6 December 2011
Norman Pagett writes:
The global financial system is in a process of self-reinforcing disintegration…George Soros 5 12 2011
The present reaction of banks to adverse financial forces is the ultimate display of panic when faced with the inevitable: drowning people grab at each other to stay afloat.
For two centuries, world banks have watched their assets grow exponentially, congratulating themselves on their expertise, enjoying the delusion that it could go on forever.
But now it is time to face up to the fact that we do not owe our recent prosperity to the collective genius of our finance houses. By sheer chance they found themselves able to capitalise on the geological anomaly of fossil fuel energy, and use the colossal power it unleashed to amass great fortunes. Despite appearances of diversity, that wealth is still dependent on a constantly increasing output of oilwells, gasfields and coalmines. We do not live in a money based economy; we live in an energy-based economy. Our financial system is a money = energy equation.
Put in terms that governments dare not utter, without that energy input we do not have a working economy and we revert to an existence reliant on muscle power alone.
We have experienced a unique century of wealth; it is our normality, and our buildings, cars, and entire infrastructure depend on it. If oil weren’t available to supply 99% of our food, we would literally starve to death.
But the cost of oil has risen tenfold in a decade, and no financial/social system can support that kind of increase. Current intervention by banks trying to save one another may follow the rules of banking and finance, but it ignores the rules of reality. Passing money around does not create wealth.
Our leaders are fully aware of that, but you won’t find them expressing it in any of their stirring speeches. It must remain unsaid, but when the truth dawns that our social system is collapsing because of declining energy input and rising cost, the panic will be global and catastrophic.
Clinging to a jointly owned piece of wreckage will not rebuild it into an ocean-going liner.
Clinging on: why the banks can’t save us
6 December 2011