What we are witnessing now is a collision: a collision of a financial system relying on fractional reserve banking, debt-financed growth, and a fiat currency system with a planet and energy resources that are finite, limited, and running out. Infinite growth is battling with finite energy. One is not possible without the other and I have absolutely no doubt as to which side will win.
In November 2002 James Kenneth Galbraith wrote an article titled "The Unbearable Costs of Empire":
None of these problems will be cured so long as war remains our dominant political theme. But serious though they are, they pale in comparison with the larger problem of the international trade-and-financial order under conditions of permanent war. It is a straightforward fact that if global oil production starts to decline but U.S. consumption does not, everyone else will be required to cut purchases and uses of oil. But how can oil prices be held stable for Americans yet be made to rise for everyone else? Only by a policy of continuing depreciation in everyone else's currency. Such a policy of dollar hegemony amid worldwide financial instability, of crushing debt burdens and deflation throughout the developing world, is perverse. It will make our trading partners' exports cheap, render their imports dear and keep their real wages low. It will price American goods out of world markets and lead to unsustainable dependence on foreign capital. It will be a policy, in short, of beggar-all-of-our-neighbors while we live alone, in increasing idleness and inside the dollar bubble.
This is the policy that Bush and Cheney are actually imposing on the rest of the world. But they cannot make it last. It will make lives miserable elsewhere, generating ever more resistance, terrorism and military engagement. Meanwhile, we will not experience even gradual exposure to the changing energy balance; we will therefore never make the investments required to adjust, even eventually, to a world of scarce and expensive oil. In the end, therefore, that world will arrive much more abruptly than it otherwise would, shaking the fragile edifice of our oil economy to its foundations. And we will someday face a double explosion: of anger against our arrogance and of actual shortage and collapsing living standards, when the confidence of investors in the dollar finally gives way.
Compared with this future, a new commitment to collective security, to a new world financial structure, to a rational energy and transportation policy, and to spending to meet our actual domestic needs would be a bargain. At the end of the Constitutional Convention, Benjamin Franklin was asked what type of government the framers had given our new country. He famously replied, "A republic, if you can keep it."
In 49 BC Julius Caesar, fresh from a battlefield victory in central Italy ordered his legions to cross a small creek called the Rubicon. Under the laws of the Roman Republic, the army was not allowed to enter the capital city.
As Julius Caesar crossed the Rubicon, the Roman Republic died and the Roman Empire was born.
Our task, if we and much of human civilization are to survive, is not to keep our republic, but to take it back.
Address of Michael C. Ruppert
To the Commonwealth Club – San Francisco
Tuesday August 31, 2004
Posted: Tue - October 12, 2004 at 11:50 AM Dacha Dude Weblog Guilty