media who action the anti-populist goals of organized business, this is what they look like. It was a cincher when he got tremors when I parenthetically said (as part of a much longer and typically Aestu philosophical exposition) that we were reaching the logical limits of the Capitalist system.

Like many Boomers, this guy was utterly solipsistic. He complained about feelings of general discontent with his life and an exaggerated fear of death. He embraced my suggested to "shift the center of your identity outside yourself" by engaging in charity or whatnot, but he could only interpret this to mean to work within his comfort zone and was baffled when I suggested that there were good causes and people worth helping within 50km of where he lived, rather than in some faraway country. Fundamental to the crusade against Communism (or the latter-day "White Woman's Burden" movement) was and is a chauvinistic notion that there can't be injustice or genuinely needy people within the US. This is also why I think Misha Collins should be burned at the stake.

I freely admit that as I am unable to enjoy most of the things that make life worth living for most people, I derive great pleasure from using my strength to intimidate others. The spook repeatedly sought to make references to things, places, people that would be obscure to most Americans (the Trabant, Ceausescu, French Huguenots, Indochina, macular degeneration, etc) and was a bit unsettled that I was two steps ahead of him each time.

In true Men In Black style, he passed me his business card, with only his name and address on it. I responded in kind with my own, which included the pretense of a career, "Proficiency & Study Services". Seeking to regain the high ground, he made a point of chuffing at this. "This," - I made an ambient gesture - "is what I do".

While I was in Gambia, I had visited a gigantic mosque gifted by Qadaffi in his efforts to push pan-Africanism (which met with terminal resistance when he tried to sell oil for currency other than dollars). Years ago, when I took the FSOT, I remember being asked to write an essay about the "Triumph of Diplomacy" that was Qadaffi's "reformation" into the international community. My essay (the substance of which was characteristically cynical, presuming evanescence) won me a high pass. Less than a year later, of course, Qadaffi had tried to get off the dollar and wound up dead.

Such events in the last decade convinced me that banks, corporations and a cabal of right-wing insiders have total control over foreign policy, and that what we see in the media are simply rationalizations for what has already been decided at business roundtables. Indeed I believe this has typically been the case in Anglo-American nations through most of our history - less true of continental powers with stronger republican traditions (by that I mean that final power rests with the bureaucracy appointed by the democracy, rather than presenting the mere facade of a democracy offered by our winner-take-all two-party system).

After the conversation, I felt compelled to research the term "petrodollars" - I had wanted to better understand the macroeconomic issues underscoring oil wars.

As I understood it, American insistence that Saudi Arabia, Ukraine and other states sell oil in dollars created a strong external demand for dollars that allowed the US's debt-based economy to function.

I noticed something else, too. The term had popped into use by a professor at Georgetown at almost the same moment the US went off the gold standard. The light went on inside my head. The US didn't really go off the gold standard. The US just went from backing its money with yellow gold to backing it with black gold. Quite a revelation.

As with many Americans, debt is fundamental to my way of life, but unlike most Americans, I have the insight to plan around macroeconomic issues. That's not to say that I am putting all my cards on the dollar imploding - that would be foolhardy - rather I am structuring the debt so that it is payable should superinflation not occur, but maximizing benefit should it do so. In practice, this means maintaining low *fixed* interest rates on high levels of debt against monetizable assets (house, car, education, career), while keeping total credit lines long enough to maintain options and a good credit rating. If superinflation does not occur, then the debt will gradually be paid off; if it does, then I will simply leverage the monetizable assets to discharge it immediately, then buy more assets from cash-strapped Americans. This is also why I want to purchase more real assets - land, euro and copper (and not gold) - and build additional lives outside the country.

Anyway, reading more about petrodollars improved my understanding of the Ukraine crisis. It was my belief that Putin wanted to grab Ukraine to deny the EU an alternative source of petrol and to appeal to the many frustrated hawks and nationalists in Russia. I still think this is largely the case, but I think European indifference to the whole thing is driven by the fact that the actual target of the invasion is not Europe or Ukraine but the US.

Russia has been frustrated with the dominance of the dollar and Sino-American hegemony of global resources. Putin probably believes that by establishing strong relations with China, India and Iran - and now grabbing Ukraine - he can undermine the dominance of the dollar and make countries deal in rubles. Clearly, this is about as realistic as Stalin claiming that the language of the future would be Russian, but the basic premise - that the strength of the dollar is ultimately built on nothing more than the US's capacity to terrorize third-world nations, and that increasingly, the gig is up - is sound.

So the EU's indifference to the Ukraine crisis now makes sense: it doesn't directly concern them. They think they can win either way: either the US wins (and the reasonably acceptable status quo continues), Russia wins (and they shrug and pay in rubles instead of dollars, which will probably increase the EU's spending power), or both lose - and the Euro takes over the world.

But I said that I would explain how green energy would destroy the American economy. This is why: because green energy will destroy demand for dollars, vacillate the petrodollar system and the entire economy will go out like the Warsaw Pact.

I have gradually become convinced that the choice between fossil fuels and green energy is not really a microeconomic choice between alternatives in cost, quality and externalities. In truth, the choice between fossil fuels and green energy is a choice between two very different ways of life. The difference is as fundamental as the difference between societies based on feudalism, slavery or barter and societies based on freedom and commerce.

The economic changes that will accompany the historically inevitable conversion to green energy will change our political, economic, personal, "and yes, even spiritual", lives in a way few today can realize. Democracy, capitalism, and the very nature and purpose of life will come to mean things as different from today as what those terms meant in ancient Athens 2500 years ago.

I will explore this revelation in greater detail later. For now I am doing correspondence and tying up loose ends with my little African safari.

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