I was reading a pretty funny article today talking about the global economy resetting, because while stock prices keep climbing, real wage growth keeps falling in comparison and at some point, it will all have to come back to reality. Obviously this isn't the funny bit. The funny bit is that they were presenting it as if it is something new.
Literally.
The line after this title is:
The idea that the globe is rapidly approaching a point of no return is not limited to fringe internet economists. The International Monetary Fund shares similar sentiments.
Well - now that the IMF has acknowledged it, it must be true.
None of this is new information.
And it has been obvious for many years that we are heading toward a point of economic no return, because of the blatant greed of the system that we keep supporting. A system that eats itself without reservation, because the only incentive is to maximise wealth, without tying it to anything that matters or forces it to adjust and recalibrate - like human wellbeing. Instead of adjusting to maximise wellbeing, the economy adjusts to maximise wealth. It is like the thought experiment with an AI that is told to maximise paperclips, it will eventually consume everything, including us, to reach its endless goal.
There is no such thing as wealthy enough in this economy.
And I am not talking about individuals either, who might get to a point of so much wealth they don't want any more. I am talking about the need for constant growth of the economy as an indicator of success, where there are constant cycles and adjustments made to devalue and crash money and the economy so that more money can be generated and amplified and used to take more and more power and control, so more can be made again.
Corporations never say "we made enough last year, let's keep it at this level" - it is always looking for another ten percent, another twenty. But if a company grows at 10% a year, it is going to double its size every 7.2 years. For a little perspective, if we were to double the population of the earth in the same time frame, every woman would need to have over four children in that period, and almost no one could die.
So when all companies are looking to grow. All governments are looking to grow. All investors want their ROI to grow, and all people want their wages to grow and everyone wants to buy more, and have more, and do more, and... Well, you get the picture right, it is unsustainable.
But when it comes to the economy, it is possible to keep it growing by continually devaluing it, because none of the money is real and isn't tied to anything. More can be printed, more can be created through fractional reserve lending and interest rates, more can just be pulled from thin air, whenever it is wanted by some people. And because it doesn't need to be mined, it doesn't need to be produced, it doesn't need to be attached to anything, it can all happen without the average person being aware of what is actually going on.
It still affects us though.
Money might not be real, but because we believe that it is necessary and important and that we can't do anything without it in the world, it affects us and dictates almost every factor of our life and our potential. The food we eat, the possibilities we have, our education, our housing, our hobbies, our relationships, the way we raise our children, the entertainment we have, our travel...
Our experience.
And for the most part, the average person's experience with money, is negative. There is never enough to do what is wanted, and often not enough to do what is needed. Money impacts heavily on our wellbeing, because much of what we consider important for quality of life, requires money to facilitate and open the possibility. You can argue this, and many do - but almost 100% of people who say that money isn't important to them, should give up all they have for a while.
Note: It didn't work for the Buddha.
The reset is coming and it seems that we are accelerating toward it. This is the way it goes of course, because that wealth gap is widening exponentially, and the wider it gets, the closer the collapse. When that reset does come, it is going to be terrible for everyone in ways that are unimaginable to most people now, but rather than learning from it and creating a system that doesn't depend on compounding wealth growth, we will likely rebuild the same system again. And again. And again.
And we call ourselves an innovative species.
Taraz
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Governments everywhere have been inflating the money supply in an effort to build and maintain an illusion of prosperity. This new money benefits the politically-connected at the expense of everyone else, and is largely funneled into specific sectors of the economy. Real estate and stocks are assets in high demand, and have absorbed a lot of that money, creating the illusion of a booming economy, but the real wealth and production is not there as a foundation.
When the illusion crumbles, it could be acknowledged as a recession, and the stagflation we have been experiencing could worsen; or we could even face hyperinflation. Some kind of correction will be necessary to clear out decades of malinvestment, that much is certain. When, and how severe, is up in the air until we see it.
The level of greed means that distribution will keep narrowing, and more and more will fall into poverty. At the top though, they don't care - as they can live in gated communities with security.
The "correction" might come in the form of world war. That is how major financial resets normally happen.
Send the impoverished to slaughter one another.
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It's interesting to compare our current situation with the Bronze Age Collapse, where trade routes were so disrupted that the economy fell so hard that in some areas of the Mediterranean and Near East even writing disappeared.
Also to the mid Medieval period, where people assumed that the world was on a permanent downward trajectory from the glory of the Roman Empire, culminating in the Black Death. It was only the lack of a labour force which both prompted a need for science to start coming up with solutions and gave the remaining workers an ability to push for a release from serfdom plus reasonable wages which began the modern upward trajectory from the Renaissance and Enlightenment, heavily supported by South American and then Indian gold.
Lol! That is awesome. Slapped so hard, they forgot how to write. Though, if looking at the US, many are already illiterate anyway ;D
Funny how the west has managed to not only build itself on the resources of others - but also build in such a way that we squander the opportunity to actually do something meaningful.
Well, I am preparing by having no debt and got myself a home on a remote island, we just purchased additional guns and ammunition, the house has a generator, well water, septic system, only need to add solar panels and we will be off the grid...
That is brilliant!
funny how your 10 percent example clicks with the rule of 72. In the books, that compounding push for EPS turns into buybacks, cost cuts, and debt shuffles, not real wage growth, so the gap feels baked in and the reset talk is defintely not new, it' s the same loop. I keep it boring with skills, low debt, and a cash buffer, because money may be abstract but rent is not, and when the paperclip game runs the show you don't want to be the paper :)
I used it for this reason. Means I can use my head, instead of a calculator :D
Precisely.
I honestly thought it would have happened by now already. It feels like we are just pushing it back further and further.
It is like crypto - just around the corner.
What to do with all that new money. I have been watching a new tv show called Refugio Nuclear. It's about a group of rich people, that pay a lot of money to secure a place in a nuclear bunker. So I thought... The man or woman who sell that idea... What is going to doy with all that money in a world without people, without things to buy.
In other hand, corporations need keeping growing and growing. If they don't grow, will be another that take advantage. That's the life today and ever, a battle to survive. It's a jungle
It is a bit like the scene from the pianist, where the kid is selling candy at a very high price, while being shipped to a concentration camp.
I don't think anyone has yet discovered a perfect system. The current system, having survived this long, seems like the best system. It's easy to implement. However, its biggest drawback is that it encourages greed. You demand more. When one side gets more, the other side gets less. The gap widens, creating an imbalance. It's like in a tug-of-war game. The stronger side pulls as hard as they can, and when the balance is disrupted, the game ends.
It definitely isn't. The inherent incentives are not aligned with a healthy, prosperous society. A big part of the issue is centralised control, because that control ultimately leads to maximising itself at the expense of society.
The pendulum will swing back and hard in this upcoming reset. Corporations aren't allowed to fail and they are propped up to keep functioning, albeit in a ghost mode because the natural cycle of growth and recess is skipped altogether. I think this cycle is unavoidable for the most part. The recess is needed to build anew and better.
I am not sure if recessions are needed in a healthy system. But this system, is not healthy - the resets are inherent, because the system is inherently broken.
Fiat currencies are weakening. HIVE is weakening. It's probably time to choose good stocks and Bitcoin.
Maybe - but stocks will weaken too.
It would be the Mother of All Economic Recessions. It would be terrible. I read about the great crash that happened some decades ago and how so much fortune was lost that even the wealthiest in the society at that time were committing suicide. Now imagine what the fate of the average person would be then. These are realities that world leaders are refusing to confront now, just because they themselves are financially comfortable. The world economy needs a reset indeed and if we are not wise to do the reset ourselves, the global economic system would do it itself in a very brutal and disastrous way, the same way our body crashes if we refuse to give it enough rest.
My retirement plan.
It is clear that constant economic growth is unsustainable. We keep backing a system that values profit more than people, pushing us toward a reset that a lot of people have predicted for years.
profit over people will culminate in a pretty sparsely populated world. Environmentalists will be pleased - though they would also be dead.
Unfortunately, the struggle for peace times vs war times will continue, and wealth for a few, is the same old restart, it is historical, in each era with a different mask now in the era of innovation and technological alienation, it will always be the result of human intelligence, whose technocratic ideology, is as dangerous as all ideologies.
What is expected there in Venezuela?
Legality in my country is a matter of power, not justice. So who does not fight for his rights, is not worthy of them...
I just know that "it's already happening."
I also think that appearances are deceiving, there is more poverty and society is robotized, but it is awakening from the two rods of the same coin violent right or left, fascist or communist.
Social-populism has been the historical identity that has prevailed, these 26 years, including the current government, with a more "nationalist" discursive aggregate, where the voter has no choice..
I wonder how different it would have been if the natural resources of Venezuela were well managed like in Norway.
I don't think any country is interested in our.political system, but of our resources to take advantage of them, for themselves, Mr. Tarazkp.
I am also aware that our.country way.part of the global geo-politics, it can and should have trade and cooperation relations with all countries, but without ideological, political and economic subordination.
Well, history has brought several reboots, the last one being the Second World War, which brought so much havoc to financial lives that the few who knew how to take advantage of it moved away from poverty by thousands of miles. A long time ago, that wealth gap narrowed so much that it is not appropriate to compare a rich person with a poor person; the closest thing is someone from the lower middle class with a poor person. These borderless limits reached unimaginable levels.